Fundamentals of Cost Accounting
5th Edition
ISBN: 9781259565403
Author: William N. Lanen Professor, Shannon Anderson Associate Professor, Michael W Maher
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 13, Problem 27E
Estimate Inventory Levels Using Production Budgets
Flex-Tite manufactures plastic parts. The inventory policy at Flex-Tite is to hold inventory equal to 130% of the average monthly sales for its main product. Sales for the following year are expected to be 900,000 units. Based on the inventory policy, the budget calls for the production of 930,000 units.
Required
What is the beginning inventory of the component?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please help me with show all calculation thanku
Need help with this question
Please give correct answer of this question
Chapter 13 Solutions
Fundamentals of Cost Accounting
Ch. 13 - Prob. 1RQCh. 13 - Prob. 2RQCh. 13 - Prob. 3RQCh. 13 - What role does the master budget play in the...Ch. 13 - What problems might arise if a firm relies solely...Ch. 13 - What is the coordinating role of budgeting?Ch. 13 - Prob. 7RQCh. 13 - Write out the inventory equation that is used to...Ch. 13 - What makes creating budgets for marketing and...Ch. 13 - Prob. 10RQ
Ch. 13 - Preparing a budget is a waste of time. The...Ch. 13 - In the Business Application feature, Using the...Ch. 13 - Prob. 13CADQCh. 13 - Would the budgeting plans for a company that uses...Ch. 13 - Government agencies are limited in spending by...Ch. 13 - What is the difference between the planning and...Ch. 13 - When might the master budget start with a forecast...Ch. 13 - In some organizations (firms, universities,...Ch. 13 - Our cash budget shows a surplus for the quarter,...Ch. 13 - Your boss asks for your estimate on the costs of a...Ch. 13 - The chapter identified four techniques used for...Ch. 13 - Estimate Sales Revenues Stubs-R-Us is a local...Ch. 13 - Estimate Sales Revenues Friendly Financial has 160...Ch. 13 - Estimate Sales Revenues Larson, Inc., manufactures...Ch. 13 - Estimate Production Levels Offenbach Son has just...Ch. 13 - Estimate Sales Levels Using Production Budgets...Ch. 13 - Estimate Inventory Levels Using Production Budgets...Ch. 13 - Estimate Production Levels: Capacity Constraints...Ch. 13 - Prob. 29ECh. 13 - Estimate Purchases and Cash Disbursements Midland...Ch. 13 - Estimate Purchases and Cash Disbursements Lakeside...Ch. 13 - Estimate Cash Disbursements Cascade, Ltd., a...Ch. 13 - Estimate Cash Collections Minot Corporation is...Ch. 13 - Estimate Cash Collections Ewing Company is...Ch. 13 - Estimate Cash Receipts Scare-2-B-U (S2BU)...Ch. 13 - Estimate Cash Receipts Varmit-B-Gone is a pest...Ch. 13 - Prob. 37ECh. 13 - Prepare Budgeted Financial Statements Cycle-1 is a...Ch. 13 - Prepare Budgeted Financial Statements Carreras Caf...Ch. 13 - Budgeting in a Service Organization Executive...Ch. 13 - Prob. 41ECh. 13 - Prob. 42ECh. 13 - Prob. 43ECh. 13 - Prob. 44ECh. 13 - Sensitivity Analysis Sanjanas Sweet Shoppe...Ch. 13 - Sensitivity Analysis Classic Limo, Inc., provides...Ch. 13 - Prepare Budgeted Financial Statements The...Ch. 13 - Prob. 48PCh. 13 - Prepare Budgeted Financial Statements Gulf States...Ch. 13 - Prob. 50PCh. 13 - Prob. 51PCh. 13 - Prepare a Production Budget Haggstrom, Inc.,...Ch. 13 - Sales Expense Budget SPU, Ltd., has just received...Ch. 13 - Budgeted Purchases and Cash Flows Mast Corporation...Ch. 13 - Prepare Budgeted Financial Statements HomeSuites...Ch. 13 - Prepare Budgeted Financial Statements: Comparing...Ch. 13 - Comprehensive Budget Plan Brighton, Inc.,...Ch. 13 - Comprehensive Budget Plan Panther Corporation...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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_forwardOperating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow: The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: a. Finished goods inventory on January 1 is 32,000 units, each costing 166.06. The desired ending inventory for each month is 80% of the next months sales. b. The data on materials used are as follows: Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of the next months production needs. This is exactly the amount of material on hand on December 31 of the prior year. c. The direct labor used per unit of output is 3 hours. The average direct labor cost per hour is 14.25. d. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labor hours.) e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Note: Activity is measured in units sold.) f. The unit selling price of the subassembly is 205. g. All sales and purchases are for cash. The cash balance on January 1 equals 400,000. The firm requires a minimum ending balance of 50,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due (cash borrowed at the end of the quarter is repaid at the end of the following quarter). The interest rate is 12% per annum. No money is owed at the beginning of January. Required: 1. Prepare a monthly operating budget for the first quarter with the following schedules. (Note: Assume that there is no change in work-in-process inventories.) a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget e. Overhead budget f. Selling and administrative expenses budget g. Ending finished goods inventory budget h. Cost of goods sold budget i. Budgeted income statement j. Cash budget 2. CONCEPTUAL CONNECTION Form a group with two or three other students. Locate a manufacturing plant in your community that has headquarters elsewhere. Interview the controller for the plant regarding the master budgeting process. Ask when the process starts each year, what schedules and budgets are prepared at the plant level, how the controller forecasts the amounts, and how those schedules and budgets fit in with the overall corporate budget. Is the budgetary process participative? Also, find out how budgets are used for performance analysis. Write a summary of the interview.arrow_forwardHow many units are in beginning inventory if 32,000 units are budgeted for sales, 35,000 units are produced, and the desired ending inventory is 9,000 units?arrow_forward
- Palmgren Company produces consumer products. The sales budget for four months of the year is presented below. Company policy requires that ending inventories for each month be 25 percent of next months sales. At the beginning of July, the beginning inventory of consumer products met that policy. Required: Prepare a production budget for the third quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.arrow_forwardPilsner Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: Pilsner typically pays 25% on account in the month of billing and 75% the next month. Required: 1. How much cash is required for payments on account in May? 2. How much cash is expected for payments on account in June?arrow_forwardOne Device makes universal remote controls and expects to sell 500 units in January, 800 in February, 450 in March, 550 in April, and 600 in May. The required ending inventory is 20% of the next months sales. Prepare a production budget for the first four months of the year.arrow_forward
- Rehydrator makes a nutrition additive and expects to sell 3,000 units in January, 2,000 in February, 2,500 in March, 2,700 in April. and 2,900 in May. The required ending inventory is 20% of the next months sales, and the beginning inventory on January 1 was 600 units. Prepare a production budget for the first four months of the year.arrow_forwardThe sales department of Macro Manufacturing Co. has forecast sales for its single product to be 20,000 units for June, with three-quarters of the sales expected in the East region and one-fourth in the West region. The budgeted selling price is 25 per unit. The desired ending inventory on June 30 is 2,000 units, and the expected beginning inventory on June 1 is 3,000 units. Prepare the following: a. A sales budget for June. b. A production budget for June.arrow_forwardNozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is 250,000 and 50,000 sales orders are estimated to be processed. a. Determine the activity rate of the sales order processing activity. b. Determine the amount of sales order processing cost associated with 30,000 sales orders.arrow_forward
- Digital Solutions Inc. uses flexible budgets that are based on the following data: Prepare a flexible selling and administrative expenses budget for October for sales volumes of 500,000, 750,000, and 1,000,000.arrow_forwardSunrise Poles manufactures hiking poles and is planning on producing 4,000 units in March and 3,700 in April. Each pole requires a half pound of material, which costs $1.20 per pound. The companys policy is to have enough material on hand to equal 10% of the next months production needs and to maintain a finished goods inventory equal to 25% of the next months production needs. What is the budgeted cost of purchases for March?arrow_forwardCash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent 50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of 40,000, marketable securities of 75,000, and accounts receivable of 300,000 (60,000 from July sales and 240,000 from August sales). Sales on account for July and August were 200,000 and 240,000, respectively. Current liabilities as of September 1 include 40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 55,000 will be made in October. Bridgeports regular quarterly dividend of 25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of 50,000. Instructions Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY