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Accounting Principles 11th Edition Jerry Weygandt, Paul Kimmel, Donald Kieso - Solutions

Fuqua Company’s sales budget projects unit sales of part 198Z of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $2 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of
Dalby Company has accumulated the following budget data for the year 2014.1. Sales: 30,000 units, unit selling price $85.2. Cost of one unit of finished goods: direct materials 2 pounds at $5 per pound, direct labor 3 hours at $15 per hour, and manufacturing overhead $5 per direct labor hour.3.
Danner Company expects to have a cash balance of $45,000 on January 1, 2014. Relevant monthly budget data for the first 2 months of 2014 are as follows.Collections from customers: January $85,000, February $150,000.Payments for direct materials: January $50,000, February $75,000.Direct labor:
Aaron Corporation is projecting a cash balance of $30,000 in its December 31, 2013, balance sheet. Aaron’s schedule of expected collections from customers for the first quarter of 2014 shows total collections of $180,000. The schedule of expected payments for direct materials for the first
The controller of Trenshaw Company wants to improve the company’s control system by preparing a month-by-month cash budget. The following information is for the month ending July 31, 2014.June 30, 2014, cash balance ................ $45,000Dividends to be declared on July 15* ............
LRF Company€™s budgeted sales and direct materials purchases are as follows.LRF€™s sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible.
Green Landscaping Inc. is preparing its budget for the first quarter of 2014. The next step in the budgeting process is to prepare a cash receipts schedule and a cash payments schedule. To that end the following information has been collected.Clients usually pay 60% of their fee in the month that
Lager Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2014. All that remains in this process is the cash budget. The following information has been collected from other portions of
In May 2014, the budget committee of Grand Stores assembles the following data in preparation of budgeted merchandise purchases for the month of June.1. Expected sales: June $500,000, July $600,000.2. Cost of goods sold is expected to be 75% of sales.3. Desired ending merchandise inventory is 30%
Glendo Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2014.1. Sales: quarter 1, 30,000 bags; quarter 2, 42,000 bags. Selling price is $60 per bag.2. Direct materials: each bag of Snare
Deleon Inc. is preparing its annual budgets for the year ending December 31, 2014. Accounting assistants furnish the data shown below.An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses
Marsh Industries had sales in 2013 of $6,400,000 and gross profit of $1,100,000. Management is considering two alternative budget plans to increase its gross profit in 2014.Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 10% from its 2013 level.
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2014 are:All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) of direct
The budget committee of Litwin Company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2014.1. Sales for May are expected to be $800,000. Sales in June and July are expected to be 5% higher than the preceding month.2. Cost of goods sold
Krause Industries’ balance sheet at December 31, 2013, is presented below.Additional information accumulated for the budgeting process is as follows.Budgeted data for the year 2014 include the following.To meet sales requirements and to have 3,000 units of finished goods on hand at December 31,
Mercer Farm Supply Company manufactures and sells a fertilizer called Basic II. The following data are available for preparing budgets for Basic II for the first 2 quarters of 2014.1. Sales: quarter 1, 40,000 bags; quarter 2, 50,000 bags. Selling price is $63 per bag.2. Direct materials: each bag
Urbina Inc. is preparing its annual budgets for the year ending December 31, 2014. Accounting assistants furnish the following data.An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of
Ogleby Industries has sales in 2013 of $5,600,000 (800,000 units) and gross profit of $1,344,000. Management is considering two alternative budget plans to increase its gross profit in 2014.Plan A would increase the selling price per unit from $7.00 to $7.60. Sales volume would decrease by 5% from
Derby Company prepares monthly cash budgets. Relevant data from operating budgets for 2014 are:All sales are on account. Collections are expected to be 60% in the month of sale, 25% in the first month following the sale, and 15% in the second month following the sale. Thirty percent (30%) of direct
The budget committee of Widner Company collects the following data for its Westwood Store in preparing budgeted income statements for July and August 2014.1. Expected sales: July $400,000, August $450,000, September $500,000.2. Cost of goods sold is expected to be 65% of sales.3. Company policy is
Diane Buswell is preparing the 2013 budget for one of Current Designs’ rotomolded kayaks. Extensive meetings with members of the sales department and executive team have resulted in the following unit sales projections for 2013.Quarter 1 1,000 kayaksQuarter 2 1,500 kayaksQuarter 3 750
Assume that you have compiled the following information regarding your expected cash flows for a typical month.Rent payment ... ... $ 500Miscellaneous costs ..... $210Interest income ....... 50Savings .......... 50Income tax withheld ..... 300Eating out ......... 150Electricity bill .........
