Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem 6.35P
Budget schedules for a manufacturer. Hale Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased from the licensed logo store site. The teams are as follows:
- Broncos, with red blankets and the Broncos logo
- Rams, with black blankets and the Rams logo
Also, the black blankets are slightly larger than the red blankets.
The budgeted direct-cost inputs for each product in 2017 are as follows:
| Broncos Blanket | Rams Blanket | |
| Red wool fabric | 5 yards | 0 yards |
| Black wool fabric | 0 | 6 |
| Broncos logo patches | 1 | 0 |
| Rams logo patches | 0 | 1 |
| Direct manufacturing labor | 4 hours | 5 hours |
Unit data pertaining to the direct materials for March 2017 are as follows:
Actual Beginning Direct Materials Inventory (3/1/2017)
| Broncos Blanket | Rams Blanket | |
| Red wool fabric | 40 yards | 0 yards |
| Black wool fabric | 0 | 20 |
| Broncos logo patches | 50 | 0 |
| Rams logo patches | 0 | 65 |
Target Ending Direct Materials Inventory (3/31/2017)
| Broncos Blanket | Rams Blanket | |
| Red wool fabric | 30 yards | 0 yards |
| Black wool fabric | 0 | 20 |
| Broncos logo patches | 30 | 0 |
| Rams logo patches | 0 | 30 |
Unit cost data for direct-cost inputs pertaining to February 2017 and March 2017 are as follows:
| February 2017 (actual) | March 2017 (budgeted) | |
| Red wool fabric (per yard) | $10 | $11 |
| Black wool fabric (per yard) | 14 | 13 |
| Broncos logo patches (per patch) | 8 | 8 |
| Rams logo patches (per patch) | 7 | 9 |
| 27 | 28 |
Manufacturing
| Broncos Blankets | Rams Blankets | |
| Beginning inventory in units | 14 | 19 |
| Beginning inventory in dollars (cost) | $1,960 | $2,945 |
| Target ending inventory in units | 24 | 29 |
Budgeted sales for March 2017 are 140 units of the Broncos blankets and 195 units of the Rams blankets. The budgeted selling prices per unit in March 2017 are $305 for the Broncos blankets and $378 for the Rams blankets. Assume the following in your answer:
- Work-in-process inventories are negligible and ignored.
- Direct materials inventory and finished-goods inventory are costed using the FIFO method.
- Unit costs of direct materials purchased and finished goods are constant in March 2017.
- 1. Prepare the following budgets for March 2017:
Required
- a. Revenues budget
- b. Production budget in units
- c. Direct material usage budget and direct materials purchases budget
- d. Direct manufacturing labor costs budget
- e. Manufacturing overhead costs budget
- f. Ending inventories budget (direct materials and finished goods)
- g. Cost of goods sold budget
- 2. Suppose Hale Specialties decides to incorporate continuous improvement into its budgeting process. Describe two areas where it could incorporate continuous improvement into the budget schedules in requirement 1.
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Lace Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased from the licensed logo store site. The teams are as follows:
•
Knights, with red blankets and the Knights logo
•
Raiders, with black blankets and the Raider logo
Also, the black blankets are slightly larger than the red blankets.
Additional information follows:
The budgeted direct-cost inputs for each product in 2013 are as follows:
Knights Blanket
Raiders Blanket
Red wool fabric
4 yards
0
Black wool fabric
0
5 yards
Knight logo patches
1
0
Raider Logo patches
0
1
Direct manufacturing labor
3 hours
4 hours
Unit data pertaining to the direct materials for March 2013 are as follows:
Actual Beginning Direct Materials Inventory (3/1/2013)
Knights Blanket
Raiders Blanket
Red wool fabric
35 yards…
Lace Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased from the licensed logo store site. The teams are as follows:
•
Knights, with red blankets and the Knights logo
•
Raiders, with black blankets and the Raider logo
Also, the black blankets are slightly larger than the red blankets.
