I need help on this. It's lengthy and I don't know where to start. The sales department of Donovan Manufacturing, Inc. has completed the following sales forecast for the months of January through March 20X1 for its only two products: 50,000 units of J to be sold at $90 each and 30,000 units of K to be sold at $70 each. The desired unit inventories at March 31, 20X1, are 10% of the next quarter's unit sales forecast, which are 60,000 units of J and 30,000 units of K. The January 1, 20X1, unit inventories were 5,000 units of J and 2,000 units of K. Each unit of J requires 3 pounds of material A and 2 pounds of material B for its manufacture; K requires 2 pounds of A and 4 pounds of B. The purchase cost of A is $9 per pound and the purchase cost of B is $5 per pound. Materials A and B on hand at January 1, 20X1, were 19,000 pounds of A and 7,000 pounds of B. Desired inventories at March 31, 20X1, are 14,000 pounds of A and 8,000 pounds of B. Each unit of J requires 0.5 hours of direct labor in the factory; each unit of K requires 1.0 hour of direct labor. The average hourly rate for direct labor is $12 per hour. Estimated manufacturing overhead cost is $6 per direct labor hour plus $90,0000 per month. Selling and administrative expenses are estimated to be 10% of sales revenue plus $180,000 per month. Cash sales for the first quarter are estimated to be $300,000 per month. It is forecast that 30% of the credit sales for the quarter ended March 31, 20X1, will occur in January, 30% in February, and 40% in March. Of credit sales (December through March), 40% will be collected as cash in the month of sale and 55% will be collected in the following month. The remainder will be uncollectible. Cash collected in January 20X1 from December 20X0 sales will be $1,050,000. The January 1, 20X1, cash balance was $70,000. The minimum acceptable cash balance at the end of each month is $60,000. Short-term borrowings (6-month term) are made in muliples of $10,000. Interest is charged at the rate of 1% per month on short-term borrowings. The first interest payment is made the month following the borrowing. Cash disbursements (excluding interest on short-term borrowings) are estimated as follows: January February March Manufacturing costs $1,500,000 $1,300,000 $1,400,000 Selling and admin expenses $390,000 $410,000 $400,000 Interest expense $90,000 $90,000 $90,000 Income tax payment 0 0 $210,000 Capital expenditures $124,000 $110,000 $50,000 Cash dividends $300,000 0 0 Required: a) Prepare the sales budget for the quarter ended March 31, 20X1. b) Prepare the production budget for the quarter ended March 31, 20X1. c) Prepare the direct materials budget for the quarter ended March 31, 20X1. d) Prepare the direct labor budget for the quarter ended March 31, 20X1. e) Prepare the manufacturing overhead budget for the quarter ended March 31, 20X1. f) Prepare the selling and adminstrative expense budget for the quarter ended March 31, 20X1. g) Prepare a schedule of cash collected from customers for the quarter ended March 31, 20X1. h.) Prepare the cash budget for the quarter ended March 31, 20X1. My note: If you can only help with a few at a time, I understand. Start with a)
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
I need help on this. It's lengthy and I don't know where to start.
The sales department of Donovan Manufacturing, Inc. has completed the following sales
Each unit of J requires 3 pounds of material A and 2 pounds of material B for its manufacture; K requires 2 pounds of A and 4 pounds of B. The purchase cost of A is $9 per pound and the purchase cost of B is $5 per pound. Materials A and B on hand at January 1, 20X1, were 19,000 pounds of A and 7,000 pounds of B. Desired inventories at March 31, 20X1, are 14,000 pounds of A and 8,000 pounds of B.
Each unit of J requires 0.5 hours of direct labor in the factory; each unit of K requires 1.0 hour of direct labor. The average hourly rate for direct labor is $12 per hour. Estimated manufacturing
Cash sales for the first quarter are estimated to be $300,000 per month. It is forecast that 30% of the credit sales for the quarter ended March 31, 20X1, will occur in January, 30% in February, and 40% in March. Of credit sales (December through March), 40% will be collected as cash in the month of sale and 55% will be collected in the following month. The remainder will be uncollectible. Cash collected in January 20X1 from December 20X0 sales will be $1,050,000.
The January 1, 20X1, cash balance was $70,000. The minimum acceptable cash balance at the end of each month is $60,000. Short-term borrowings (6-month term) are made in muliples of $10,000. Interest is charged at the rate of 1% per month on short-term borrowings. The first interest payment is made the month following the borrowing. Cash disbursements (excluding interest on short-term borrowings) are estimated as follows:
| January | February | March | |
| $1,500,000 | $1,300,000 | $1,400,000 | |
| Selling and admin expenses | $390,000 | $410,000 | $400,000 |
| Interest expense | $90,000 | $90,000 | $90,000 |
| Income tax payment | 0 | 0 | $210,000 |
| Capital expenditures | $124,000 | $110,000 | $50,000 |
| Cash dividends | $300,000 | 0 | 0 |
Required:
a) Prepare the sales budget for the quarter ended March 31, 20X1.
b) Prepare the production budget for the quarter ended March 31, 20X1.
c) Prepare the direct materials budget for the quarter ended March 31, 20X1.
d) Prepare the direct labor budget for the quarter ended March 31, 20X1.
e) Prepare the manufacturing overhead budget for the quarter ended March 31, 20X1.
f) Prepare the selling and adminstrative expense budget for the quarter ended March 31, 20X1.
g) Prepare a schedule of cash collected from customers for the quarter ended March 31, 20X1.
h.) Prepare the
My note: If you can only help with a few at a time, I understand. Start with a)
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