Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 7, Problem 6P
Preparing a flexible budget
Use the information in Figure 7-12 of the chapter.
Required:
Prepare flexible budgets for the production and sale of 29,000 units and 31,000 units, respectively.
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Marigold manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets:
2,690 canoes, 3,340 canoes, and 3,880 canoes, Canoes sell for $950 each. The standard variable cost information for a canoe is as
follows.
Direct materials
Direct labor
Variable overhead
Utilities
Indirect material
Indirect labor
Total
Insurance
$264
Rent
110
Total
35
30
Annual fixed overhead cost is expected to be:
60
Maintenance $ 21,700
Depreciation
43,000
29,600
32,380
$ 126,680
$ 499
3. Using the format demonstrated in your textbook - Prepare the
following budgets (be sure to show/demonstrate ALL calculations
- include quarterly AND yearly totals) in excel or google drive:
a. production budget
b. direct materials budget
c. direct labor budget
d. manufacturing overhead budget
e. selling and administrative budget
On the production budget, the number of units to be produced is computed as
Select one:
a.
unit sales + desired end inventory + beginning inventory.
b. unit sales - desired end inventory - beginning inventory.
c. unit sales - desired end inventory + beginning inventory.
d. unit sales + desired end inventory - beginning inventory.
e. unit sales - cost of goods sold + beginning inventory.
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Chapter 7 Solutions
Principles of Cost Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Explain zero-based budgeting and how it differs...Ch. 7 - Prob. 6QCh. 7 - Which operating budget must be prepared before the...Ch. 7 - Prob. 8QCh. 7 - Why is it important to have front-line managers...Ch. 7 - If the sales forecast estimates that 50,000 units...
Ch. 7 - What are the advantages and disadvantages of each...Ch. 7 - What three operating budgets can be prepared...Ch. 7 - Prob. 13QCh. 7 - What are the three budgets that are needed in...Ch. 7 - Why might Web-based budgeting be more useful than...Ch. 7 - What is a flexible budget?Ch. 7 - Why is a flexible budget better than a master...Ch. 7 - Why is it important to distinguish between...Ch. 7 - Why is the concept of relevant range important...Ch. 7 - In comparing actual sales revenue to flexible...Ch. 7 - How would you define the following? a. Theoretical...Ch. 7 - Is it possible for a factory to operate at more...Ch. 7 - If a factory operates at 100% of capacity one...Ch. 7 - How is the standard cost per unit for factory...Ch. 7 - When allocating service department costs to...Ch. 7 - The sales department of Macro Manufacturing Co....Ch. 7 - The sales department of F. Pollard Manufacturing...Ch. 7 - Barnes Manufacturing Co. forecast October sales to...Ch. 7 - Prepare a cost of goods sold budget for the Crest...Ch. 7 - Prepare a cost of goods sold budget for MacLaren...Ch. 7 - Roman Inc. has the following totals from its...Ch. 7 - Starburst Inc. has the following items and amounts...Ch. 7 - Using the following per-unit and total amounts,...Ch. 7 - Cortez Manufacturing, Inc. has the following...Ch. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Calculating factory overhead The normal capacity...Ch. 7 - The Sales Department of Minimus Inc. has forecast...Ch. 7 - Sales, production, direct materials, direct labor,...Ch. 7 - Budgeted selling and administrative expenses for...Ch. 7 - Prob. 4PCh. 7 - Selling and administrative expense budget and...Ch. 7 - Preparing a flexible budget Use the information in...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Flexible budget for factory overhead Presented...Ch. 7 - Prob. 10PCh. 7 - Overhead application rate Creole Manufacturing...Ch. 7 - Overhead application rate Roll Tide Manufacturing...Ch. 7 - Flexible budgeting, performance measurement, and...
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- Prepare a flexible budgeted income for 120,000 units using the following information from a static budget for 100,000 units:arrow_forwardPrepare a flexible budgeted income statement for 47,000 units using the following information from a static budget for 45,000 units:arrow_forwardUsing the provided budgeted information for production of 10,000 and 15,000 units, prepare a flexible budget for 17,000 units.arrow_forward
- Refer to Cornerstone Exercise 8.6. Required: 1. Calculate the total budgeted cost of units produced for Play-Disc for the coming year. Show the cost of direct materials, direct labor, and overhead. 2. Prepare a cost of goods sold budget for Play-Disc for the year. 3. What if the beginning inventory of finished goods was 75,200 (for 16,000 units)? How would that affect the cost of goods sold budget? (Assume Play-Disc uses the FIFO method.) Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs: For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 285,000 of them. Budgeted beginning inventory in units is 16,000 with unit cost of 4.75. (There are no beginning or ending inventories of work in process.) Required: 1. Prepare an ending finished goods inventory budget for Play-Disc for the coming year. 2. What if sales increased to 290,000 discs? How would that affect the ending finished goods inventory budget? Calculate the value of budgeted ending finished goods inventory.arrow_forwardPreparing a performance report Use the flexible budget prepared in P7-6 for the 31,000-unit level and the actual operating results listed below for the 31,000-unit level. Required: 1. Prepare a performance report. 2. List the major reasons why the actual operating income at 31,000 units differs from the master budget operating income at 30,000 units in Figure 7-12. 3. Given the level at which the company operated, how was its cost control? Item Direct materials: Direct labor:arrow_forwardPreparing a performance report Use the flexible budget prepared in P7-6 for the 29,000-unit level of activity and the actual operating results listed below for the 29,000- unit level. Required: 1. Prepare a performance report. 2. List the major reasons why the actual operating income at 29,000 units differs from the master budget operating income at 30,000 units in Figure 7-12. 3. Given the level at which the company operated, how was its cost control? Item Direct materials: Direct labor:arrow_forward
- Please help mearrow_forwardDo not give image formatarrow_forwardEvaluate the following statements related to creating budget: I. In a production budget if the number of units in the finished goods inventory at the end of the period is less than the number of units in the finished goods inventory at the beginning of the period then the expected number of units sold is less than the number of units to be produced during the period Ii. in the merchandise purchases budget, the required purchases in units for a period can be determined by subtracting the beginning merchandise Inventory in units from the total of budgeted sales in unit and desired ending merchandise inventory (unit) III. When preparing a direct materials budget the beginning inventory for raw materials should be added to production needs, and the desired ending inventory should be subtracted to determine the amount of raw materials to be purchased Answer: ???arrow_forward
- x Thomas Co. provides the following fixed budget data for the year: Sales (20,000 units) Cost of sales: Direct materials Direct labor Variable overhead Fixed overhead Gross profit Operating expenses: Fixed Variable Income from operations The company's actual activity for the Sales (21,000 units) Cost of goods sold: Direct materials Direct labor Variable overhead Fixed overhead Gross profit Operating expenses: Fixed Variable Income from operations F3 $200,000 160.000 60,000 80,000 $ 12,000 40.000 year follows: $231.000 168,000 73.500 77.500 12.000 39.500 F6 $600,000 500,000 $100,000 52.000 $ 48,000 $651,000 550.000 $101.000 51.500 $49.500 F7 F8arrow_forwardplease answer in text form and in proper format answer with must explanation , calculation for each part and steps clearlyarrow_forwardPlease avoid handwritten solution thankuarrow_forward
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