The CEO of Baxter Company asks the Sales and Production Managers to prepare a flexible Budget...

  

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The CEO of Baxter Company asks the Sales and Production Managers to prepare a flexible Budget for each of the three levels of activity: the unit sales at break even, the unit sales to achieve a $25,000 profit and the unit sales to achieve a $40,000 profit. (These unit sales figures come from questions 1 and 2 above). The following standard costs were used to prepare the flexible budget: Selling Price: Variable Costs (per unit) Direct Materials: The standard materials quantity and cost for each unit is 3 pounds per unit at a cost of $.50 per pound. $18.50 Direct Labor: The standard activity and wage rate is 20 minutes per product at a rate of $12.00 per DL hour. Indirect Materials: Utilities for Factory Indirect Labor for Factory Factory Supplies Variable Administrative Salaries Variable Sales Commissions Fixed Costs (per month) Factory Supervisor Salaries Depreciation on Factory Equipment Property Taxes (Factory) Insurance (Factory) Maintenance (Factory) Fixed Sales Salaries Depreciation on Sales Equipment Advertising $.10 $.15 $.70 $.15 $0.75 $1.15 $40,000 $15,500 $4,500 $3,200 $1,800 $ 10,000 $12,000 $5,000 Requirement 3 (25 points) a. Calculate the standard cost per unit for direct materials and standard rate per unit for direct labor. (The formulas are given above next to the "Direct Materials" and "Direct Labor" items. The standard costs that you calculate are the amounts you will use for your flexible budget for each of these costs). b. Prepare a flexible production budget including Revenues, Total Variable Costs, Total Fixed Costs, Total Costs and Net Income, for the three levels of activity (number of units to break even, number of units to achieve a $25,000 profit, number of units to achieve a $40,000 profit). The CEO of Baxter Company asks the Sales and Production Managers to prepare a flexible Budget for each of the three levels of activity: the unit sales at break even, the unit sales to achieve a $25,000 profit and the unit sales to achieve a $40,000 profit. (These unit sales figures come from questions 1 and 2 above). The following standard costs were used to prepare the flexible budget: Selling Price: Variable Costs (per unit) Direct Materials: The standard materials quantity and cost for each unit is 3 pounds per unit at a cost of $.50 per pound. $18.50 Direct Labor: The standard activity and wage rate is 20 minutes per product at a rate of $12.00 per DL hour. Indirect Materials: Utilities for Factory Indirect Labor for Factory Factory Supplies Variable Administrative Salaries Variable Sales Commissions Fixed Costs (per month) Factory Supervisor Salaries Depreciation on Factory Equipment Property Taxes (Factory) Insurance (Factory) Maintenance (Factory) Fixed Sales Salaries Depreciation on Sales Equipment Advertising $.10 $.15 $.70 $.15 $0.75 $1.15 $40,000 $15,500 $4,500 $3,200 $1,800 $ 10,000 $12,000 $5,000 Requirement 3 (25 points) a. Calculate the standard cost per unit for direct materials and standard rate per unit for direct labor. (The formulas are given above next to the "Direct Materials" and "Direct Labor" items. The standard costs that you calculate are the amounts you will use for your flexible budget for each of these costs). b. Prepare a flexible production budget including Revenues, Total Variable Costs, Total Fixed Costs, Total Costs and Net Income, for the three levels of activity (number of units to break even, number of units to achieve a $25,000 profit, number of units to achieve a $40,000 profit).

Answer rating: 100% (QA)

Solution or 100C or 75 cm Copper Figure 28W2 The situation is shown in figure 28W2 Le... View the full answer