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ACCT 202 Final: 4-09 INDIANA CORP

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blushllama275
19 Mar 2020
School
MSU
Department
Accounting
Course
ACCT 202
Professor
Steve Markoff

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Document Summary

Indiana corp. produces a product, cleverly named product x for which the following standard costs have been established for the production of one unit: At the start of the year, the company did some planning and, based on market conditions and other information available, they forecasted sales of 600 units for the upcoming year. The company also has a just-in-time (jit) inventory system under which materials are only ordered and units are only produced in response to customer orders. No inventories are kept and, therefore, the number of units produced always equals the number of units sold. As the year unfolded, demand for the product x was not as strong as originally anticipated and actual production and sales amounted to 500 units. The following actual costs were incurred in connection with the production of the 500 units during the year:

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Related Questions

White Corporation's budget calls for the following sales for next year:

Quarter 1 96,500 units Quarter 2 82,000 units Quarter 3 67,700 units Quarter 4 98,800

Each unit of the product requires 3 pounds of direct materials. The company's policy is to begin each quarter with an inventory of product equal to 5% of that quater's estimated sales requirements and an inventory of direct materials equal to 20% of that quarter's estimated direct materials requirements for production.

1. Determine the production budget for the second quarter:

Budgeted sales_____________

Desired ending inventory________________

Total units needed ___________________

Beginning inventory ____________________

Total units to produce__________________

2. Determine the materials purchases budget for the second quater:

Budgeted production _________________

Direct materials (lbs.) per unit produced ____________________

Direct materials needed in production

Desired ending inventory of direct materials (lbs.)_____________

Total direct materials needed ________________________

Beginning inventory of direct materials ___________________

Budgeted purchases of direct materials (lbs.) _______________

The budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July is summarized as follows:

a. Estimated sales for July by sales territory:

Maine:
Backyard Chef 310 units at $700 per unit
Master Chef 150 units at $1,200 per unit
Vermont:
Backyard Chef 240 units at $750 per unit
Master Chef 110 units at $1,300 per unit
New Hampshire:
Backyard Chef 360 units at $750 per unit
Master Chef 180 units at $1,400 per unit

b. Estimated inventories at July 1:

Direct materials:
Grates 290 units
Stainless steel 1,500 lbs.
Burner subassemblies 170 units
Shelves 340 units
Finished products:
Backyard Chef 30 units
Master Chef 32 units

c. Desired inventories at July 31:

Direct materials:
Grates 340 units
Stainless steel 1,800 lbs.
Burner subassemblies 155 units
Shelves 315 units
Finished products:
Backyard Chef 40 units
Master Chef 22 units

d. Direct materials used in production:

In manufacture of Backyard Chef:
Grates 3 units per unit of product
Stainless steel 24 lbs. per unit of product
Burner subassemblies 2 units per unit of product
Shelves 4 units per unit of product
In manufacture of Master Chef:
Grates 6 units per unit of product
Stainless steel 42 lbs. per unit of product
Burner subassemblies 4 units per unit of product
Shelves 5 units per unit of product

e. Anticipated purchase price for direct materials:

Grates $15 per unit
Stainless steel $6 per lb.
Burner subassemblies 110 per unit
Shelves $10 per unit

f. Direct labor requirements:

Backyard Chef:
Stamping Department 0.50 hr. at $17 per hr.
Forming Department 0.60 hr. at $15 per hr.
Assembly Department 1.00 hr. at $14 per hr.
Master Chef:
Stamping Department 0.60 hr. at $17 per hr.
Forming Department 0.80 hr. at $15 per hr.
Assembly Department 1.50 hrs. at $14 per hr.

Required:

1. Prepare a sales budget for July.

Gourmet Grill Company
Sales Budget
For the Month Ending July 31
Product and Area Unit Sales
Volume		 Unit Selling
Price		 Total Sales
Backyard Chef:
Maine
Vermont
New Hampshire
Total
Master Chef:
Maine
Vermont
New Hampshire
Total
Total revenue from sales

2. Prepare a production budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gourmet Grill Company
Production Budget
For the Month Ending July 31
Units
Backyard Chef Master Chef
Expected units to be sold
Desired inventory, July 31
Total units available
Estimated inventory, July 1
Total units to be produced

3. Prepare a direct materials purchases budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gourmet Grill Company
Direct Materials Purchases Budget
For the Month Ending July 31
Grates
(units)		 Stainless Steel
(lbs.)		 Burner Sub-
assemblies
(units)		 Shelves
(units)		 Total
Required units for production:
Backyard Chef
Master Chef
Desired inventory, July 31
Total
Estimated inventory, July 1
Total units to be purchased
Unit price
Total direct materials to be purchased

4. Prepare a direct labor cost budget for July.

Gourmet Grill Company
Direct Labor Cost Budget
For the Month Ending July 31
Stamping
Department		 Forming Department Assembly Department Total
Hours required for production:
Backyard Chef
Master Chef
Total
Hourly rate
Total direct labor cost

Anticipated sales for Safety Grip Company were 40,000 passenger car tires and 12,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table:

Passenger Car Truck
Rubber 25 lbs. per unit 58 lbs. per unit
Steel belts 4 lbs. per unit 10 lbs. per unit

The purchase prices of rubber and steel are $3.3 and $4.3 per pound, respectively. The desired ending inventories of rubber and steel belts are 38,000 and 8,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 44,000 and 6,000 pounds, respectively.

Prepare a direct materials purchases budget for Safety Grip Company for the year ended December 31, 20Y9.

Safety Grip Company
Direct Materials Purchases Budget
For the Year Ending December 31, 20Y9
Rubber Steel Belts Total
Pounds required for production:
Passenger tires lbs. lbs.
Truck tires
Desired inventory, December 31, 20Y9
Total lbs. lbs.
Estimated inventory, January 1, 20Y9
Total units purchased lbs. lbs.
Unit price x $ x $
Total direct materials to be purchased $ $ $

2) Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows:

Junior Pro Striker
Production budget 5,800 units 22,100 units

Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

Forming Department Assembly Department
Junior 0.2 hour per unit 0.5 hour per unit
Pro Striker 0.3 hour per unit 0.6 hour per unit

The direct labor rate for each department is as follows:

Forming Department $16 per hour
Assembly Department $13 per hour

Prepare the direct labor cost budget for July 20Y9.

Ace Racket Company
Direct Labor Cost Budget
For the Month Ending July 31, 20Y9
Forming Department Assembly Department
Hours required for production:
Junior
Pro Striker
Total
Hourly rate x$ x$
Total direct labor cost $ $

3) Sweet Tooth Candy Company budgeted the following costs for anticipated production for August:

Advertising expenses $279,250
Manufacturing supplies 15,310
Power and light 45,650
Sales commissions 312,220
Factory insurance 26,580
Production supervisor wages 134,260
Production control wages 34,910
Executive officer salaries 284,620
Materials management wages 38,380
Factory depreciation 21,750

Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only fixed factory costs.

Sweet Tooth Candy Company
Factory Overhead Cost Budget
For the Month Ending August 31
Variable factory overhead costs:
Manufacturing supplies $
Power and light
Production supervisor wages
Production control wages
Materials management wages
Total variable factory overhead costs $
Fixed factory overhead costs:
Factory insurance $
Factory depreciation
Total fixed factory overhead costs
Total factory overhead costs $