1. Templeton Corporation produces ice cream machines. Last year, Templeton sold 40,000 machines. Unit sales are expected to increase 10 percent each year. Average sales price per machine will remain at $200.

Assume finished goods inventory is maintained at a level equal to 5 percent of the next quarter's sales. Finished goods inventory at the end of last year was 2,300 units.

a. What is Templeton Corporation's sales budget for this year?

b. What is Templeton Corporation's production budget for this year?

2. Giantage Corporation produces windows used in residential construction. The company expects to produce 44,550 units next year. With regards to direct materials, each unit of product requires 12 square feet of glass at a cost of $1.50 per square foot. With regards to direct labor, each unit of product requires 2 labor hours at a cost of $15/hour. The following information relates to the manufacturing overhead budget.

Variable Overhead Costs
Indirect materials	$2.50 per unit
Indirect labor	$3.20 per unit
Other	$1.70 per unit
Fixed Overhead Costs
Salaries	$50,000
Rent	$60,000
Depreciation	$36,000

a. Calculate the direct materials budget for Giantage.

b. Calculate the direct labor budget for Giantage.

c. Calculate the manufacturing overhead budget for Giantage.

3. Civil Engineers, LLC, has five engineers who design and maintain wetlands. The company had the following net income for the most current year.

Civil Engineers, LLC
Income Statement
YE December 31, 20XX
Service revenue	$1,185,000
Operating expenses:
Engineer salaries	$480,000
Biologist salaries	$200,000
Administrative staff wages	$80,000
Supplies	$92,000
Rent	$56,000
Utilities	$16,000
Insurance	$112,000
Miscellaneous	$52,000
Total operating expenses	$1,088,000
Net income (loss)	$97,000

The following information was gathered from management to help create this coming year's budgeted income statement:

• Service revenue will increase 3 percent.
• Existing engineer and biologist salaries will increase 5 percent, and a new biologist will be hired at the beginning of the year, at a salary of $40,000.
• Administrative staff wages will increase 15 percent.
• Supplies and rent will remain the same.
• Utilities will increase 8 percent.
• Insurance will increase 20 percent.
• Miscellaneous expenses will decrease 5 percent.

Create a budgeted annual income statement for Civil Engineers, LLC.

4. Hal's Heating produces furnaces for commercial buildings. The company's master budget shows the following standards information.

Expected production for January:	300 furnaces
Direct materials	3 heating elements at $40 per element
Direct labor	35 hours per furnace at $18 per hour
Variable manufacturing overhead	35 direct labor hours per furnace at $15 per hour

a. Calculate the standard cost per unit for direct materials, direct labor, and variable manufacturing overhead.

b. Assume Hal's Heating produced 320 furnaces during January. Create a flexible budget for direct materials, direct labor, and variable manufacturing overhead.

5. Sweets Company produces boxes of chocolate. Sweets purchased and used 2,200 pounds of chocolate during the month of April for $4.80 per pound. A standard of 2 pounds of material is expected to be used for each box produced, at a cost of $5 per pound. Sweets produced 1,000 boxes of chocolate during the month of April.

a. Calculate the direct materials price variance for the month of April.

b. Calculate the materials quantity variance for the month of April.

6. Tech Company produces computer servers. The company's standards show an expected direct labor rate of $20 per hour and that each server will require 10 hours of direct labor. Tech's direct labor workforce worked 3,200 hours to produce 300 units during the month of August for a total direct labor cost of $70,400.

a. Calculate the labor rate variance for the month of August. Clearly indicate if the variance is favorable or unfavorable.

b. Calculate the labor efficiency variance for the month of August. Clearly indicate if the variance is favorable or unfavorable.

7. Tech Company produces computer servers. Variable overhead is allocated to each server based on a standard of $100 per machine hour and 3 machine hours per server. A total of 850 machine hours were used during the month of August to produce 300 servers. Variable overhead costs totaled $96,050 for the month.

a. Calculate the variable overhead spending variance for the month of August. Clearly indicate if the variance is favorable or unfavorable.

b. Calculate the variable overhead efficiency variance for the month of August. Clearly indicate if the variance is favorable or unfavorable.

8. Rain Gear, Inc., produces rain jackets. The master budget shows the following standards information and indicates the company expected to produce and sell 28,000 units for the year. Variable manufacturing overhead is allocated based on direct labor hours.

Direct materials	4 yards per unit at $3 per yard
Direct labor	2 hours per unit at $10 per hour
Variable mfg OH	2 direct labor hours per unit at $4 per hour

Rain Gear actually produced and sold 30,000 units for the year. During the year, the company purchased and used 130,000 yards of material for $429,000. A total of 65,000 labor hours were worked during the year at a cost of $637,000. Variable overhead costs totaled $231,000 for the year.

a. Provide a flexible budget of production costs for the year

b. Calculate the materials price variance and materials quantity variance. Enter your calculations into the table below to present your findings:

	Actual	Flexible budget	Budget Variance	Price Variance	Quantity Variance

c. Calculate the labor rate variance and labor efficiency variance. Enter your calculations into the table below to present your findings:

	Actual	Flexible budget	Budget Variance	Rate Variance	Efficiency Variance
DL

d. Calculate the variable overhead spending variance and variable overhead efficiency variance. Enter your calculations into the table below to present your findings:

	Actual	Flexible budget	Budget Variance	Spend Variance	Efficiency Variance
VOH

e. Company policy is to investigate all variances greater than 10 percent of the flexible budget amount for each of the three variable production costs: direct materials, direct labor, and variable overhead. Identify which of the six variances calculated in requirements b through e should be investigated.

f. Provide two possible explanations for each variance identified in requirement e.

Answer rating: 100% (QA)

1 a Templeton Corporations sales budget for this year is 400000 40000 machines x 200 per machine x 11 increase b Templeton Corporations production bud... View the full answer