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Accounting 23rd Edition Carl S. Warren - Solutions
=+31, 2010, over budget. Place your answers in a columnar table with the following format:Unit Sales, Increase (Decrease)Year Ended 2010 Actual Over Budget Budget Actual Sales Amount Percent Home Alert System:United States . . . . . . . . . . . . .Europe . . . . . . . . . . . . . . . . . .Asia . .
=+PR 22-1A Forecast sales volume and sales budget obj. 4✔ 3. Total revenue from sales,$34,374,630 Chapter 22 Budgeting 1031 Instructions 1. Compute the increase or decrease of actual unit sales for the year ended December
=+System System United States 25,272 15,645 Europe 6,834 6,336 Asia 5,723 4,326 For the year ending December 31, 2011, unit sales are expected to follow the patterns established during the year ending December 31, 2010. The unit selling price for the Home Alert System is expected to increase to
=+United States . . . . . . . . . . . . . . . . 24,300 $250 $ 6,075,000 Europe . . . . . . . . . . . . . . . . . . . . . 6,700 250 1,675,000 Asia . . . . . . . . . . . . . . . . . . . . . . . 5,900 250 1,475,000 ______ ___________ Total . . . . . . . . . . . . . . . . . . . . . 36,900 $ 9,225,000
=+EX 22-22 Capital expenditures budget obj. 5✔ Total capital expenditures in 2010,$7,000,000 Problems Series A Guardian Devices Inc. prepared the following sales budget for the current year:Guardian Devices Inc.Sales Budget For the Year Ending December 31, 2010 Unit Sales Unit Selling Product and
=+Use the interview information above to prepare a capital expenditures budget for Gardeneer Tools Inc. for the years 2010–2013.
=+Director of Information Systems: We need to upgrade our information systems to wireless network technology. It doesn’t make sense to do this until after the new factory building is completed and producing product. During 2012, once the factory is up and running, we should equip the whole
=+Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase$1.7 million in equipment in late 2011. I expect that an additional $200,000 will be needed early in the following year (2012) to test and install the equipment before we can begin production. If sales
=+EX 22-21 Schedule of cash payments obj. 5✔ Total cash payments in September,$123,300 1030 Chapter 22 Budgeting On January 1, 2010, the controller of Gardeneer Tools Inc. is planning capital expenditures for the years 2010–2013. The following interviews helped the controller collect the
=+Salaries $ 58,200 $ 63,500 $ 74,500 Utilities 5,300 5,600 7,100 Other operating expenses 48,500 52,700 58,200 ________ ________ ________ Total $112,000 $121,800 $139,800 ________ ________ ________ ________ ________ ________ Other operating expenses include $10,500 of monthly depreciation expense
=+EX 22-20 Schedule of cash payments obj. 5✔ Total cash payments in August, $79,440 Rejuvenation Physical Therapy Inc. is planning its cash payments for operations for the third quarter (July–September), 2011. The Accrued Expenses Payable balance on July 1 is $24,000. The budgeted expenses for
=+Prepare a schedule indicating cash payments for selling and administrative expenses for June, July, and August.
=+June $117,400 July 110,500 August 100,400 Depreciation, insurance, and property taxes represent $25,000 of the estimated monthly expenses. The annual insurance premium was paid on May 31, and property taxes for the year will be paid in December. Sixty percent of the remainder of the expenses are
=+EX 22-19 Schedule of cash collections of accounts receivable obj. 5✔ Total cash collected in August, $300,000 Excel Learning Systems Inc. was organized on May 31, 2010. Projected selling and administrative expenses for each of the first three months of operations are as follows:
=+The Accounts Receivable balance on July 31, 2010, was $200,000.Prepare a schedule of cash collections from sales for August, September, and October.
