191422294-20840-3-example-problems-ch-9-10-1

Question 1: Score 0/4

Your responseCorrect response

Exercise 9-1 Schedule of Expected Cash Collections [LO2]

Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below:

AprilMayJuneTotal

Budgeted sales (all on account)$300,000$500,000$200,000$1,000,000

From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000.

Requirement 1:

Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

AprilMayJuneTotal

February sales$1(0%)$1(0%)$1(0%)$1(0%)

March sales1(0%)1(0%)1(0%)1(0%)

April sales1(0%)1(0%)1(0%)1(0%)

May sales1(0%)1(0%)1(0%)1(0%)

June sales1(0%)1(0%)1(0%)1(0%)

Total cash collections$1(0%)$1(0%)$1(0%)$1(0%)

Exercise 9-1 Schedule of Expected Cash Collections [LO2]

Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below:

AprilMayJuneTotal

Budgeted sales (all on account)$300,000$500,000$200,000$1,000,000

From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000.

Requirement 1:

Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

AprilMayJuneTotal

February sales$23,000$0$0$23,000

March sales182,00026,0000208,000

April sales60,000210,00030,000300,000

May sales0100,000350,000450,000

June sales0040,00040,000

Total cash collections$265,000$336,000$420,000$1,021,000

Total grade: 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 + 0.01/24 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

AprilMayJuneTotal

February sales:$230,000 10%$23,000$23,000

March Sales:$260,000 70%, 10%182,000$26,000208,000

April sales:$300,000 20%, 70%, 10%60,000210,000$30,000300,000

May sales:$500,000 20%, 70%100,000350,000450,000

June sales:$200,000 20%40,00040,000

Total cash collections$265,000$336,000$420,000$1,021,000

Observe that even though sales peak in May, cash collections peak in June. This occurs because the bulk of the company's customers pay in the month following sale. The lag in collections that this creates is even more pronounced in some companies. Indeed, it is not unusual for a company to have the least cash available in the months when sales are greatest.


Requirement 2:

Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date. (Omit the "$" sign in your response.)

Accounts receivable$1(0%)

Requirement 2:

Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date. (Omit the "$" sign in your response.)

Accounts receivable$210,000

Total grade: 0.01/1 = 0%

Feedback:

Accounts receivable at June 30:

From May sales: $500,000 10%$50,000

From June sales: $200,000 (70% + 10%)160,000

Total accounts receivable at June 30$210,000

Question 2: Score 0/4Your responseCorrect response

Exercise 9-2 Production Budget [LO3]

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

Salesin Units

April50,000

May75,000

June90,000

July80,000

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units.

Required:

Show the number of units to be produced each month and for the quarter in total.

Required Production

April1(0%)

May1(0%)

June1(0%)

Quarter1(0%)

Exercise 9-2 Production Budget [LO3]

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

Salesin Units

April50,000

May75,000

June90,000

July80,000

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units.

Required:

Show the number of units to be produced each month and for the quarter in total.

Required Production

April52,500

May76,500

June89,000

Quarter218,000

Total grade: 0.01/4 + 0.01/4 + 0.01/4 + 0.01/4 = 0% + 0% + 0% + 0%

Feedback:

AprilMayJuneQuarter

Budgeted sales in units50,00075,00090,000215,000

Add desired ending inventory*7,5009,0008,0008,000

Total needs57,50084,00098,000223,000

Less beginning inventory5,0007,5009,0005,000

Required production52,50076,50089,000218,000

*10% of the following month's sales in units.


Exercise 9-3 Direct Materials Budget [LO4]

Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is 150 roubles per kilogram. (Siberia is located in Russia, whose currency is the rouble.) Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

Year 2Year 3

FirstSecondThirdFourthFirst

Budgeted production, in bottles60,00090,000150,000100,00070,000

Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2.

Required:

Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases in roubles for each quarter and for the year in total. (Input all amounts as positive values.)

Year 2

FirstSecondThirdFourthYear

Production needsgrams1(0%)1(0%)1(0%)1(0%)1(0%)

Less(0%) : desired ending inventorygrams1(0%)1(0%)1(0%)1(0%)1(0%)

Total needsgrams1(0%)1(0%)1(0%)1(0%)1(0%)

Add(0%) : beginning inventorygrams1(0%)1(0%)1(0%)1(0%)1(0%)

Raw materials to be purchasedgrams1(0%)1(0%)1(0%)1(0%)1(0%)

Cost of raw materials to be purchased1(0%)1(0%)1(0%)1(0%)1(0%)

Exercise 9-3 Direct Materials Budget [LO4]

Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is 150 roubles per kilogram. (Siberia is located in Russia, whose currency is the rouble.) Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

Year 2Year 3


Budgeted production, in bottles60,00090,000150,000100,00070,000

Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2.

Required:

Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases in roubles for each quarter and for the year in total. (Input all amounts as positive values.)

Year 2

FirstSecondThirdFourthYear

Production needsgrams180,000270,000450,000300,0001,200,000

Add : desired ending inventorygrams54,00090,00060,00042,00042,000

Total needsgrams234,000360,000510,000342,0001,242,000

Less : beginning inventorygrams36,00054,00090,00060,00036,000

Raw materials to be purchasedgrams198,000306,000420,000282,0001,206,000

Cost of raw materials to be purchased29,70045,90063,00042,300180,900

Total grade: 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Year 2Year 3


Required production in bottles60,00090,000150,000100,00070,000

Number of grams per bottle 3 3 3 3 3

Total production needsgrams180,000270,000450,000300,000210,000



Exercise 9-4 Direct Labor Budget [LO5]

The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

1st Quarter2nd Quarter3rd Quarter4th Quarter

Units to be produced8,0006,5007,0007,500

Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour.

Requirement 1:

Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Omit the "$" sign in your response.)

Total directlabor cost

1st Quarter$1(0%)

2nd Quarter$1(0%)

3rd Quarter$1(0%)

4th Quarter$1(0%)

Year$1(0%)

Exercise 9-4 Direct Labor Budget [LO5]

The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:



Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour.

Requirement 1:

Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Omit the "$" sign in your response.)


