a. Prepare a budgeted multi-step income statement (for the quarter).

b. Prepare a schedule for expected cash collections from customers.

c. Prepare a schedule for expected payments for materials purchases.

d. Variance Analysis -- Based on the standards used during the budgeting process and the following information, compute the total, price, and quantity variances for direct materials and labor (separate calculations should be made for apples and sugar). During the first quarter of 2021, JAMZ Company produced and sold 890,000 jars of premium organic apple jam. The quantities of materials purchased during the quarter were also used. The actual quantities and costs incurred during production were as follows:?

Direct Materials:?

Apples -- 1,780,000 lbs @ $1.50 per lb.

Sugar -- 445,000 lbs @ $1.10 per lb.

Direct Labor: 89,000 hours @ $17.00 per hour

Additionally, prepare variance reports and indicate the department that will receive each report. Provide an explanation as to what may have caused the direct materials and direct labor variances.?

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Transcribed Image Text:

JAMZ Company is a family owned business that produces premium organic apple jam, which it sells to grocery stores nationwide for $8.50 per jar. The JAMZ Company budget committee is in the process of preparing budgets for the first quarter of the coming year and has gathered the following information: 1. Sales: Unit sales for November 2020 Unit sales for December 2020 Expected unit sales for January 2021 Expected unit sales for February 2021 Expected unit sales for March 2021 Expected unit sales for April 2021 Expected unit sales for May 2021 Expected unit sales for June 2021 Collections are expected to be 50 percent in the month of the sale, 35 percent in the first month fol ing the sale, and 15 percent in the second month following the sale. Accounts receivable on December 31, 2020 totaled $1,656,055. 2. Direct materials: 292,200 302,000 303,800 275,800 307,200 299,000 310,600 315,000 JAMZ Company's apple jam contains two main ingredients, apples and sugar. For every 24- ounce jar of apple jam, 1.5 pounds of organic apples at a cost of $1.75 per pound and 0.75 pounds of organic sugar at a cost of $0.85 per pound, will be used. Sixty percent of direct materials purchases are paid in the month of purchase, and the remaining 40 percent is paid in the month following the purchase. Direct materials purchases for December totaled $982,377.90 ($790,419.00 for apples and $191,958.90 for sugar). Accounts Payable on December 31, 2020 totaled $392,951.16. 3. Desired inventory levels: Type of Inventory Apple jam (jars) Apples (pounds) Sugar (pounds) December 1 January 1 60400 60760 136062 134190 68031 67095 February 1 55160 126936 63468 March 1 April 1 61440 59800 137502 135594 68751 67797 May 1 62120 140166 70083 4. Direct labor: To produce one jar of premium organic apple jam, 7.5 minutes of direct labor are consumed at an hourly rate of $14.00. 5. Manufacturing Overhead JAMZ Company expects variable manufacturing overhead to fluctuate with production volume on the basis of direct labor hours. Variable manufacturing overhead per unit and fixed manufacturing overhead are as follows: Indirect materials Indirect labor Utilities Maintenance Supervisory salaries Depreciation Facility rent Advertising Office salaries Insurance $1.25 per direct labor hour $0.70 per direct labor hour $0.45 per direct labor hour $0.20 per direct labor hour $168,000 per year 6. Selling and Administrative Variable selling and administrative costs per unit are expected to be $0.35, which includes sales commissions of $0.25 per unit and freight-out of $0.10 per unit. Fixed selling and administrative costs are as follows: 7. Other Information $5,000 per month $10,500 per month $10,000 per month $102,000 per year $500 per month Cost of goods sold should be calculated by multiplying the expected sales units by the cost per jar. Each month, JAMZ Company incurs $35,000 of interest expense. The corporate tax rate is 21 percent. The manufacturing overhead and selling and administrative expense budgets have already been prepared. Variable costs Indirect materials ($1.25/hour) Indirect labor ($0.70/hour) Utilities ($0.45/hour) Maintenance ($0.20/hour) Total variable costs Fixed costs Supervisory salaries Depreciation JAMZ Company Manufacturing Overhead Budget For the Quarter Ending March 31, 2021 Facility rent Total fixed costs January Month February March Total manufacturing overhead Manufacturing overhead rate per direct labor hour Quarter $46,593.75 $44,075.00 $47,743.75 $138,412.50 26,092.50 24,682.00 26,736.50 77,511.00 16,773.75 15,867.00 17,187.75 49,828.50 7,052.00 7,639.00 22,146.00 7,455.00 96,915.00 91,676.00 99,307.00 287,898.00 14,000.00 14,000.00 14,000.00 42,000.00 5,000.00 5,000.00 5,000.00 15,000.00 10,500.00 10,500.00 10,500.00 31,500.00 29,500.00 29,500.00 29,500.00 88,500.00 $126,415.00 $121,176.00 $128,807.00 $376,398.00 $3.40 JAMZ Company Selling and Administrative Expense Budget For the Quarter Ending March 31, 2021 January Month February March Quarter Variable expenses Sales