You might hear people say that they “need to learn to live within a budget.” The funny thing is that most people who say this haven’t actually prepared a personal budget, nor do they intend to. Instead, what they are referring to is a vaguely defined, poorly specified collection of rough
(a) What is budgetary control? (b) Fred Barone is describing budgetary control. What steps should be included in Fred’s description?
The static manufacturing overhead budget based on 40,000 direct labor hours shows budgeted indirect labor costs of $54,000. During March, the department incurs $64,000 of indirect labor while working 45,000 direct labor hours. Is this a favorable or unfavorable performance? Why?
A static overhead budget based on 40,000 direct labor hours shows Factory Insurance $6,500 as a fixed cost. At the 50,000 direct labor hours worked in March, factory insurance costs were $6,300. Is this a favorable or unfavorable performance? Why?
Cali Company has prepared a graph of flexible budget data. At zero direct labor hours, the total budgeted cost line intersects the vertical axis at $20,000. At 10,000 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $85,000. How may the fixed and
The flexible budget formula is fixed costs $50,000 plus variable costs of $4 per direct labor hour. What is the total budgeted cost at (a) 9,000 hours and (b) 12,345 hours?
For the quarter ended March 31, 2014, Maris Company accumulates the following sales data for its product, Garden-Tools: $310,000 budget; $305,000 actual. Prepare a static budget report for the quarter.
Data for Maris Company are given in BE10-1. In the second quarter, budgeted sales were $380,000, and actual sales were $384,000. Prepare a static budget report for the second quarter and for the year to date.Data From BE10-1 For the quarter ended March 31, 2014, Maris Company accumulates the
In Paige Company, direct labor is $20 per hour. The company expects to operate at 10,000 direct labor hours each month. In January 2014, direct labor totaling $204,000 is incurred in working 10,400 hours. Prepare(a) A static budget report and (b) A flexible budget report. Evaluate the usefulness of
Gundy Company expects to produce 1,200,000 units of Product XX in 2014. Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are direct materials $5, direct labor $6, and overhead $8. Budgeted fixed manufacturing costs per unit for
Data for Gundy Company are given in BE10-4. In March 2014, the company incurs the following costs in producing 100,000 units: direct materials $525,000, direct labor $596,000, and variable overhead $805,000. Actual fixed costs were equal to budgeted fixed costs. Prepare a flexible budget report for
In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2014 were as follows.All costs are controllable by the department manager. Prepare a responsibility report for April for the costcenter.
Elbert Company accumulates the following summary data for the year ending December 31, 2014, for its Water Division, which it operates as a profit center: sales— $2,000,000 budget, $2,080,000 actual; variable costs—$1,000,000 budget, $1,060,000 actual; and controllable fixed costs—$300,000
For the year ending December 31, 2014, Cobb Company accumulates the following data for the Plastics Division which it operates as an investment center: contribution margin—$700,000 budget, $710,000 actual; controllable fixed costs—$300,000 budget, $302,000 actual. Average operating assets for
For its three investment centers, Kaspar Company accumulates the followingdata:
Data for the investment centers for Kaspar Company are given in BE10-9. The centers expect the following changes in the next year:(I) Increase sales 15%;(II) Decrease costs $400,000;(III) Decrease average operating assets $500,000.Compute the expected return on investment (ROI) for each center.
Voorhees, Inc. reports the following financial information.Average operating assets .. $3,000,000Controllable margin ...... $ 660,000Minimum rate of return ...... 10%Compute the return on investment and the residual income.
Presented below is information related to the Southern Division of Lumber, Inc.Contribution margin .... $1,200,000Controllable margin .... $ 800,000Average operating assets ... $4,000,000Minimum rate of return ...... 15%Compute the Southern Division’s return on investment and residual income.