1st Quarter$33,600

2nd Quarter$27,300

3rd Quarter$29,400

4th Quarter$31,500

Year$121,800

Total grade: 0.01/5 + 0.01/5 + 0.01/5 + 0.01/5 + 0.01/5 = 0% + 0% + 0% + 0% + 0%

Feedback:

Assuming that the direct labor workforce is adjusted each quarter, the direct labor budget is:

1stQuarter2ndQuarter3rdQuarter4thQuarterYear

Units to be produced8,0006,5007,0007,50029,000

Direct labor time per unit (hours) 0.35 0.35 0.35 0.35 0.35

Total direct labor hours needed2,8002,2752,4502,62510,150

Direct labor cost per hour$12.00$12.00$12.00$12.00$12.00

Total direct labor cost$33,600$27,300$29,400$31,500$121,800


Requirement 2:

Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company's direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. (Omit the "$" sign in your response.)


1st Quarter$1(0%)

2nd Quarter$1(0%)

3rd Quarter$1(0%)

4th Quarter$1(0%)

Year$1(0%)

Requirement 2:

Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company's direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. (Omit the "$" sign in your response.)


1st Quarter$34,800

2nd Quarter$31,200

3rd Quarter$31,200

4th Quarter$31,650

Year$128,850

Total grade: 0.01/5 + 0.01/5 + 0.01/5 + 0.01/5 + 0.01/5 = 0% + 0% + 0% + 0% + 0%

Feedback:

Assuming that the direct labor workforce is not adjusted each quarter and that overtime wages are paid, the direct labor budget is:



Direct labor time per unit (hours) 0.35 0.35 0.35 0.35

Total direct labor hours needed2,8002,2752,4502,625

Regular hours paid2,6002,6002,6002,600

Overtime hours paid2000025

Wages for regular hours (@ $12.00 per hour)$31,200$31,200$31,200$31,200$124,800

Overtime wages (@ 1.5 hours $12.00 per hour)3,600004504,050




Exercise 9-5 Manufacturing Overhead Budget [LO6]

The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:


Budgeted direct labor-hours8,0008,2008,5007,800

The company's variable manufacturing overhead rate is $3.25 per direct labor-hour and the company's fixed manufacturing overhead is $48,000 per quarter. The only non cash item included in fixed manufacturing overhead is depreciation, which is $16,000 per quarter.

Requirement 1:

Compute the company's manufacturing overhead budget for the upcoming fiscal year. (Omit the "$" sign in your response.)

Cash disbursements for manufacturing overhead

1st Quarter$1(0%)

2nd Quarter$1(0%)

3rd Quarter$1(0%)

4th Quarter$1(0%)

Year$1(0%)

Exercise 9-5 Manufacturing Overhead Budget [LO6]

The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:


Budgeted direct labor-hours8,0008,2008,5007,800

The company's variable manufacturing overhead rate is $3.25 per direct labor-hour and the company's fixed manufacturing overhead is $48,000 per quarter. The only non cash item included in fixed manufacturing overhead is depreciation, which is $16,000 per quarter.

Requirement 1:

Compute the company's manufacturing overhead budget for the upcoming fiscal year. (Omit the "$" sign in your response.)

Cash disbursements for manufacturing overhead

1st Quarter$58,000

2nd Quarter$58,650

3rd Quarter$59,625

4th Quarter$57,350

Year$233,625

Total grade: 0.01/5 + 0.01/5 + 0.01/5 + 0.01/5 + 0.01/5 = 0% + 0% + 0% + 0% + 0%

Feedback:

Yuvwell CorporationManufacturing Overhead Budget

1st Quarter2ndQuarter3rdQuarter4thQuarterYear

Budgeted direct labor-hours8,0008,2008,5007,80032,500

Variable overhead rate$ 3.25$ 3.25$ 3.25$ 3.25$ 3.25

Variable manufacturing overhead$26,000$26,650$27,625$25,350$105,625

Fixed manufacturing overhead48,00048,00048,00048,000192,000

Total manufacturing overhead74,00074,65075,62573,350297,625

Less depreciation16,00016,00016,00016,00064,000

Cash disbursements for manufacturing overhead$58,000$58,650$59,625$57,350$233,625


Requirement 2:

Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Manufacturing overhead rate for the year$1(0%)

Requirement 2:

Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Manufacturing overhead rate for the year$9.16

Total grade: 0.01/1 = 0%

Feedback:

Total budgeted manufacturing overhead for the year (a)$297,625

Total budgeted direct labor-hours for the year (b)32,500

Manufacturing overhead rate for the year (a) (b)$9.16



Exercise 9-6 Selling and Administrative Expense Budget [LO7]

The budgeted unit sales of Weller Company for the upcoming fiscal year are provided below:


Budgeted unit sales15,00016,00014,00013,000

The company's variable selling and administrative expense per unit is $2.50. Fixed selling and administrative expenses include advertising expenses of $8,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $20,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, property taxes of $8,000 will be paid in the second quarter.

Required:

Prepare the company's selling and administrative expense budget for the upcoming fiscal year. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Weller CompanySelling and Administrative Expense Budget


Variable expense$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

Fixed selling and administrative expenses:

Advertising1(0%)1(0%)1(0%)1(0%)1(0%)

Executive salaries1(0%)1(0%)1(0%)1(0%)1(0%)

Insurance1(0%)1(0%)1(0%)1(0%)1(0%)

Property taxes1(0%)1(0%)1(0%)1(0%)1(0%)

Depreciation1(0%)1(0%)1(0%)1(0%)1(0%)

Total fixed selling and administrative expenses1(0%)1(0%)1(0%)1(0%)1(0%)

Total selling and administrative expenses1(0%)1(0%)1(0%)1(0%)1(0%)

Less depreciation1(0%)1(0%)1(0%)1(0%)1(0%)

Cash disbursements for selling and administrative expenses$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

Exercise 9-6 Selling and Administrative Expense Budget [LO7]

The budgeted unit sales of Weller Company for the upcoming fiscal year are provided below:



The company's variable selling and administrative expense per unit is $2.50. Fixed selling and administrative expenses include advertising expenses of $8,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $20,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, property taxes of $8,000 will be paid in the second quarter.