=+EX 22-18 Schedule of cash collections of accounts receivable obj. 5✔ Total cash collected in July, $520,350 Office Mate Supplies Inc. has “cash and carry” customers and credit customers. Office Mate estimates that 25% of monthly sales are to cash customers, while the remaining sales are to
=+The company expects to sell 10% of its merchandise for cash. Of sales on account, 50% are expected to be collected in the month of the sale, 35% in the month following the sale, and the remainder in the second month following the sale.Prepare a schedule indicating cash collections from sales for
=+EX 22-17 Cost of goods sold budget obj. 4✔ Cost of goods sold, $425,420 Chapter 22 Budgeting 1029 Pet Joy Wholesale Inc., a pet wholesale supplier, was organized on May 1, 2010.Projected sales for each of the first three months of operations are as follows:May $360,000 June 450,000 July 600,000
=+Use the preceding information to prepare a cost of goods sold budget for June 2010.
=+Desired inventory, June 30, 2010 3,350 4,150 3,590 11,090 Work in process inventories:Estimated inventory, June 1, 2010 $ 2,800 Desired inventory, June 30, 2010 1,880 Budgeted factory overhead costs for June:Indirect factory wages $64,900 Depreciation of plant and equipment 12,600 Power and light
=+Direct materials: Enamel Paint Porcelain Total Total direct materials purchases budgeted for June $33,840 $5,340 $118,980 $158,160 Estimated inventory, June 1, 2010 1,150 2,800 4,330 8,280 Desired inventory, June 30, 2010 2,400 2,050 6,000 10,450 Kiln Decorating Direct labor cost: Department
=+EX 22-16 Cost of goods sold budget obj. 4✔ Cost of goods sold, $2,334,000 The controller of Swiss Ceramics Inc. wishes to prepare a cost of goods sold budget for June. The controller assembled the following information for constructing the cost of goods sold budget:
=+Use the preceding information to prepare a cost of goods sold budget for September 2011.
=+P2. Deleware budgeted 25,000 barrels of oil for purchase in September for $72 per barrel. Direct labor budgeted in the chemical process was $210,000 for September. Factory overhead was budgeted $325,000 during September. The inventories on September 1 were estimated to be:Oil . . . . . . . . . .
=+EX 22-15 Factory overhead cost budget obj. 4✔ Total variable factory overhead costs, $264,000 Delaware Chemical Company uses oil to produce two types of plastic products, P1 and
=+Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only factory fixed costs.
=+Advertising expenses $275,000 Production supervisor wages $132,000 Manufacturing supplies 15,000 Production control salaries 35,000 Power and light 44,000 Executive officer salaries 280,000 Sales commissions 300,000 Materials management salaries 38,000 Factory insurance 26,000 Factory
=+b. Prepare the January direct labor cost budget for the four sewing operations, assuming a $12.50 wage per hour for the inseam and outerseam sewing operations and a$16 wage per hour for the pocket and zipper sewing operations. Prepare the direct labor cost budget in four columns: inseam,
=+EX 22-14 Production and direct labor cost budgets obj. 4✔a. Total production of 501 Jeans, 54,000(continued)1028 Chapter 22 Budgeting
=+a. Prepare a production budget for January. Prepare the budget in two columns:Dockers® and 501 Jeans®.
=+Pockets 7 9 Zipper 10 6 __ __ Total 57 minutes 42 minutes __ __ __ __
=+January 1 estimated inventory 1,110 1,490 January 31 desired inventory 410 1,890 Assume the following direct labor data per 10 pairs of Dockers and 501 Jeans for four different sewing operations:Direct Labor per 10 Pairs Dockers 501 Jeans Inseam 18 minutes 12 minutes Outerseam 22 15
=+EX 22-13 Direct labor budget—service business obj. 4✔ Average weekday total, $1,712 Levi Strauss & Co. manufactures slacks and jeans under a variety of brand names, such as Dockers® and 501 Jeans®. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the
=+Determine the estimated housekeeping, restaurant, and total direct labor cost for an average weekday and weekend day. Format the budget in two columns, labeled as weekday and weekend day.