In Pargo Company’s flexible budget graph, the fixed cost line and the total budgeted cost line intersect the vertical axis at $90,000. The total budgeted cost line is $330,000 at an activity level of 50,000 direct labor hours. Compute total budgeted costs at 65,000 direct labor hours.
Mussatto Company expects to produce 50,000 units of product IOA during the current year. Budgeted variable manufacturing costs per unit are direct materials $7, direct labor $13, and overhead $18. Annual budgeted fixed manufacturing overhead costs are $96,000 for depreciation and $45,600 for
The Wellstone Division operates as a profit center. It reports the following for the year.Prepare a responsibility report for the Wellstone Division at December 31,2014.
The service division of Raney Industries reported the following results for 2013.Sales ......... $500,000Variable costs ...... 300,000Controllable fixed costs .... 75,000Average operating assets .. 625,000Management is considering the following independent courses of action in 2014 in order to
Crede Company budgeted selling expenses of $30,000 in January, $35,000 in February, and $40,000 in March. Actual selling expenses were $31,200 in January, $34,525 in February, and $46,000 in March.Instructions(a) Prepare a selling expense report that compares budgeted and actual amounts by month
Thome Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.Indirect labor ..... $1.00Indirect materials ... 0.60Utilities ....... 0.40Fixed overhead costs per month are supervision $4,000,
Using the information in E10-3, assume that in July 2014, Thome Company incurs the following manufacturing overhead costs.Instructions(a) Prepare a flexible budget performance report, assuming that the company worked 9,000 direct labor hours during the month.(b) Prepare a flexible budget
DeWitt Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $170,000 to $200,000. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 4%, traveling 3%, and delivery 2%. Fixed selling expenses will consist
The actual selling expenses incurred in March 2014 by DeWitt Company are as follows.Instructions(a) Prepare a flexible budget performance report for March using the budget data in E10-5, assuming that March sales were $170,000.(b) Prepare a flexible budget performance report, assuming that March
Kitchen Help Inc. (KHI) is a manufacturer of toaster ovens. To improve control over operations, the president of KHI wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for KHI’s expected costs at production levels of
Rensing Groomers is in the dog-grooming business. Its operating costs are described by the following formulas:Grooming supplies (variable) y = $0 + $5xDirect labor (variable) y = $0 + $14xOverhead (mixed) y = $10,000 + $1xMilo, the owner, has determined that direct labor is the cost driver for all
Lowell Company€™s manufacturing overhead budget for the first quarter of 2014 contained the following data.Actual variable costs were indirect materials $13,900, indirect labor $9,500, utilities $8,700, and maintenance $5,000. Actual fixed costs equaled budgeted costs except for property
As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Soria Company for the month of October.As a result of this budget report, Joe was called into the president€™s office and congratulated on his fine sales
Kirkland Plumbing Company is a newly formed company specializing in plumbing services for home and business. The owner, Lenny Kirkland, had divided the company into two segments: Home Plumbing Services and Business Plumbing Services. Each segment is run by its own supervisor, while basic selling
Venetian Company has two production departments, Fabricating and Assembling. At a department managers’ meeting, the controller uses flexible budget graphs to explain total budgeted costs. Separate graphs based on direct labor hours are used for each department. The graphs show the following.1. At
Fultz Company’s organization chart includes the president; the vice president of production; three assembly plants—Dallas, Atlanta, and Tucson; and two departments within each plant—Machining and Finishing. Budget and actual manufacturing cost data for July 2014 are as follows.Finishing
The Mixing Department manager of Malone Company is able to control all overhead costs except rent, property taxes, and salaries. Budgeted monthly overhead costs for the Mixing Department, in alphabetical order, are:Indirect labor ..... $12,000Property taxes .... $ 1,000Indirect materials ....
Deitz Inc. has three divisions which are operated as profit centers. Actual operating data for the divisions listed alphabetically are as follows.Instructions(a) Compute the missing amounts. Show computations.(b) Prepare a responsibility report for the Women€™s Shoes Division assuming (1)
The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2014 at $900,000. The only variable costs budgeted for the divisions were cost of goods sold ($440,000) and selling and administrative ($60,000). Fixed costs were budgeted at
The West Division of Nieto Company reported the following data for the current year.Sales ......... $3,000,000Variable costs ..... 1,980,000Controllable fixed costs .. 600,000Average operating assets . 5,000,000Top management is unhappy with the investment center’s return on investment (ROI). It
The Dinkle and Frizell Dental Clinic provides both preventive and orthodontic dental services. The two owners, Reese Dinkle and Anita Frizell, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the centers: Reese
The Pletcher Transportation Company uses a responsibility reporting system to measure the performance of its three investment centers: Planes, Taxis, and Limos. Segment performance is measured using a system of responsibility reports and return on investment calculations. The allocation of
Presented below is selected information for three regional divisions of Medina Company.Instructions(a) Compute the return on investment for each division.(b) Compute the residual income for each division.(c) Assume that each division has an investment opportunity that would provide a rate of return
Presented below is selected financial information for two divisions of Yono Brewing.InstructionsSupply the missing information for the lettereditems.
Cook Company estimates that 300,000 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data, shown below, are computed for the year.It is estimated that direct labor hours worked each month will range
Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2014. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an
Hill Company uses budgets in controlling costs. The August 2014 budget report for the company's Assembling Department is as follows.The monthly budget amounts in the report were based on an expected production of 60,000 units per month or 720,000 units per year. The Assembling Department manager is
Clarke Inc. operates the Patio Furniture Division as a profit center. Operating data for this division for the year ended December 31, 2014, are as shown below.In addition, Clarke incurs $180,000 of indirect fixed costs that were budgeted at $175,000. Twenty percent (20%) of these costs are
Suppan Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2014, and relevant budget data are as follows.Average operating assets
Durham Company uses a responsibility reporting system. It has divisions in Denver, Seattle, and San Diego. Each division has three production departments: Cutting, Shaping, and Finishing. The responsibility for each department rests with a manager who reports to the division production manager.
Delby Industries has manufactured prefabricated houses for over 20 years. The houses are constructed in sections to be assembled on customers’ lots. Delby expanded into the precut housing market when it acquired Jensen Company, one of its suppliers. In this market, various types of lumber are
Speier Company estimates that 240,000 direct labor hours will be worked during 2014 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed.It is estimated that direct labor hours worked each month will range from 18,000 to 24,000 hours.During
Gonzalez Company produces one product, Olpe. Because of wide fluctuations in demand for Olpe, the Assembly Department experiences significant variations in monthly production levels.The annual master manufacturing overhead budget is based on 300,000 direct labor hours. In July, 27,500 labor hours
Hardesty Company uses budgets in controlling costs. The May 2014 budget report for the company's Packaging Department is as follows.The monthly budget amounts in the report were based on an expected production of 50,000 units per month or 600,000 units per year.The company president was displeased
Guzman Inc. operates the Home Appliance Division as a profit center. Operating data for this division for the year ended December 31, 2014, are shown:In addition, Guzman incurs $150,000 of indirect fixed costs that were budgeted at $155,000. Twenty percent (20%) of these costs are allocated to the
Strauss Company manufactures a variety of garden and lawn equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Lawnmower Division for the year ended December 31, 2014, and relevant budget data are as follows.Average operating assets
Gore Company uses a responsibility reporting system. It has divisions in San Francisco, Phoenix, and Tulsa. Each division has three production departments: Cutting, Shaping, and Finishing. The responsibility for each department rests with a manager who reports to the division production manager.
Walton Industries has manufactured prefabricated garages for over 20 years. The garages are constructed in sections to be assembled on customers’ lots. Walton expanded into the precut housing market when it acquired Washington Enterprises, one of its suppliers. In this market, various types of
The Current Designs staff has prepared the annual manufacturing budget for the rotomolded line based on an estimated annual production of 4,000 kayaks during 2013. Each kayak will require 54 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). The polyethylene powder used
Green Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing in the boarding of broodmares and their foals. A recent economic downturn in the thoroughbred industry has led to a decline in breeding activities, and it has made the boarding business extremely competitive.