Required:

Prepare the company's selling and administrative expense budget for the upcoming fiscal year. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Weller CompanySelling and Administrative Expense Budget


Variable expense$37,500$40,000$35,000$32,500$145,000

Fixed selling and administrative expenses:

Advertising8,0008,0008,0008,00032,000

Executive salaries35,00035,00035,00035,000140,000

Insurance5,00005,000010,000

Property taxes08,000008,000

Depreciation20,00020,00020,00020,00080,000

Total fixed selling and administrative expenses68,00071,00068,00063,000270,000

Total selling and administrative expenses105,500111,000103,00095,500415,000


Cash disbursements for selling and administrative expenses$85,500$91,000$83,000$75,500$335,000

Total grade: 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback: 1st Quarter2nd Quarter3rd Quarter4th QuarterYear

Budgeted unit sales15,00016,00014,00013,00058,000

Variable selling and administrative expense per unit$2.50$2.50$2.50$2.50$2.50

Variable expense$37,500$40,000$35,000$32,500$145,000


Exercise 9-7 Cash Budget [LO8]

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:


Total cash receipts$180,000$330,000$210,000$230,000

Total cash disbursements$260,000$230,000$220,000$240,000

The company's beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.

Required:

Prepare the company's cash budget for the upcoming fiscal year. (Show deficiencies, repayments, interest, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Garden DepotCash Budget

1st Quarter2nd Quarter3rd Quarter4th QuarterYear

Cash balance, beginning$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

Total cash receipts1(0%)1(0%)1(0%)1(0%)1(0%)

Total cash available1(0%)1(0%)1(0%)1(0%)1(0%)

Less total cash disbursements1(0%)1(0%)1(0%)1(0%)1(0%)

Excess (deficiency) of cash available over disbursements1(0%)1(0%)1(0%)1(0%)1(0%)

Financing:

Borrowings (at beginnings of quarters)1(0%)1(0%)1(0%)1(0%)1(0%)

Repayments (at ends of quarters)1(0%)1(0%)1(0%)1(0%)1(0%)

Interest1(0%)1(0%)1(0%)1(0%)1(0%)

Total financing1(0%)1(0%)1(0%)1(0%)1(0%)

Cash balance, ending$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

Exercise 9-7 Cash Budget [LO8]

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:


Total cash receipts$180,000$330,000$210,000$230,000

Total cash disbursements$260,000$230,000$220,000$240,000

The company's beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.

Required:

Prepare the company's cash budget for the upcoming fiscal year. (Show deficiencies, repayments, interest, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Garden DepotCash Budget


Cash balance, beginning$20,000$10,000$35,800$25,800$20,000

Total cash receipts180,000330,000210,000230,000950,000

Total cash available200,000340,000245,800255,800970,000

Less total cash disbursements260,000230,000220,000240,000950,000

Excess (deficiency) of cash available over disbursements-60,000110,00025,80015,80020,000

Financing:

Borrowings (at beginnings of quarters)70,00000070,000

Repayments (at ends of quarters)0-70,00000-70,000

Interest0-4,20000-4,200

Total financing70,000-74,20000-4,200

Cash balance, ending$10,000$35,800$25,800$15,800$15,800

Total grade: 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 + 0.01/50 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Borrowings (at beginnings of quarters):

Since the deficiency of cash available over disbursements is $60,000, the company must borrow $70,000 to maintain the desired ending cash balance of $10,000.

Interest:

$70,000 3% 2 = $4,200.

Question 8: Score 0.28/4Your responseCorrect response

Exercise 9-8 Budgeted Income Statement [LO9]

Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:

Budgeted unit sales460

Selling price per unit$1,950

Cost per unit$1,575

Variable selling and administrative expenses (per unit)$75

Fixed selling and administrative expenses (per year)$105,000

Interest expense for the year$14,000

Required:

Use the absorption costing income statement method, prepare the company's budgeted income statement. (Input all amounts as positive values. Omit the "$" sign in your response.)

Gig Harbor Boating Budgeted Income Statement

Interest expense(0%)$1(0%)

Selling and administrative expenses(0%)1(0%)

Gross profit(7%)1(0%)

Notes payable(0%)1(0%)

Net operating loss(0%)1(0%)

Notes payable(0%)1(0%)

Net loss(0%)$1(0%)

Exercise 9-8 Budgeted Income Statement [LO9]

Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:

Budgeted unit sales460

Selling price per unit$1,950

Cost per unit$1,575

Variable selling and administrative expenses (per unit)$75

Fixed selling and administrative expenses (per year)$105,000

Interest expense for the year$14,000

Required:

Use the absorption costing income statement method, prepare the company's budgeted income statement. (Input all amounts as positive values. Omit the "$" sign in your response.)

Gig Harbor Boating Budgeted Income Statement

Sales$897,000

Cost of goods sold724,500

Gross profit172,500

Selling and administrative expenses139,500

Net operating income33,000

Interest expense14,000

Net income$19,000

Total grade: 0.01/14 + 0.01/14 + 0.01/14 + 0.01/14 + 1.01/14 + 0.01/14 + 0.01/14 + 0.01/14 + 0.01/14 + 0.01/14 + 0.01/14 + 0.01/14 + 0.01/14 + 0.01/14 = 0% + 0% + 0% + 0% + 7% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Sales (460 units $1,950 per unit) = $897,000

Cost of goods sold (460 units $1,575 per unit) = $724,500

Selling and administrative expenses (460 units $75 per unit) + $105,000 = $139,500.


Exercise 9-9 Budgeted Balance Sheet [LO10]

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

EndingBalances

Cash?


Supplies inventory$3,200

Equipment$34,000

Accumulated depreciation$16,000

Accounts payable$1,800

Common stock$5,000

Retained earnings?

The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800.

Required:

Prepare the company's budgeted balance sheet. (Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

Mecca CopyBudgeted Balance Sheet

AssetsLiabilities and Stockholders' Equity

Current assets:Current liabilities:

Cash(5%)$1(0%)Accounts payable(5%)1(0%)

Common stock(0%)1(0%)Stockholders' equity:

Retained earnings(0%)1(0%)Supplies inventory(0%)$1(0%)

Total current assets$1(0%)Equipment(0%)1(0%)

Plant and equipment:Total stockholders' equity1(0%)

Building(0%)1(0%)

Retained earnings(0%)1(0%)

Plant and equipment, net1(0%)

Total assets$1(0%)Total liabilities and stockholders' equity$1(0%)

Exercise 9-9 Budgeted Balance Sheet [LO10]

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

EndingBalances

Cash?


