Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Question 2
The role of management accountants has been well-known to the corporate world as they widely
contribute for performing planning, controlling and decision making functions effectively and
efficiently through providing solid accounting information with good analysis. Liebherr Industries
has been growing in terms of revenue and its customer base over the past decade. The Board of
Directors of the company has been claiming that they should have one management accountant for
their company to achieve better performance in the coming periods.
Production and Cost Details
Liebherr manufactures and sells many replacement parts for its equipment. PX-111 is one of such
parts that has following cost and selling price structure:
Information
Selling Price
Direct Material
Direct Labour cost
Number of labor hours needed to
manufacture one unit of product
Fixed Costs for the company
$ per unit
700
300
(per unit of material)
50 per hour
300
300
6 hours
$40,000
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Transcribed Image Text:Question 2 The role of management accountants has been well-known to the corporate world as they widely contribute for performing planning, controlling and decision making functions effectively and efficiently through providing solid accounting information with good analysis. Liebherr Industries has been growing in terms of revenue and its customer base over the past decade. The Board of Directors of the company has been claiming that they should have one management accountant for their company to achieve better performance in the coming periods. Production and Cost Details Liebherr manufactures and sells many replacement parts for its equipment. PX-111 is one of such parts that has following cost and selling price structure: Information Selling Price Direct Material Direct Labour cost Number of labor hours needed to manufacture one unit of product Fixed Costs for the company $ per unit 700 300 (per unit of material) 50 per hour 300 300 6 hours $40,000
Estimations for the next year 2021
The company has estimated the following information;
(i) Sales Estimations
First Quarter
Second
Third Quarter Fourth Quarter
Quarter
Number
of
units to be sold
1,000
1,100
1,200
1,300
(Units)
(ii) Inventory estimations
Inventory
Finished Goods
Materials
Required:
Beginning
(first quarter)
200 units
$120,000
Ending
The company desires to have an ending
inventory each quarter equal to 25% of the next
quarter's sales. The first quarter's sales for
the following year (2022) is expected to be
1.400 units
The company desires the ending balance in
materials inventory to be 45% of the next
quarter's cost of materials. The cost of materials
for the first quarter in the following year (2022)
is expected to be $170,400
Based on the estimated information given above, prepare
A. Sales Budget
B. Production Budget |
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Transcribed Image Text:Estimations for the next year 2021 The company has estimated the following information; (i) Sales Estimations First Quarter Second Third Quarter Fourth Quarter Quarter Number of units to be sold 1,000 1,100 1,200 1,300 (Units) (ii) Inventory estimations Inventory Finished Goods Materials Required: Beginning (first quarter) 200 units $120,000 Ending The company desires to have an ending inventory each quarter equal to 25% of the next quarter's sales. The first quarter's sales for the following year (2022) is expected to be 1.400 units The company desires the ending balance in materials inventory to be 45% of the next quarter's cost of materials. The cost of materials for the first quarter in the following year (2022) is expected to be $170,400 Based on the estimated information given above, prepare A. Sales Budget B. Production Budget |
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