Additional information follows:
The budgeted direct-cost inputs for each product in 2013 are as follows:
Knights Blanket
Raiders Blanket
Red wool fabric
4 yards
0
Black wool fabric
0
5 yards
Knight logo patches
1
0
Raider Logo patches
0
1
Direct manufacturing labor
3 hours
4 hours
Unit data pertaining to the direct materials for March 2013 are as follows:
Actual Beginning Direct Materials Inventory (3/1/2013)
Knights Blanket
Raiders Blanket
Red wool fabric
35 yards…
Vaughn Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following
information relates to its budgeted operations for the current year.
Revenues
Direct materials costs
Direct labor costs.
Overhead costs
Operating income (loss)
Revenues
Direct materials costs
Direct labor costs.
Overhead costs
Operating income (loss)
Activity Cost Pools
Scheduling and travel
Setup time
Supervision
The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more
profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client
base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers.
As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more
accurate…
Chapter 6 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 6 - What are the four elements of the budgeting cycle?Ch. 6 - Define master budget.Ch. 6 - Strategy, plans, and budgets are unrelated to ore...Ch. 6 - Budgeted performance is a better criterion than...Ch. 6 - Production managers and marketing managers are...Ch. 6 - Budgets meet the cost-benefit test. They force...Ch. 6 - Define rolling budget. Give an example.Ch. 6 - Outline the steps in preparing an operating...Ch. 6 - The sales forecast is the cornerstone for...Ch. 6 - Prob. 6.10Q
Ch. 6 - Define Kaizen budgeting.Ch. 6 - Prob. 6.12QCh. 6 - Explain how the choice of the type of...Ch. 6 - What are some additional considerations that arise...Ch. 6 - Prob. 6.15QCh. 6 - Master budget. Which of the following statements...Ch. 6 - Operating and financial budgets. Which of the...Ch. 6 - Production budget. Superior Industries sales...Ch. 6 - Responsibility centers. Elmhurst Corporation is...Ch. 6 - Cash budget. Mary Jacobs, the controller of the...Ch. 6 - Sales budget, service setting. In 2017 Hart Sons,...Ch. 6 - Sales and production budget. The Coby Company...Ch. 6 - Direct material budget. Dawson Co. produces wine....Ch. 6 - Material purchases budget. The McGrath Company has...Ch. 6 - Revenues, production, and purchases budgets. The...Ch. 6 - Revenues and production budget. Saphire, Inc.,...Ch. 6 - Budgeting; direct material usage, manufacturing...Ch. 6 - Budgeting, service company. Ever Clean Company...Ch. 6 - Budgets for production and direct manufacturing...Ch. 6 - Activity-based budgeting. The Jerico store of...Ch. 6 - Kaizen approach to activity-based budgeting...Ch. 6 - Responsibility and controllability. Consider each...Ch. 6 - Responsibility, controllability, and stretch...Ch. 6 - Cash flow analysis, sensitivity analysis....Ch. 6 - Budget schedules for a manufacturer. Hale...Ch. 6 - Budgeted costs, Kaizen improvements environmental...Ch. 6 - Revenue and production budgets. (CPA, adapted) The...Ch. 6 - Budgeted income statement. (CMA, adapted) Smart...Ch. 6 - Prob. 6.39PCh. 6 - Comprehensive problem with ABC costing. Animal...Ch. 6 - Cash budget (continuation of 6-40). Refer to the...Ch. 6 - Comprehensive operating budget. Skulas, Inc.,...Ch. 6 - Cash budgeting, budgeted balance sheet....Ch. 6 - Comprehensive problem; ABC manufacturing, two...Ch. 6 - Cash budget. (Continuation of 6-44) (Appendix)...Ch. 6 - Budgeting and ethics. Jayzee Company manufactures...Ch. 6 - Kaizen budgeting for carbon emissions. Apex...Ch. 6 - Comprehensive budgeting problem; activity-based...
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