Ginnie Springs Company has been bottling and selling water since 1940. The companys current owner would like
Question:
Ginnie Springs Company has been bottling and selling water since 1940. The company’s current owner would like to know how a new product would affect the company’s net income in the coming year.
Required
Calculate Ginnie Springs’ net income for the new product in the coming year by completing the operating budgets and budgeted income statement that follow. Assume that the selling price will remain constant.
1. Sales budget:
2. Production budget:
3. Direct materials purchases budget:
Ginnie Springs Company
Direct Materials Purchases Budget
For the Year Ended December 31
4. Direct labor budget:
5. Overhead budget:
6. Selling and administrative expenses budget:
7. Cost of goods manufactured budget:
Ginnie Springs Company
Cost of Goods Manufactured Budget
For the Year Ended December 31
8. Budgeted incomestatement:
Ginnie Springs Company Sales Budget For the Year Ended December 31 Quarter 2 4 Year Sales in units Selling price per unit Total sales 40,000 30,000 50,000 55,000 175,000 $40,000 77$ 7? Ginnie Springs Company Production Budget For the Year Ended December 31 Quarter Year Sales in units Plus desired units of ending 40,000 finished goods inventory Desired total units Less desired units of beginning 3,000 43,000 6,000 9,0006,000 finished goods inventoryb Total production units 4,000 39,000 4,000 Ginnie Springs Company Direct Materials Purchases Budget For the Year Ended December 31 Quarter 2 3 Year Total production units Ounces per unit To 39,000 32,000 50,500 55,500 × 20 × 20 × 780,000 X 20 × 20 × 20 tal production needs in ounces Plus desired ounces of ending direct materials inventory 128,000 908,000 ? 240,000 240,000 Less desired ounces of beginning 156,000 ? 156,000 direct materials inventory Total ounces of direct materials to be purchased Cost per ounce Total cost of direct 752,000 materials purchases 7,520 Desired ounces of ending direct materials inventory-20% of next quarter's budgeted production needs in ounces. "Desired ounces of beginning direct materials inventory 20% of current quarter's budgeted production needs in ounces Ginnie Springs Company Direct Labor Budget For the Year Ended December 31 Quarter 2 Year 39,000 ×0.001 × ? × ? × ? × Total production units Direct labor hours per unit Total direct labor hours Direct labor cost per hour Total direct labor cost 39.0 312 $7 ?$7 ? Ginnie Springs Company Overhead Budget For the Year Ended December 31 Quarter 2 4 Year Variable overhead costs: Factory supplies (50.01) Employee benefits (50.05) Inspection (50.01) Maintenance and repairs ($0.02) Utilities ($0.01) Total variable overhead costs 390 1,950 390 780 390 $?? $3,900 ? 7? Total fixed overhead costs Total overhead costs $5,316 $? ? Ginnie Springs Company Selling and Administrative Expenses Budget For the Year Ended December 31 Quarter 4 Year Variable selling and administrative expenses: Delivery expenses ($0.01) Sales commissions ($0.02) Accounting ($0.01) Other administrative expenses ($0.01) Total variable selling and 400 ?7? 800 400 400 administrative expenses $2,000 $7? 7$ Total fixed selling and administrative expenses 5,000 Total selling and administrative expenses $7,000 7$77? Direct materials used: Direct materials inventory, beginning Purchases Cost of direct materials available for use Less direct materials inventory, ending Cost of direct materials used Direct labor costs Overhead costs Total manufacturing costs Work in process inventory, beginning Less work in process inventory, ending Cost of goods manufactured Units produced Manufactured cost per unit
Step by Step Answer:
1 Ginnie Springs Company Sales Budget For the Year Ended December 31 Quarter 1 2 3 4 Year Sales in units 40000 30000 50000 55000 175000 Selling price per unit 1 1 1 1 1 Total sales 40000 30000 50000 5...View the full answer
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
Students also viewed these Managerial Accounting questions
-
The Bottled Water Company has been bottling and selling water since 1940. Ginnie Adams, the current owner of The Bottled Water Company, would like to know how a new product would affect the company's...