Supplies inventory$3,200

Equipment$34,000

Accumulated depreciation$16,000

Accounts payable$1,800

Common stock$5,000

Retained earnings?

The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800.

Required:

Prepare the company's budgeted balance sheet. (Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

Mecca CopyBudgeted Balance Sheet

AssetsLiabilities and Stockholders' Equity

Current assets:Current liabilities:

Cash$12,200Accounts payable1,800

Accounts receivable8,100Stockholders' equity:

Supplies inventory3,200Common stock$5,000

Total current assets$23,500Retained earnings34,700

Plant and equipment:Total stockholders' equity39,700

Equipment34,000

Accumulated depreciation-16,000

Plant and equipment, net18,000

Total assets$41,500Total liabilities and stockholders' equity$41,500

Total grade: 1.01/21 + 0.01/21 + 1.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 + 0.01/21 = 5% + 0% + 5% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Cash: Plug figure.

Retained earnings, beginning balance$28,000

Add net income11,500

39,500

Deduct dividends4,800

Retained earnings, ending balance$34,700


Exercise 9-10 Cash Budget Analysis [LO8]

A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts in the table. (Enter your answers in thousands of dollars. Show deficiencies, repayments, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Quarter

1234Year

Cash balance, beginning$6$1(0%)$1(0%)$1(0%)$1(0%)

Add collections from customers1(0%)1(0%)961(0%)323

Total cash available711(0%)1(0%)1(0%)1(0%)

Less disbursements:

Purchases of inventory35451(0%)351(0%)

Operating expenses1(0%)30301(0%)113

Equipment purchases88101(0%)36

Dividends22221(0%)

Total disbursements1(0%)851(0%)1(0%)1(0%)

Excess (deficiency) of cash available over disbursements-21(0%)111(0%)1(0%)

Financing:

Borrowings1(0%)151(0%)1(0%)1(0%)

Repayments (including interest)*1(0%)1(0%)1(0%)-171(0%)

Total financing1(0%)1(0%)1(0%)1(0%)1(0%)

Cash balance, ending$1(0%)1(0%)$1(0%)$1(0%)$1(0%)

*Interest will total $1,000 for the year.

Exercise 9-10 Cash Budget Analysis [LO8]

A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts in the table. (Enter your answers in thousands of dollars. Show deficiencies, repayments, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Quarter

1234Year

Cash balance, beginning$6$5$5$5$6

Add collections from customers65709692323

Total cash available717510197329

Less disbursements:

Purchases of inventory35454835163

Operating expenses28303025113

Equipment purchases88101036

Dividends22228

Total disbursements73859072320

Excess (deficiency) of cash available over disbursements-2-1011259

Financing:

Borrowings7150022

Repayments (including interest)*00-6-17-23

Total financing715-6-17-1

Cash balance, ending$55$5$8$8

*Interest will total $1,000 for the year.

Total grade: 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 + 0.01/42 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%



Exercise 9-11 Production and Direct Materials Budgets [LO3, LO4]

The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year:



The company expects to start the first quarter with 1,600 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,700 units.

In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3,120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14,820.

Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3,140 pounds. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.

Requirement 1:

Prepare the company's production budget for the upcoming fiscal year. (Input all amounts as positive values.)

Gaeber IndustriesProduction Budget


Budgeted unit sales1(0%)1(0%)1(0%)1(0%)1(0%)

Add desired ending inventory1(0%)1(0%)1(0%)1(0%)1(0%)

Total units needed1(0%)1(0%)1(0%)1(0%)1(0%)

Less beginning inventory1(0%)1(0%)1(0%)1(0%)1(0%)

Required production1(0%)1(0%)1(0%)1(0%)1(0%)

Exercise 9-11 Production and Direct Materials Budgets [LO3, LO4]

The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year:




In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3,120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14,820.

Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3,140 pounds. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.

Requirement 1:


Gaeber IndustriesProduction Budget



Add desired ending inventory1,4001,2001,4001,7001,700

Total units needed9,4008,2007,4008,70029,700

Less beginning inventory1,6001,4001,2001,4001,600

Required production7,8006,8006,2007,30028,100

Total grade: 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%


Requirement 2:

(a)Prepare the company's direct materials budget. (Input all amounts as positive values. Omit the "$" sign in your response.)

Gaeber IndustriesDirect Materials Budget


Production needs1(0%)1(0%)1(0%)1(0%)1(0%)


Total needs1(0%)1(0%)1(0%)1(0%)1(0%)


Raw materials to be purchased1(0%)1(0%)1(0%)1(0%)1(0%)

Cost of raw materials to be purchased$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

Requirement 2:

(a)Prepare the company's direct materials budget. (Input all amounts as positive values. Omit the "$" sign in your response.)

Gaeber IndustriesDirect Materials Budget


Production needs15,60013,60012,40014,60056,200


Total needs18,32016,08015,32017,74059,340


Raw materials to be purchased15,20013,36012,84014,82056,220

Cost of raw materials to be purchased$60,800$53,440$51,360$59,280$224,880

Total grade: 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:



Raw materials per unit 2 2 2 2 2

Production needs15,60013,60012,40014,60056,200


(b)Prepare the schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Gaeber IndustriesSchedule of Expected Cash Disbursements for Materials


Accounts payable, beginning balance$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

1st Quarter purchases1(0%)1(0%)1(0%)1(0%)1(0%)

2nd Quarter purchases1(0%)1(0%)1(0%)1(0%)1(0%)

3rd purchases1(0%)1(0%)1(0%)1(0%)1(0%)

4th Quarter purchases1(0%)1(0%)1(0%)1(0%)1(0%)

Total cash disbursements for materials$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

(b)Prepare the schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Gaeber IndustriesSchedule of Expected Cash Disbursements for Materials


Accounts payable, beginning balance$14,820$0$0$0$14,820

1st Quarter purchases45,60015,2000060,800

2nd Quarter purchases040,08013,360053,440

3rd purchases0038,52012,84051,360

4th Quarter purchases00044,46044,460

Total cash disbursements for materials$60,420$55,280$51,880$57,300$224,880

Total grade: 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%



Exercise 9-14 Direct Labor and Manufacturing Overhead Budgets [LO5, LO6]

The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:



Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour.

In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter.

Requirement 1:

Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Omit the "$" sign in your response.)