=+housekeeping staff is paid $10 per hour. The restaurant has five full-time staff (eighthour day) on duty, regardless of occupancy. However, for every 60 occupied rooms, an additional person is brought in to work in the restaurant for the eight-hour day. The restaurant staff is paid $8 per hour.
=+EX 22-12 Direct labor cost budget obj. 4✔ Total direct labor cost, Assembly,$208,860 Sleep-EZ Suites, Inc., operates a downtown hotel property that has 250 rooms. On average, 72% of Sleep-EZ Suites’ rooms are occupied on weekdays, and 48% are occupied during the weekend. The manager has
=+Prepare the direct labor cost budget for October 2010.
=+Hammer Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for October for the two rackets is as follows:Junior Pro Striker Production budget 7,600 units 22,100 units Both rackets are produced in two departments, Forming and Assembly.
=+EX 22-11 Direct materials purchases budget obj. 4✔ Total steel belt purchases,$1,344,000 Chapter 22 Budgeting 1027 respectively. The estimated beginning inventories for rubber and steel belts are 46,000 and 8,000 pounds, respectively.Prepare a direct materials purchases budget for Sure Grip
=+Rubber 30 lbs. per unit 70 lbs. per unit Steel belts 4 lbs. per unit 10 lbs. per unit The purchase prices of rubber and steel are $3.20 and $4.20 per pound, respectively.The desired ending inventories of rubber and steel belts are 40,000 and 10,000 pounds,
=+EX 22-10 Direct materials purchases budget obj. 4✔ Concentrate budgeted purchases,$107,600 Anticipated sales for Sure Grip Tire Company were 42,000 passenger car tires and 15,000 truck tires. There were no anticipated beginning or ending finished goods inventories for either product. Rubber
=+Coke 214,000 two-liter bottles Sprite 163,000 two-liter bottles In addition, assume that the concentrate costs $80 per pound for both Coke and Sprite and is used at a rate of 0.2 pound per 100 liters of carbonated water in blending Coke and 0.15 pound per 100 liters of carbonated water in
=+EX 22-9 Direct materials purchases budget obj. 4✔ Total cheese purchases, $123,163 Coca-Cola Enterprises is the largest bottler of Coca-Cola® in North America. The company purchases Coke® and Sprite® concentrate from The Coca-Cola Company, dilutes and mixes the concentrate with carbonated
=+Prepare April’s direct materials purchases budget for Marino’s Frozen Pizza Inc.
=+In addition, Marino’s has determined the following information about each material:Dough Tomato Cheese Estimated inventory, April 1, 2010 580 lbs. 205 lbs. 325 lbs.Desired inventory, April 30, 2010 610 lbs. 200 lbs. 355 lbs.Price per pound $1.20 $2.60 $3.10
=+12" Pizza 16" Pizza Budgeted production volume 15,100 22,700 There are three direct materials used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows:12" Pizza 16" Pizza Direct materials:Dough 0.90 lb. per unit 1.50 lbs. per
=+EX 22-8 Professional labor cost budget obj. 4✔ Staff total labor cost, $1,851,000 Marino’s Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for April 2010:Units
=+EX 22-7 Professional fees earned budget obj. 4✔ Total professional fees earned,$10,153,500 1026 Chapter 22 Budgeting Based on the data in Exercise 22-7 and assuming that the average compensation per hour for staff is $30 and for partners is $125, prepare a professional labor cost budget for
=+The average billing rate for staff is $130 per hour, and the average billing rate for partners is $250 per hour. Prepare a professional fees earned budget for Roberts and Chou, CPAs, for the year ending December 31, 2010, using the following column headings and showing the estimated professional
=+EX 22-6 Sales and production budgets obj. 4✔b. Model DL total production, 7,985 units Roberts and Chou, CPAs, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been estimated for
=+EX 22-5 Production budget obj. 4✔ Small scale budgeted production, 51,600 units Harmony Audio Company manufactures two models of speakers, DL and XL. Based on the following production and sales data for September 2009, prepare (a) a sales budget and (b) a production budget.DL XL Estimated
=+The finished goods inventory estimated for May 1, 2011, for the small and large scale models is 1,500 and 2,300 units, respectively. The desired finished goods inventory for May 31, 2011, for the small and large scale models is 1,100 and 2,500 units, respectively.Prepare a production budget for
=+EX 22-4 Flexible budget for Fabrication Department obj. 2✔ Total department cost at 12,000 units,$1,029,000 Accu-Weight, Inc. produces a small and large version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows:Small Scale Large Scale
=+Prepare a flexible budget for 12,000, 15,000, and 18,000 filing cabinets for the month of October 2010, similar to Exhibit 5, assuming that inventories are not significant.