Lanier Company manufactures expensive watch cases sold as souvenirs. Three of its sales departments are Retail Sales, Wholesale Sales, and Outlet Sales. The Retail Sales Department is a profit center. The Wholesale Sales Department is a cost center. Its managers merely take orders from customers
The manufacturing overhead budget for Fleming Company contains the following items.The budget was based on an estimated 2,000 units being produced. During the past month, 1,500 units were produced, and the following costs incurred.Instructions(a) Determine which items would be controllable by Fred
Preparing a personal budget is a great first step toward control over your personal finances. It is especially useful to prepare a budget when you face a big decision. For most people, the biggest decision they will ever make is whether to purchase a house. The percentage of people in the United
Mikan Company’s standard predetermined overhead rate is $9 per direct labor hour. For the month of June, 26,000 actual hours were worked, and 27,000 standard hours were allowed. How much overhead was applied?
Kerry James says that the balanced scorecard was created to replace financial measures as the primary mechanism for performance evaluation. He says that it uses only nonfinancial measures. Is this true?
If the $9 per hour overhead rate in Question 12 includes $5 variable, and actual overhead costs were $248,000, what is the overhead controllable variance for June? The normal capacity hours were 28,000. Is the variance favorable or unfavorable?
Alma Ortiz does not understand why the overhead volume variance indicates that fixed overhead costs are under- or overapplied. Clarify this matter for Alma.
John Hsu is attempting to outline the important points about overhead variances on a class examination. List four points that John should include in his outline.
Perez Company uses both standards and budgets. For the year, estimated production of Product X is 500,000 units. Total estimated cost for materials and labor are $1,300,000 and $1,700,000. Compute the estimates for (a) A standard cost and (b) A budgeted cost.
Tang Company accumulates the following data concerning raw materials in making one gallon of finished product: (1) Price—net purchase price $2.30, freight-in $0.20, and receiving and handling $0.10. (2) Quantity—required materials 3.6 pounds, allowance for waste and spoilage 0.4 pounds. Compute
Labor data for making one gallon of finished product in Tang Company are as follows: (1) Price—hourly wage rate $13.00, payroll taxes $0.80, and fringe benefits $1.20. (2) Quantity—actual production time 1.1 hours, rest periods and cleanup 0.25 hours, and setup and downtime 0.15 hours. Compute
Simba Company’s standard materials cost per unit of output is $10 (2 pounds × $5). During July, the company purchases and uses 3,200 pounds of materials costing $16,192 in making 1,500 units of finished product. Compute the total, price, and quantity materials variances.
Hartley Company’s standard labor cost per unit of output is $22 (2 hours × $11 per hour). During August, the company incurs 2,100 hours of direct labor at an hourly cost of $10.80 per hour in making 1,000 units of finished product. Compute the total, price, and quantity labor variances.
In October, Roby Company reports 21,000 actual direct labor hours, and it incurs $118,000 of manufacturing overhead costs. Standard hours allowed for the work done is 20,400 hours. The predetermined overhead rate is $6 per direct labor hour. Compute the total overhead variance.
Journalize the following transactions for Combs Company.(a) Purchased 6,000 units of raw materials on account for $11,500. The standard cost was $12,000.(b) Issued 5,600 units of raw materials for production. The standard units were 5,800.
Journalize the following transactions for Dewey, Inc.(a) Incurred direct labor costs of $24,000 for 3,000 hours. The standard labor cost was $25,500.(b) Assigned 3,000 direct labor hours costing $24,000 to production. Standard hours were 3,150.
Some overhead data for Roby Company are given in BE11-6. In addition, the flexible manufacturing overhead budget shows that budgeted costs are $4 variable per direct labor hour and $50,000 fixed. Compute the overhead controllable variance.Data From BE11-6 In October, Roby Company reports 21,000
Using the data in BE11-6 and BE11-10, compute the overhead volume variance. Normal capacity was 25,000 direct labor hours.Data from BE11-6In October, Roby Company reports 21,000 actual direct labor hours, and it incurs $118,000 of manufacturing overhead costs. Standard hours allowed for the work
Jacque Company accumulated the following standard cost data concerning product I-Tal.Direct materials per unit: 2 pounds at $5 per poundDirect labor per unit: 0.2 hours at $15 per hourManufacturing overhead: Predetermined rate is 125% of direct labor costCompute the standard cost of one unit of
The standard cost of product 777 includes 2 units of direct materials at $6.00 per unit. During August, the company bought 29,000 units of materials at $6.30 and used those materials to produce 16,000 units. Compute the total, price, and quantity variances for materials.

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