Raredon CorporationDirect Labor Budget

1st quarter2nd quarter3rd quarter4th quarterYear

Total direct labor-hours needed1(0%)1(0%)1(0%)1(0%)1(0%)

Total direct labor cost$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

Exercise 9-14 Direct Labor and Manufacturing Overhead Budgets [LO5, LO6]

The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:



Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour.

In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter.

Requirement 1:

Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Omit the "$" sign in your response.)



Total direct labor-hours needed8,4009,8009,1007,70035,000


Total grade: 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:



Units to be produced12,00014,00013,00011,00050,000

Direct labor time per unit (hours)0.700.700.700.700.70

Total direct labor-hours needed8,4009,8009,1007,70035,000

Direct labor cost per hour$10.50$10.50$10.50$10.50$10.50



Requirement 2:

Prepare the company's manufacturing overhead budget. (Omit the "$" sign in your response.)

Raredon CorporationManufacturing Overhead Budget


Variable manufacturing overhead$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

Fixed manufacturing overhead1(0%)1(0%)1(0%)1(0%)1(0%)

Total manufacturing overhead1(0%)1(0%)1(0%)1(0%)1(0%)

Cash disbursements for manufacturing overhead$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

Requirement 2:

Prepare the company's manufacturing overhead budget. (Omit the "$" sign in your response.)







Total grade: 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:



Budgeted direct labor-hours8,4009,8009,1007,70035,000

Variable overhead rate$1.50$1.50$1.50$1.50$1.50








Exercise 9-12 Sales and Production Budgets [LO2, LO3]

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):



The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200.


Requirement 1:

(a)Calculate the company's total sales. (Omit the "$" sign in your response.)


Total sales$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

Exercise 9-12 Sales and Production Budgets [LO2, LO3]

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):



The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200.


Requirement 1:

(a)Calculate the company's total sales. (Omit the "$" sign in your response.)


Total sales$198,000$216,000$252,000$234,000$900,000

Total grade: 0.01/5 + 0.01/5 + 0.01/5 + 0.01/5 + 0.01/5 = 0% + 0% + 0% + 0% + 0%

Feedback:

Jessi CorporationSales Budget



Selling price per unit $18.00 $18.00 $18.00 $18.00 $18.00

Total sales$198,000$216,000$252,000$234,000$900,000


(b)Prepare the schedule of expected cash collections. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Jessi CorporationSchedule of Expected Cash Collections


Accounts receivable, beginning balance$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

1st Quarter sales1(0%)1(0%)1(0%)1(0%)1(0%)

2nd Quarter sales1(0%)1(0%)1(0%)1(0%)1(0%)

3rd Quarter sales1(0%)1(0%)1(0%)1(0%)1(0%)

4th Quarter sales1(0%)1(0%)1(0%)1(0%)1(0%)

Total cash collections$1(0%)$1(0%)$1(0%)$1(0%)$1(0%)

(b)Prepare the schedule of expected cash collections. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Jessi CorporationSchedule of Expected Cash Collections


Accounts receivable, beginning balance$70,200$0$0$0$70,200

1st Quarter sales128,70059,40000188,100

2nd Quarter sales0140,40064,8000205,200

3rd Quarter sales00163,80075,600239,400

4th Quarter sales000152,100152,100

Total cash collections$198,900$199,800$228,600$227,700$855,000

Total grade: 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 + 0.01/30 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%


Requirement 2:


Jessi CorporationProduction Budget


Budgeted unit sales1(0%)1(0%)1(0%)1(0%)1(0%)


Total units needed1(0%)1(0%)1(0%)1(0%)1(0%)


Required production1(0%)1(0%)1(0%)1(0%)1(0%)

Requirement 2:


Jessi CorporationProduction Budget




Total units needed12,80014,10015,95014,85051,850



Total grade: 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 + 0.01/25 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%


Exercise 10-1 Prepare a Flexible Budget [LO1]

Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company's planning budget for May appears below:

Puget Sound DiversPlanning BudgetFor the Month Ended May 31

Budgeted diving-hours (q)100

Revenue ($365.00q)$36,500

Expenses:

Wages and salaries ($8,000 + $125.00q)20,500

Supplies ($3.00q)300

Equipment rental ($1,800 + $32.00q)5,000

Insurance ($3,400)3,400

Miscellaneous ($630 + $1.80q)810

Total expense30,010

Net operating income$6,490

Required:

During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity. (Input all amounts as positive values. Omit the "$" sign in your response.)

Puget Sound DiversFlexible BudgetFor the Month Ended May 31

Revenue$1(0%)

Expenses:

Wages and salaries1(0%)

Supplies1(0%)

Equipment rental1(0%)

Insurance1(0%)

Miscellaneous1(0%)

Total expense1(0%)

Net operating income$1(0%)

Exercise 10-1 Prepare a Flexible Budget [LO1]

Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company's planning budget for May appears below:

Puget Sound DiversPlanning BudgetFor the Month Ended May 31

Budgeted diving-hours (q)100

Revenue ($365.00q)$36,500

Expenses:


Supplies ($3.00q)300

Equipment rental ($1,800 + $32.00q)5,000

Insurance ($3,400)3,400

Miscellaneous ($630 + $1.80q)810

Total expense30,010


Required:

During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity. (Input all amounts as positive values. Omit the "$" sign in your response.)

Puget Sound DiversFlexible BudgetFor the Month Ended May 31

Revenue$38,325

Expenses:

Wages and salaries21,125

Supplies315

Equipment rental5,160

Insurance3,400

Miscellaneous819

Total expense30,819


Total grade: 0.01/8 + 0.01/8 + 0.01/8 + 0.01/8 + 0.01/8 + 0.01/8 + 0.01/8 + 0.01/8 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Revenue ($365.00 105) = $38,325

Wages and salaries ($8,000 + ($125.00 105)) = $21,125

Supplies ($3.00 105) = $315

Equipment rental ($1,800 + ($32.00 105)) = $5,160

Miscellaneous ($630 + ($1.80 105)) = $819


Exercise 10-2 Prepare a Report Showing Activity Variances [LO2]

Flight Caf is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company's planning budget for July appears below:

Flight CafPlanning BudgetFor the Month Ended July 31

Budgeted meals (q)18,000

Revenue ($4.50q)$81,000

Expenses:

Raw materials ($2.40q)43,200


Utilities ($2,400 + $0.05q)3,300

Facility rent ($4,300)4,300

Insurance ($2,300)2,300

Miscellaneous ($680 + $0.10q)2,480

Total expense66,180


In July, 17,800 meals were actually served. The company's flexible budget for this level of activity appears below:

Flight CafFlexible BudgetFor the Month Ended July 31


Revenue ($4.50q)$80,100

Expenses:



Utilities ($2,400 + $0.05q)3,290


Insurance ($2,300)2,300


Total expense65,610


Required:

Prepare a report showing the company's activity variances for July. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Flight CafActivity VariancesFor the Month Ended July 31

Activity Variances

Revenue$1(0%)U(6%)

Expenses:

Raw materials1(0%)F(6%)

Wages and salaries1(0%)None(0%)

Utilities1(0%)None(0%)

Facility rent1(0%)None(6%)

Insurance1(0%)None(6%)

Miscellaneous1(0%)F(6%)

Total expense1(0%)U(0%)

Net operating income$1(0%)U(6%)


Flight Caf is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company's planning budget for July appears below:

Flight CafPlanning BudgetFor the Month Ended July 31


Revenue ($4.50q)$81,000

Expenses:



Utilities ($2,400 + $0.05q)3,300


Insurance ($2,300)2,300


Total expense66,180


In July, 17,800 meals were actually served. The company's flexible budget for this level of activity appears below:

Flight CafFlexible BudgetFor the Month Ended July 31


Revenue ($4.50q)$80,100

Expenses:



Utilities ($2,400 + $0.05q)3,290


Insurance ($2,300)2,300


Total expense65,610


Required:

Prepare a report showing the company's activity variances for July. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Activity Variances

Revenue$900U

Expenses:

Raw materials480F

Wages and salaries60F

Utilities10F

Facility rent0None

Insurance0None

Miscellaneous20F

Total expense570F

Net operating income$330U

Total grade: 0.01/18 + 1.01/18 + 0.01/18 + 1.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 1.01/18 + 0.01/18 + 1.01/18 + 0.01/18 + 1.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 1.01/18 = 0% + 6% + 0% + 6% + 0% + 0% + 0% + 0% + 0% + 6% + 0% + 6% + 0% + 6% + 0% + 0% + 0% + 6%

Feedback:


PlanningBudgetFlexible BudgetActivity Variances

Meals18,00017,800

Revenue ($4.50q)$81,000$80,100$900U

Expenses:

Raw materials ($2.40q)43,20042,720480F

Wages and salaries ($5,200 + $0.30q)10,60010,54060F

Utilities ($2,400 + $0.05q)3,3003,29010F

Facility rent ($4,300)4,3004,3000None

Insurance ($2,300)2,3002,3000None

Miscellaneous ($680 + $0.10q)2,4802,46020F

Total expense66,18065,610570F

Net operating income$14,820$14,490$330U


Exercise 10-3 Prepare a Report Showing Revenue and Spending Variances [LO3]

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 pounds of oysters in August. The company's flexible budget for August appears below:

Quilcene OysteriaFlexible BudgetFor the Month Ended August 31

Actual pounds (q)8,000

Revenue ($4.00q)$32,000

Expenses:

Packing supplies ($0.50q)4,000

Oyster bed maintenance ($3,200)3,200

Wages and salaries ($2,900 +$0.30q)5,300

Shipping ($0.80q)6,400

Utilities ($830)830

Other ($450 + $0.05q)850

Total expense20,580


The actual results for August appear below:

Quilcene OysteriaIncome StatementFor the Month Ended August 31

Actual pounds8,000

Revenue$35,200

Expenses:

Packing supplies4,200

Oyster bed maintenance3,100


Shipping6,950

Utilities810

Other980

Total expense21,680


Required:

Prepare a report showing the company's revenue and spending variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Quilcene OysteriaRevenue and Spending VariancesFor the Month Ended August 31

Revenue andSpending Variances

Revenue$1(0%)F(6%)

Expenses:

Packing supplies1(0%)F(0%)

Oyster bed maintenance1(0%)U(0%)


Shipping1(0%)F(0%)

Utilities1(0%)None(0%)

Other1(0%)U(6%)


Net operating income$1(0%)F(6%)


Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 pounds of oysters in August. The company's flexible budget for August appears below:

Quilcene OysteriaFlexible BudgetFor the Month Ended August 31

Actual pounds (q)8,000

Revenue ($4.00q)$32,000

Expenses:

Packing supplies ($0.50q)4,000

Oyster bed maintenance ($3,200)3,200

Wages and salaries ($2,900 +$0.30q)5,300

Shipping ($0.80q)6,400

Utilities ($830)830

Other ($450 + $0.05q)850

Total expense20,580


The actual results for August appear below:

Quilcene OysteriaIncome StatementFor the Month Ended August 31

Actual pounds8,000

Revenue$35,200

Expenses:

Packing supplies4,200

Oyster bed maintenance3,100


Shipping6,950

Utilities810

Other980

Total expense21,680


Required:

Prepare a report showing the company's revenue and spending variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Revenue andSpending Variances

Revenue$3,200F

Expenses:

Packing supplies200U

Oyster bed maintenance100F

Wages and salaries340U

Shipping550U

Utilities20F

Other130U

Total expense1,100U

Net operating income$2,100F

Total grade: 0.01/18 + 1.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 0.01/18 + 1.01/18 + 0.01/18 + 1.01/18 + 0.01/18 + 1.01/18 = 0% + 6% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 6% + 0% + 6% + 0% + 6%

Feedback:


FlexibleBudgetActualResultRevenue and Spending Variances

Pounds8,0008,000

Revenue ($4.00q)$32,000$35,200$3,200F

Expenses:

Packing supplies ($0.50q)4,0004,200200U

Oyster bed maintenance ($3,200)3,2003,100100F

Wages and salaries ($2,900 + $0.30q)5,3005,640340U

Shipping ($0.80q)6,4006,950550U

Utilities ($830)83081020F

Other ($450 + $0.05q)850980130U

Total expense20,58021,6801,100U

Net operating income$11,420$13,520$2,100F


Exercise 10-4 Prepare a Flexible Budget Performance Report [LO4]

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company's operations in July appear below:

Vulcan FlyoversOperating DataFor the Month Ended July 31

PlanningBudgetFlexibleBudgetActualBudget

Flights (q)504848

Revenue ($320.00q)$16,000$15,360$13,650

Expenses:

Wages and salaries ($4,000 + $82.00q)8,1007,9368,430

Fuel ($23.00q)1,1501,1041,260

Airport fees ($650 + $38.00q)2,5502,4742,350

Aircraft depreciation ($7.00q)350336336

Office expenses ($190 + $2.00q)290286460

Total expense12,44012,13612,836

Net operating income$3,560$3,224$814

The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:

Prepare a flexible budget performance report for July. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Vulcan FlyoversFlexible Budget Performance ReportFor the Month Ended July 31

Activity VariancesRevenue and Spending Variances

Revenue$1(0%)None(0%)$1(0%)None(0%)

Expenses:

Wages and salaries1(0%)U(0%)1(0%)None(0%)

Fuel1(0%)U(0%)1(0%)U(3%)

Airport fees1(0%)F(3%)1(0%)U(0%)

Aircraft depreciation1(0%)U(0%)1(0%)U(0%)

Office expenses1(0%)F(3%)1(0%)None(0%)

Total expense1(0%)U(0%)1(0%)F(0%)

Net operating income$1(0%)U(3%)$1(0%)F(0%)

Exercise 10-4 Prepare a Flexible Budget Performance Report [LO4]

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company's operations in July appear below:

Vulcan FlyoversOperating DataFor the Month Ended July 31

PlanningBudgetFlexibleBudgetActualBudget

Flights (q)504848

Revenue ($320.00q)$16,000$15,360$13,650

Expenses:

Wages and salaries ($4,000 + $82.00q)8,1007,9368,430

Fuel ($23.00q)1,1501,1041,260

Airport fees ($650 + $38.00q)2,5502,4742,350

Aircraft depreciation ($7.00q)350336336

Office expenses ($190 + $2.00q)290286460

Total expense12,44012,13612,836

Net operating income$3,560$3,224$814

The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:

Prepare a flexible budget performance report for July. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Activity VariancesRevenue and Spending Variances

Revenue$640U$1,710U

Expenses:

Wages and salaries164F494U

Fuel46F156U

Airport fees76F124F

Aircraft depreciation14F0None

Office expenses4F174U

Total expense304F700U

Net operating income$336U$2,410U

Total grade: 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 1.01/32 + 0.01/32 + 1.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 1.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 0.01/32 + 1.01/32 + 0.01/32 + 0.01/32 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 3% + 0% + 3% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 3% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 3% + 0% + 0%

Feedback:


PlanningBudgetActivityVariancesFlexibleBudgetRevenue andSpendingVariancesActualResults

Flights (q)504848

Revenue ($320.00q)$16,000$640U$15,360$1,710U$13,650

Expenses:

Wages and salaries($4,000 + $82.00q)8,100164F7,936494U8,430

Fuel ($23.00q)1,15046F1,104156U1,260

Airport fees ($650 + $38.00q)2,55076F2,474124F2,350

Aircraft depreciation ($7.00q)35014F3360None336

Office expenses ($190 + $2.00q)2904F286174U460

Total expense12,440304F12,136700U12,836

Net operating income$3,560$336U$3,224$2,410U$814


Exercise 10-5 Prepare a Flexible Budget with More Than One Cost Driver [LO5]

Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost driversthe number of cruises and the number of passengersthat it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below:

Fixed CostPer MonthCost perCruiseCost perPassenger

Vessel operating costs$5,200$480.00$2.00

Advertising$1,700

Administrative costs$4,300$24.00$1.00

Insurance$2,900

For example, vessel operating costs should be $5,200 per month plus $480 per cruise plus $2 per passenger. The company's sales should average $25 per passenger. The company's planning budget for July is based on 24 cruises and 1,400 passengers.

Required:

Prepare the company's planning budget for July. (Input all amounts as positive values. Omit the "$" sign in your response.)

Alyeski ToursPlanning BudgetFor the Month Ended July 31

Revenue$1(0%)

Expenses:

Vessel operating costs1(0%)

Advertising1(0%)

Administrative costs1(0%)

Insurance1(0%)

Total expense1(0%)


Exercise 10-5 Prepare a Flexible Budget with More Than One Cost Driver [LO5]

Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost driversthe number of cruises and the number of passengersthat it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below:

Fixed CostPer MonthCost perCruiseCost perPassenger

Vessel operating costs$5,200$480.00$2.00

Advertising$1,700

Administrative costs$4,300$24.00$1.00

Insurance$2,900

For example, vessel operating costs should be $5,200 per month plus $480 per cruise plus $2 per passenger. The company's sales should average $25 per passenger. The company's planning budget for July is based on 24 cruises and 1,400 passengers.

Required:

Prepare the company's planning budget for July. (Input all amounts as positive values. Omit the "$" sign in your response.)

Alyeski ToursPlanning BudgetFor the Month Ended July 31

Revenue$35,000

Expenses:

Vessel operating costs19,520

Advertising1,700

Administrative costs6,276

Insurance2,900

Total expense30,396


Total grade: 0.01/7 + 0.01/7 + 0.01/7 + 0.01/7 + 0.01/7 + 0.01/7 + 0.01/7 = 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Revenue ($25.00 1,400) = $35,000

Vessel operating costs ($5,200 + ($480.00 24) + ($2.00 1,400)) = $19,520

Administrative costs ($4,300 + ($24.00 24) + ($1.00 1,400)) = $6,276


Exercise 10-8 Flexible Budget [LO1]

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company's costs:

Fixed CostPer MonthCost perCar Washed

Cleaning supplies$0.80

Electricity$1,200$0.15

Maintenance$0.20

Wages and salaries$5,000$0.30

Depreciation$6,000

Rent$8,000

Administrative expenses$4,000$0.10

For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 per car washed.

Required:

Prepare the company's planning budget for August. (Input all amounts as positive values. Omit the "$" sign in your response.)

Lavage RapidePlanning BudgetFor the Month Ended August 31

Revenue$1(0%)

Expenses:

Cleaning supplies1(0%)

Electricity1(0%)

Maintenance1(0%)


Depreciation1(0%)

Rent1(0%)

Administrative expenses1(0%)

Total expense1(0%)







Maintenance$0.20


Depreciation$6,000

Rent$8,000



Required:

Prepare the company's planning budget for August. (Input all amounts as positive values. Omit the "$" sign in your response.)