=+EX 22-3 Static budget vs.flexible budget objs. 2, 4✔b. Excess of actual over budget for March, $53,000 Chapter 22 Budgeting 1025 Steelcase Inc. is one of the largest manufacturers of office furniture in the United States.In Grand Rapids, Michigan, it produces filing cabinets in two departments:
=+b. Compare the flexible budget with the actual expenditures for the first three months. What does this comparison suggest?
=+a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost.
=+The Machining Department supervisor has been very pleased with this performance, since actual expenditures have been less than the monthly budget. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work
=+The actual amount spent and the actual units produced in the first three months of 2010 in the Machining Department were as follows:Amount Spent Units Produced January $600,000 110,000 February 570,000 100,000 March 545,000 90,000
=+EX 22-2 Flexible budget for selling and administrative expenses objs. 2, 4✔ Total selling and administrative expenses at$125,000 sales,$66,350 The production supervisor of the Machining Department for Nell Company agreed to the following monthly static budget for the upcoming year:Nell Company
=+c. What are the budget implications for Britney Logan?Agent Blaze uses flexible budgets that are based on the following data:Sales commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8% of sales Advertising expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21%
=+b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
=+EX 22-1 Personal cash budget objs. 2, 5✔a. December 31 cash balance, $3,500 1024 Chapter 22 Budgeting Cash balance, September 1 (from a summer job) . . . . . . . . . . . . . . . . . . . . . . . $7,000 Purchase season football tickets in September . . . . . . . . . . . . . . . . . . . . . . . .
=+PE 22-6B Cash budget obj. 5 EE 22-6 p. 1016 Exercises At the beginning of the 2010 school year, Britney Logan decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition,
=+PE 22-6A Cash budget obj. 5 EE 22-6 p. 1016 Day Timer Publishers Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. If sales on account are budgeted to be $390,000 for April and $360,000 for May, what are the budgeted cash receipts from
=+PE 22-5A Cost of goods sold budget obj. 4 EE 22-5 p. 1011 Soft Glow Candle Co. pays 20% of its purchases on account in the month of the purchase and 80% in the month following the purchase. If purchases are budgeted to be$15,000 for October and $17,000 for November, what are the budgeted cash
=+PE 22-5B Cost of goods sold budget obj. 4 EE 22-5 p. 1011 Prepare a cost of goods sold budget for Soft Glow Candle Co. using the information in Practice Exercises 22-3A and 22-4A. Assume the estimated inventories on January 1, 2010, for finished goods and work in process were $12,000 and $4,000,
=+PE 22-4A Direct labor cost budget obj. 4 EE 22-4 p. 1009 Prepare a cost of goods sold budget for Day Timer Publishers Inc. using the information in Practice Exercises 22-3B and 22-4B. Assume the estimated inventories on January 1, 2010, for finished goods and work in process were $39,000 and
=+PE 22-4B Direct labor cost budget obj. 4 EE 22-4 p. 1009 Soft Glow Candle Co. budgeted production of 78,900 candles in 2010. Each candle requires molding. Assume that 15 minutes are required to mold each candle. If molding labor costs $16.00 per hour, determine the direct labor cost budget for
=+PE 22-3B Direct materials purchases budget obj. 4 EE 22-3 p. 1008 Day Timer Publishers Inc. budgeted production of 201,500 schedule planners in 2010.Each planner requires assembly. Assume that 12 minutes are required to assemble each planner. If assembly labor costs $14 per hour, determine the
=+determine the direct materials purchases budget for 2010.
