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Bramlett Company produces and sells two different product: Thingone and Thingtwo. Company uses two different production department dedicated for each product. All the other activities in the company are combined in two Support Departments. These Support Departments are responsible of supplying services to the production departments these costs are allocated to each department by using the manufacturing labor hour used. Addition to all the Company has Marketing and Distribution activity fixed costs $680,000 and $362,000 respectively. In 2014 the following data is gathered to prepare the 2015 budget: 2015 PROJECTED SALES 2015 INVENTORIES IN UNITS Product Units Price Begining Inventory Ending Inventory Thingone 60,000 $165 20,000 25,000 Thingtwo 40,000 $220 8,000 9,000 Budgeted AMOUNT USED PER 2015 INVENTORIES IN UNITS UNIT Direct Unit Unit Thingone Thingtwo Begining Ending Materials Price Inventory Inventory A kg $12 4 5 32,000 36,000 B kg $5 2 3 29,000 32,000 C unit $3 0 1 6,000 7,000 Product Thingone Thingtwo DIRECT MANUFACTURING LABOR HOURS Hours per Unit Rate per Hour 2 $16 3 $16 Support Fixed Variable Department Cost Cost Sup1 $1,200,000 $3 Sup2 $2,640,000 $2 Non- Fixed Variable Cost Manufacturing Cost Thingone Thingtwo Costs Marketing $400,000 $2 $4 Distribution $300,000 $0,5 $0,8 COMPANY'S ASSUMPTIONS IN PREPARATION OF THE BUDGET 1. The FIFO inventory method is used. 2. Direct Method used while allocating the support department costs to operating departments. 3. Cost of materials and labor are given as an average value therefore there is no price difference expected WCCR MORIS

Bramlett Company produces and sells two different product: Thingone and Thingtwo. Company uses two different production department dedicated for each product. All the other activities in the company are combined in two Support Departments. These Support Departments are responsible of supplying services to the production departments these costs are allocated to each department by using the manufacturing labor hour used. Addition to all the Company has Marketing and Distribution activity fixed costs $680,000 and $362,000 respectively. In 2014 the following data is gathered to prepare the 2015 budget: 2015 PROJECTED SALES 2015 INVENTORIES IN UNITS Product Units Price Begining Inventory Ending Inventory Thingone 60,000 $165 20,000 25,000 Thingtwo 40,000 $220 8,000 9,000 Budgeted AMOUNT USED PER 2015 INVENTORIES IN UNITS UNIT Direct Unit Unit Thingone Thingtwo Begining Ending Materials Price Inventory Inventory A kg $12 4 5 32,000 36,000 B kg $5 2 3 29,000 32,000 C unit $3 0 1 6,000 7,000 Product Thingone Thingtwo DIRECT MANUFACTURING LABOR HOURS Hours per Unit Rate per Hour 2 $16 3 $16 Support Fixed Variable Department Cost Cost Sup1 $1,200,000 $3 Sup2 $2,640,000 $2 Non- Fixed Variable Cost Manufacturing Cost Thingone Thingtwo Costs Marketing $400,000 $2 $4 Distribution $300,000 $0,5 $0,8 COMPANY'S ASSUMPTIONS IN PREPARATION OF THE BUDGET 1. The FIFO inventory method is used. 2. Direct Method used while allocating the support department costs to operating departments. 3. Cost of materials and labor are given as an average value therefore there is no price difference expected WCCR MORIS

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 1CMA
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PART A REQUIREMENTS: 1. Prepare the Revenues Budget. 2. Prepare the Production Budget (in Units). 3. Prepare the Direct Material Usage Budget and Direct Material Purchases Budget. 4. Prepare the Direct Manufacturing Labor Costs Budget. 5. Prepare the Manufacturing Overhead Costs Budget. 6. Prepare the Ending Inventories Budget. 7. Prepare the Cost of Goods Sold Budget. 8. Prepare the Nonmanufacturing Cost Budget. 9. Prepare the Budgeted Income Statements. PART B REQUIREMENTS: For the given data below calculate all the variances for Level 1,2, and 3 analysis. Explain the performance of the company. 2015 ACTUAL SALES 2015 INVENTORIES IN UNITS Product Units Price Begining Inventory Ending Inventory Thingone 58,000 $167 20,000 | 27,000 Thingtwo | 46,000 $218 8,000 3,000 2015 INVENTORIES IN Actual UNITS Direct Unit Unit Begining Ending Materials Price Inventory Inventory Changes A kg 4% 32,000 30,000 increase B kg 3% 29,000 25,000 decrease C unit No 6,000 5,000 change All other costs increase 8% comparing to the previous year's prices. But the workers are not happy with this new pricing policy and they slowed the work 4%. PART C REQUIREMENTS: With respect to actual data given in PART C calculate the number of sales from each unit if the company wants to increase the revenue 15%. Assume that the sales mix of budgetted data in PART A is attained.