commissions ($0.25 per unit) Freight-out ($0.10 per unit) Total variable expenses Fixed expenses Advertising 30,000.00 Office salaries 25,500.00 Insurance 1,500.00 Total fixed expenses 19,000.00 19,000.00 19,000.00 57,000.00 Total selling and administrative expenses $125,330.00 $115,530.00 $126,520.00 $367,380.00 $75,950.00 $68,950.00 $76,800.00 $221,700.00 30,380.00 27,580.00 30,720.00 88,680.00 106,330.00 96,530.00 107,520.00 310,380.00 10,000.00 10,000.00 10,000.00 8,500.00 8,500.00 8,500.00 500.00 500.00 500.00 JAMZ Company is a family owned business that produces premium organic apple jam, which it sells to grocery stores nationwide for $8.50 per jar. The JAMZ Company budget committee is in the process of preparing budgets for the first quarter of the coming year and has gathered the following information: 1. Sales: Unit sales for November 2020 Unit sales for December 2020 Expected unit sales for January 2021 Expected unit sales for February 2021 Expected unit sales for March 2021 Expected unit sales for April 2021 Expected unit sales for May 2021 Expected unit sales for June 2021 Collections are expected to be 50 percent in the month of the sale, 35 percent in the first month fol ing the sale, and 15 percent in the second month following the sale. Accounts receivable on December 31, 2020 totaled $1,656,055. 2. Direct materials: 292,200 302,000 303,800 275,800 307,200 299,000 310,600 315,000 JAMZ Company's apple jam contains two main ingredients, apples and sugar. For every 24- ounce jar of apple jam, 1.5 pounds of organic apples at a cost of $1.75 per pound and 0.75 pounds of organic sugar at a cost of $0.85 per pound, will be used. Sixty percent of direct materials purchases are paid in the month of purchase, and the remaining 40 percent is paid in the month following the purchase. Direct materials purchases for December totaled $982,377.90 ($790,419.00 for apples and $191,958.90 for sugar). Accounts Payable on December 31, 2020 totaled $392,951.16. 3. Desired inventory levels: Type of Inventory Apple jam (jars) Apples (pounds) Sugar (pounds) December 1 January 1 60400 60760 136062 134190 68031 67095 February 1 55160 126936 63468 March 1 April 1 61440 59800 137502 135594 68751 67797 May 1 62120 140166 70083 4. Direct labor: To produce one jar of premium organic apple jam, 7.5 minutes of direct labor are consumed at an hourly rate of $14.00. 5. Manufacturing Overhead JAMZ Company expects variable manufacturing overhead to fluctuate with production volume on the basis of direct labor hours. Variable manufacturing overhead per unit and fixed manufacturing overhead are as follows: Indirect materials Indirect labor Utilities Maintenance Supervisory salaries Depreciation Facility rent Advertising Office salaries Insurance $1.25 per direct labor hour $0.70 per direct labor hour $0.45 per direct labor hour $0.20 per direct labor hour $168,000 per year 6. Selling and Administrative Variable selling and administrative costs per unit are expected to be $0.35, which includes sales commissions of $0.25 per unit and freight-out of $0.10 per unit. Fixed selling and administrative costs are as follows: 7. Other Information $5,000 per month $10,500 per month $10,000 per month $102,000 per year $500 per month Cost of goods sold should be calculated by multiplying the expected sales units by the cost per jar. Each month, JAMZ Company incurs $35,000 of interest expense. The corporate tax rate is 21 percent. The manufacturing overhead and selling and administrative expense budgets have already been prepared. Variable costs Indirect materials ($1.25/hour) Indirect labor ($0.70/hour) Utilities ($0.45/hour) Maintenance ($0.20/hour) Total variable costs Fixed costs Supervisory salaries Depreciation JAMZ Company Manufacturing Overhead Budget For the Quarter Ending March 31, 2021 Facility rent Total fixed costs January Month February March Total manufacturing overhead Manufacturing overhead rate per direct labor hour Quarter $46,593.75 $44,075.00 $47,743.75 $138,412.50 26,092.50 24,682.00 26,736.50 77,511.00 16,773.75 15,867.00 17,187.75 49,828.50 7,052.00 7,639.00 22,146.00 7,455.00 96,915.00 91,676.00 99,307.00 287,898.00 14,000.00 14,000.00 14,000.00 42,000.00 5,000.00 5,000.00 5,000.00 15,000.00 10,500.00 10,500.00 10,500.00 31,500.00 29,500.00 29,500.00 29,500.00 88,500.00 $126,415.00 $121,176.00 $128,807.00 $376,398.00 $3.40 JAMZ Company Selling and Administrative Expense Budget For the Quarter Ending March 31, 2021 January Month February March Quarter Variable expenses Sales commissions ($0.25 per unit) Freight-out ($0.10 per unit) Total variable expenses Fixed expenses Advertising 30,000.00 Office salaries 25,500.00 Insurance 1,500.00 Total fixed expenses 19,000.00 19,000.00 19,000.00 57,000.00 Total selling and administrative expenses $125,330.00 $115,530.00 $126,520.00 $367,380.00 $75,950.00 $68,950.00 $76,800.00 $221,700.00 30,380.00 27,580.00 30,720.00 88,680.00 106,330.00 96,530.00 107,520.00 310,380.00 10,000.00 10,000.00 10,000.00 8,500.00 8,500.00 8,500.00 500.00 500.00 500.00

Answer rating: 100% (QA)

a the variance reports will be submitted to compan... View the full answer