-
A college dean would like to know how well he can predict sophomore grade point average for first semester freshmen so that students who are headed for trouble can be given appropriate counseling....
-
The client, Mr. David Keys, would like to know what state law provides concerning the removal of a director from the board of directors of a corporation. Prepare an information letter to Mr. Keys...
-
A stock is trading at $70. You believe there is a 70% chance the price of the stock will increase by 10% over the next 3 months. You believe there is a 10% chance the stock will drop by 10%, and you...
-
Let x be a Poisson random variable with mean = 2. Calculate these probabilities: a. P(x = 0) b. P(x = 1) c. P(x > 1) d. P(x = 5)
-
The elements oxygen and sulfur have similar chemical properties because they both have six electrons in their outermost electron shells. Indeed, both elements form molecules with two hydrogen atoms,...
-
Consider the simple linear regression model fit to the oxygen purity data in Problem 2.7. Problem 2.7 The purity of oxygen produced by a fractional distillation process is thought to be related to...
-
The total payroll of Rene Auber Company for September 2008 was $480,000, of which $110,000 is exempt from FICA tax because it represented amounts paid in excess of $97,500 to certain employees. The...
-
Preliminary analytical reviews are performed to obtain an understanding of the business and its environment. Analytical procedures are an important part of the audit process and are applied during...
-
Lansing, Inc. provides the following information for one of its department's operations for June (no new material is added in Department T). WIP inventory-Department T Beginning inventory (8,300...
-
Bobble, Inc.s principal product is a stainless steel water bottle that carries a lifetime guarantee. Cost and production data for the water bottle follow. Direct materials: Stainless steel: 0.25...
-
Forensics Company provides fraud monitoring services. It employs five fraud specialists. Each specialist works an average of 200 hours a month. The companys controller has compiled the information...
-
Eddie Zambrano Corporation began operations on January 1, 2022. During its first 3 years of operations, Zambrano reported net income and declared dividends as follows. The following information...
-
Your grandfather put some money in an account for you on the day you were born. You are now 18 years old and are allowed to withdraw the money for the first time. The account currently has $5, 800 in...
-
Oneyearago,youpurchased atwo-yearzero-couponbondwith ayield-to-maturity at the time of 8%. Interest rates have risen, and the current yield to maturity on the bond is currently 9%.If you sell the...
-
D. Legitimacy Test. A government's legitimacy is based on the general belief of people that theirgovernment has the right to rule. Based on this definition, decide if the situations below jeopardize...
-
Essay "Macbeth" Act 5, Scene 5, lines 22-31 Tomorrow and tomorrow and tomorrow Creeps in this petty pace from day to day To the last syllable of recorded time, And all our yesterdays have lighted...
-
Urban development and the case of the Berlin Literature dating back to 1920 has explored urban economics and geography questions. However, it is difficult to find empirical evidence that...
-
Show that the lower and upper bounds on the difference between the prices of the American call and put options on a foreign currency are given by where Bf () and B() are bond prices in the foreign...
-
Read the Forecasting Supply Chain Demand Starbucks Corporation case in your text Operations and Supply Chain Management on pages 484-485, then address the four questions associated with the...
-
Open PowerWorld Simulator case Problem 11_21. This case models the Example 11.4 system with damping at the bus 1 generator, and with a line fault midway between buses 2 and 3. The fault is cleared by...
-
How do creditors assess risk when lending funds to a company?
-
What are some of the reasons a business owner might choose the corporate form of business?
-
Par value of a stock refers to the ________. A. Issue price of a stock B. Value assigned by the incorporation documents C. Maximum selling price of a stock D. Dividend to be paid by the corporation
-
The following information concerns production in the Baking Department for August. All direct materials are placed in process at the beginning of production. ACCOUNT Work in Process-Baking Department...
-
The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory Apr. 1 Purchased Oct. 1 Purchased 400 units 2,700 units @ $22 800 units @ $23 @ $17 During the year,...
-
On January 4, 2024, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan...
Study smarter with the SolutionInn App