Project $4$ Budgeting and Variance Analysis

$30$ Points

Assumptions:

Sales volume increases $500$ units each quarter, including Q$1$ of the next year

Ending Inventory is $20\%$ of next quarter's budgeted sales

Unit cost is $45\%$ of sales price

Salaries are $25\%$ of sales

Commissions are $5\%$ of sales

Benefits are $25\%$ of salaries

Supplies are $1\%$ of sales

All other expenses are the same amount each quarter

Interest expenses are $1\%$ of Sales

Income taxes are $20\%$ of earnings before taxes

Rent is $$50,000$ per quarter

Utilities are $$5,000$ per quarter

Depreciation is $$20,000$ per quarter

Sales Budget Q$1$ Q$2$ Q$3$ Q$4$ Total

Sales Units $15,00015,000$

Price per unit $250125$

Total Sales $3,750,000---1,875,000$

Purchases Budget

Units Sold $15,000---15,000$

Ending Inventory $----$

Tablets Needed $15,000---$

Beginning $3,000---3,000$

Purchases $12,000---12,000$

Revenue

Sales $3,750,000---3,750,000$

Cost of Goods Sold $1,687,500---1,687,500$

Gross Profit $2,062,500---2,062,500$

Gross Profit $\%$

Expenses

Salaries $-$

Commissions $-$

Benefits $-$

Rent $-$

Utilities $-$

Supplies $-$

Total expenses $-----$

Operating Income $2,062,500$

Operating Income $\%$

Depreciation $-$

Interest expense $-$

Earnings before taxes $----2,062,500$

Income Taxes $-$

Net Income $----2,062,500$

Net Income $\%$

Project $5$ Part $2$ Direct Materials Variance

Name

Quantity produced $65,000$ units

Direct materials cost standard $ $1\mathrm{.}85$ per pound

Direct materials efficiency standard $1\mathrm{.}25$ pounds of paraffin per batch of crayons

Actual amount of paraffin purchased and used $74,750$ pounds

Actual cost of paraffin purchased and used $ $149,5002\mathrm{.}00$

Total variance

Materials variance

Efficiency variance