=+PE 22-2B Production budget obj. 4 EE 22-2 p. 1007 Soft Glow Candle Co. budgeted production of 78,900 candles in 2010. Wax is required to produce a candle. Assume 8 ounces (one half of a pound) of wax is required for each candle. The estimated January 1, 2010, wax inventory is 2,000 pounds. The
=+PE 22-2A Production budget obj. 4 EE 22-2 p. 1007 Day Timer Publishers Inc. projected sales of 205,000 schedule planners for 2010. The estimated January 1, 2010, inventory is 18,500 units, and the desired December 31, 2010, inventory is 15,000 units. What is the budgeted production (in units) for
=+PE 22-1B Flexible budgeting obj. 2 EE 22-1 p. 1003 Soft Glow Candle Co. projected sales of 78,000 candles for 2010. The estimated January 1, 2010, inventory is 3,600 units, and the desired December 31, 2010, inventory is 4,500 units. What is the budgeted production (in units) for 2010?
=+PE 22-1A Flexible budgeting obj. 2 EE 22-1 p. 1003 Practice Exercises At the beginning of the period, the Assembly Department budgeted direct labor of$186,000 and property tax of $15,000 for 12,000 hours of production. The department actually completed 13,400 hours of production. Determine the
=+16. Give an example of how the capital expenditures budget affects other operating budgets.
=+15. How does a schedule of collections from sales assist in preparing the cash budget?
=+b. If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used?
=+14.a. Discuss the purpose of the cash budget.
=+13. In preparing the budget for the cost of goods sold, what are the three budgets from which data on relevant estimates of quantities and costs are combined with data on estimated inventories?
=+12. Why should the timing of direct materials purchases be closely coordinated with the production budget?
=+carefully coordinated with the sales budget?
=+11. Why should the production requirements set forth in the production budget be
=+10. What is the first step in preparing a master budget?
=+9. How do computerized budgeting systems aid firms in the budgeting process?
=+8. Under what circumstances would a static budget be appropriate?
=+7. When would a company use zero-based budgeting?
=+6. What behavioral problems are associated with establishing conflicting goals within the budget?
=+5. What behavioral problems are associated with setting a budget too loosely?
=+4. Give an example of budgetary slack.
=+3. Briefly describe the type of human behavior problems that might arise if budget goals are set too tightly.
=+2. What is the manager’s role in a responsibility center?
=+1. What are the three major objectives of budgeting?
=+How much cash does Dixon expect to collect in April?A. $800,000 C. $755,000 B. $560,000 D. $1,015,000
=+5. Dixon Company expects $650,000 of credit sales in March and $800,000 of credit sales in April.Dixon historically collects 70% of its sales in the month of sale and 30% in the following month.
=+4. The total estimated sales for the coming year is 250,000 units. The estimated inventory at the beginning of the year is 22,500 units, and the desired inventory at the end of the year is 30,000 units. The total production indicated in the production budget is:A. 242,500 units. C. 280,000
=+3. Static budgets are often used by:A. production departments.B. administrative departments.C. responsibility centers.D. capital projects.
=+2. The first step of the budget process is:A. plan. C. control.B. direct. D. feedback.
=+1. A tight budget may create:A. budgetary slack.B. discouragement.C. a flexible budget.D. a “spend it or lose it” mentality.
=+5. Prepare a cost of goods sold budget for July
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