Transcribed Image Text:PART A REQUIREMENTS: 1. Prepare the Revenues Budget. 2. Prepare the Production Budget (in Units). 3. Prepare the Direct Material Usage Budget and Direct Material Purchases Budget. 4. Prepare the Direct Manufacturing Labor Costs Budget. 5. Prepare the Manufacturing Overhead Costs Budget. 6. Prepare the Ending Inventories Budget. 7. Prepare the Cost of Goods Sold Budget. 8. Prepare the Nonmanufacturing Cost Budget. 9. Prepare the Budgeted Income Statements. PART B REQUIREMENTS: For the given data below calculate all the variances for Level 1,2, and 3 analysis. Explain the performance of the company. 2015 ACTUAL SALES 2015 INVENTORIES IN UNITS Product Units Price Begining Inventory Ending Inventory Thingone 58,000 $167 20,000 | 27,000 Thingtwo | 46,000 $218 8,000 3,000 2015 INVENTORIES IN Actual UNITS Direct Unit Unit Begining Ending Materials Price Inventory Inventory Changes A kg 4% 32,000 30,000 increase B kg 3% 29,000 25,000 decrease C unit No 6,000 5,000 change All other costs increase 8% comparing to the previous year's prices. But the workers are not happy with this new pricing policy and they slowed the work 4%. PART C REQUIREMENTS: With respect to actual data given in PART C calculate the number of sales from each unit if the company wants to increase the revenue 15%. Assume that the sales mix of budgetted data in PART A is attained.
Bramlett Company produces and sells two different product: Thingone and Thingtwo. Company uses two different production department dedicated for each product. All the other activities in the company are combined in two Support Departments. These Support Departments are responsible of supplying services to the production departments these costs are allocated to each department by using the manufacturing labor hour used. Addition to all the Company has Marketing and Distribution activity fixed costs $680,000 and $362,000 respectively. In 2014 the following data is gathered to prepare the 2015 budget: 2015 PROJECTED SALES 2015 INVENTORIES IN UNITS Begining Inventory 20,000 Product Units Price Ending Inventory Thingone 60,000 $165 25,000 Thingtwo 40,000 $220 8,000 9,000 Budgeted AMOUNT USED PER 2015 INVENTORIES IN UNITS UNIT Direct Unit Unit Thingone Thingtwo Begining Ending Materials Price Inventory Inventory A kg S12 4 5 32,000 36,000 kg $5 2 3 29,000 32,000 unit $3 1 6,000 7,000 DIRECT MANUFACTURING LABOR HOURS Product Hours per Unit Rate per Hour Thingone $16 Thingtwo 3 $16 Support Fixed Variable Department Cost Cost Supl $1,200,000 $3 Sup2 $2,640,000 $2 Non- Fixed Variable Cost Manufacturing Cost Thingone Thingtwo Costs Marketing $400,000 | $2 $4 Distribution $300,000 $0,5 $,8 COMPANY'S ASSUMPTIONS IN PREPARATION OF THE BUDGET 1. The FIFO inventory method is used. 2. Direct Method used while allocating the support department costs to operating departments. 3. Cost of materials and labor are given as an average value therefore there is no price difference expectoeeno
Transcribed Image Text:Bramlett Company produces and sells two different product: Thingone and Thingtwo. Company uses two different production department dedicated for each product. All the other activities in the company are combined in two Support Departments. These Support Departments are responsible of supplying services to the production departments these costs are allocated to each department by using the manufacturing labor hour used. Addition to all the Company has Marketing and Distribution activity fixed costs $680,000 and $362,000 respectively. In 2014 the following data is gathered to prepare the 2015 budget: 2015 PROJECTED SALES 2015 INVENTORIES IN UNITS Begining Inventory 20,000 Product Units Price Ending Inventory Thingone 60,000 $165 25,000 Thingtwo 40,000 $220 8,000 9,000 Budgeted AMOUNT USED PER 2015 INVENTORIES IN UNITS UNIT Direct Unit Unit Thingone Thingtwo Begining Ending Materials Price Inventory Inventory A kg S12 4 5 32,000 36,000 kg $5 2 3 29,000 32,000 unit $3 1 6,000 7,000 DIRECT MANUFACTURING LABOR HOURS Product Hours per Unit Rate per Hour Thingone $16 Thingtwo 3 $16 Support Fixed Variable Department Cost Cost Supl $1,200,000 $3 Sup2 $2,640,000 $2 Non- Fixed Variable Cost Manufacturing Cost Thingone Thingtwo Costs Marketing $400,000 | $2 $4 Distribution $300,000 $0,5 $,8 COMPANY'S ASSUMPTIONS IN PREPARATION OF THE BUDGET 1. The FIFO inventory method is used. 2. Direct Method used while allocating the support department costs to operating departments. 3. Cost of materials and labor are given as an average value therefore there is no price difference expectoeeno
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