Lavage RapidePlanning BudgetFor the Month Ended August 31

Revenue$44,100

Expenses:

Cleaning supplies7,200

Electricity2,550

Maintenance1,800


Depreciation6,000

Rent8,000

Administrative expenses4,900

Total expense38,150


Total grade: 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Revenue ($4.90 9,000) = $44,100

Cleaning supplies ($0.80 9,000) = $7,200

Electricity ($1,200 + ($0.15 9,000)) = $2,550

Maintenance ($0.20 9,000) = $1,800

Wages and salaries ($5,000 + ($0.30 9,000)) = $7,700

Administrative expenses ($4,000 + ($0.10 9,000)) = $4,900







Maintenance$0.20


Depreciation$6,000

Rent$8,000


For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company actually washed 8,800 cars in August and to collect an average of $4.90 per car washed.

Required:

Prepare the company's flexible budget for August. (Input all amounts as positive values. Omit the "$" sign in your response.)

Lavage RapideFlexible BudgetFor the Month Ended August 31

Revenue$1(0%)

Expenses:

Cleaning supplies1(0%)

Electricity1(0%)

Maintenance1(0%)


Depreciation1(0%)

Rent1(0%)

Administrative expenses1(0%)

Total expense1(0%)







Maintenance$0.20


Depreciation$6,000

Rent$8,000


For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company actually washed 8,800 cars in August and to collect an average of $4.90 per car washed.

Required:

Prepare the company's flexible budget for August. (Input all amounts as positive values. Omit the "$" sign in your response.)

Lavage RapideFlexible BudgetFor the Month Ended August 31

Revenue$43,120

Expenses:


Electricity2,520

Maintenance1,760


Depreciation6,000

Rent8,000


Total expense37,840


Total grade: 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 + 0.01/10 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Revenue ($4.90 8,800) = $43,120

Cleaning supplies ($0.80 8,800) = $7,040

Electricity ($1,200 + ($0.15 8,800)) = $2,520

Maintenance ($0.20 8,800) = $1,760

Wages and salaries ($5,000 + ($0.30 8,800)) = $7,640

Administrative expenses ($4,000 + ($0.10 8,800)) = $4,880







Maintenance$0.20


Depreciation$6,000

Rent$8,000



The actual operating results for August appears below.

Lavage RapideIncome StatementFor the Month Ended August 31

Actual cars washed8,800

Revenue$43,080

Expenses:


Electricity2,670

Maintenance2,260


Depreciation6,000

Rent8,000


Total expense39,940


Required:

Prepare a report showing the company's activity variances for August. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Lavage RapideActivity VariancesFor the Month Ended August 31

Activity Variances

Revenue$1(0%)U(5%)

Expenses:

Cleaning supplies1(0%)None(0%)

Electricity1(0%)None(0%)

Maintenance1(0%)U(0%)

Wages and salaries1(0%)U(0%)

Depreciation1(0%)F(0%)

Rent1(0%)U(0%)

Administrative expenses1(0%)U(0%)


Net operating income$1(0%)U(5%)






Maintenance$0.20


Depreciation$6,000

Rent$8,000






Revenue$43,080

Expenses:


Electricity2,670

Maintenance2,260


Depreciation6,000

Rent8,000


Total expense39,940


Required:

Prepare a report showing the company's activity variances for August. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Activity Variances

Revenue$980U

Expenses:

Cleaning supplies160F

Electricity30F

Maintenance40F

Wages and salaries60F

Depreciation0None

Rent0None

Administrative expenses20F

Total expense310F

Net operating income$670U

Total grade: 0.01/20 + 1.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 1.01/20 = 0% + 5% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 5%

Feedback:


PlanningBudgetFlexible BudgetActivity Variances

Cars washed (q)9,0008,800

Revenue ($4.90q)$44,100$43,120$980U

Expenses:

Cleaning supplies ($0.80q)7,2007,040160F

Electricity ($1,200 + $0.15q)2,5502,52030F

Maintenance ($0.20q)1,8001,76040F

Wages and salaries ($5,000 + $0.30q)7,7007,64060F

Depreciation ($6,000)6,0006,0000None

Rent ($8,000)8,0008,0000None

Administrative expenses($4,000 + $0.10q)4,9004,88020F

Total expense38,15037,840310F

Net operating income$5,950$5,280$670U







Maintenance$0.20


Depreciation$6,000

Rent$8,000






Revenue$43,080

Expenses:


Electricity2,670

Maintenance2,260


Depreciation6,000

Rent8,000


Total expense39,940


Required:

Prepare a report showing the company's revenue and spending variances for August. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Lavage RapideRevenue and Spending VariancesFor the Month Ended August 31

Revenue and Spending Variances

Revenue$1(0%)U(5%)

Expenses:

Cleaning supplies1(0%)F(0%)

Electricity1(0%)None(0%)

Maintenance1(0%)U(5%)


Depreciation1(0%)F(0%)

Rent1(0%)None(5%)

Administrative expenses1(0%)None(0%)


Net operating income$1(0%)F(0%)






Maintenance$0.20


Depreciation$6,000

Rent$8,000






Revenue$43,080

Expenses:


Electricity2,670

Maintenance2,260


Depreciation6,000

Rent8,000


Total expense39,940


Required:

Prepare a report showing the company's revenue and spending variances for August. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Lavage RapideRevenue and Spending VariancesFor the Month Ended August 31

Revenue and Spending Variances

Revenue$40U

Expenses:

Cleaning supplies520U

Electricity150U

Maintenance500U

Wages and salaries860U

Depreciation0None

Rent0None

Administrative expenses70U

Total expense2,100U

Net operating income$2,140U

Total grade: 0.01/20 + 1.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 1.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 1.01/20 + 0.01/20 + 0.01/20 + 0.01/20 + 1.01/20 + 0.01/20 + 0.01/20 = 0% + 5% + 0% + 0% + 0% + 0% + 0% + 5% + 0% + 0% + 0% + 0% + 0% + 5% + 0% + 0% + 0% + 5% + 0%

191422294-20840-3-example-problems-ch-9-10-1

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