ch.9

Question 1: Score 0/4

Your response Correct response

Exercise 9-1 Schedule of Expected Cash Collections [LO2]Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below:

April

Budgeted sales (all on account) $300,00

From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000.

Requirement 1:Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

February salesMarch salesApril salesMay salesJune salesTotal cash collections

Exercise 9-1 Schedule of Expected Cash Collections [LO2]Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below:

April

Budgeted sales (all on account) $300,00

From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000.

Requirement 1:Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

February salesMarch salesApril salesMay salesJune salesTotal cash collections

Total grade: 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback: April May June Total

February sales:

$230,000 × 10% $ 23,000

$ 23,000March Sales:

$260,000 × 70%, 10%

182,000 $ 26,000

208,000April sales:

$300,000 × 20%, 70%, 10%

60,000

210,000 $ 30,000

300,000May sales: 100,000 350,000 450,000

$500,000 × 20%, 70%June sales:

$200,000 × 20%

40,000

40,000Total cash collections $ 265,000 $ 336,000 $ 420,000 $ 1,021,000

Observe that even though sales peak in May, cash collections peak in June. This occurs because the bulk of the company's customers pay in the month following sale. The lag in collections that this creates is even more pronounced in some companies. Indeed, it is not unusual for a company to have the least cash available in the months when sales are greatest.


Requirement 2:Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date. (Omit the "$" sign in your response.)

Accounts receivable$

1 (0%)

Requirement 2:Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date. (Omit the "$" sign in your response.)

Accounts receivable$ 210,000

Total grade: 0.0×1/1 = 0%Feedback:

Accounts receivable at June 30:

From May sales: $500,000 × 10% $ 50,000From June sales: $200,000 × (70% + 10%) 160,000Total accounts receivable at June 30 $ 210,000



Exercise 9-2 Production Budget [LO3]Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

Salesin Units

April 50,00

0

May 75,00

0

Exercise 9-2 Production Budget [LO3]Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

Salesin Units

April 50,000 May 75,000 June 90,000 July 80,000

June 90,00

0

July 80,00

0

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units.

Required:Show the number of units to be produced each month and for the quarter in total.

Required Production

April 1 (0%)May 1 (0%)June 1 (0%)Quarter 1 (0%)

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units.

Required:Show the number of units to be produced each month and for the quarter in total.

Required Production

April 52,500May 76,500June 89,000Quarter 218,000

Total grade: 0.0×1/4 + 0.0×1/4 + 0.0×1/4 + 0.0×1/4 = 0% + 0% + 0% + 0%Feedback:

April May June QuarterBudgeted sales in units 50,000 75,000 90,000 215,000Add desired ending inventory* 7,500 9,000 8,000 8,000Total needs 57,500 84,000 98,000 223,000Less beginning inventory 5,000 7,500 9,000 5,000Required production 52,500 76,500 89,000 218,000

*10% of the following month's sales in units.



Exercise 9-3 Direct Materials Budget [LO4]Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is 150 roubles per kilogram. (Siberia is located in Russia, whose currency is the rouble.) Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

First Second

Exercise 9-3 Direct Materials Budget [LO4]Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is 150 roubles per kilogram. (Siberia is located in Russia, whose currency is the rouble.) Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

First Second

Budgeted production, in bottles 60,000 90,000

Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2.

Required:Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases in roubles for each quarter and for the year in total.

Production needs—grams Less (0%) : desired ending inventory—gramsTotal needs—grams Add (0%) : beginning inventory—gramsRaw materials to be purchased—grams

Cost of raw materials to be purchased

Budgeted production, in bottles 60,000 90,000

Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2.

Required:Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases in roubles for each quarter and for the year in total.

Production needs—gramsAdd : desired ending inventory—gramsTotal needs—gramsLess : beginning inventory—gramsRaw materials to be purchased—grams


Total grade: 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback: Year 2 Year 3 First Second Third Fourth FirstRequired production in bottles 60,000 90,000 150,000 100,000 70,000Number of grams per bottle × 3 × 3 × 3 × 3 × 3Total production needs—grams 180,000 270,000 450,000 300,000 210,000



Exercise 9-4 Direct Labor Budget [LO5]The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

1st Quarter

Units to be produced 8,000

Exercise 9-4 Direct Labor Budget [LO5]The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

1st Quarter

Units to be produced 8,000

Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour.

Requirement 1:Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. the "$" sign in your response.)

Total directlabor cost

1st Quarter $ 1 (0%

)

2nd Quarter $ 1 (0%

)

3rd Quarter $ 1 (0%

)

4th Quarter $ 1 (0%

)

Year $ 1 (0%

)

Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour.

Requirement 1:Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. the "$" sign in your response.)

Total direct

labor cost1st Quarter $ 33,6002nd Quarter $ 27,3003rd Quarter $ 29,4004th Quarter $ 31,500Year $ 121,800

Total grade: 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 = 0% + 0% + 0% + 0% + 0%Feedback:

Assuming that the direct labor workforce is adjusted each quarter, the direct labor budget is:

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter YearUnits to be produced 8,000 6,500 7,000 7,500 29,000Direct labor time per unit (hours) × 0.35 × 0.35 × 0.35 × 0.35 × 0.35Total direct labor hours needed 2,800 2,275 2,450 2,625 10,150Direct labor cost per hour × $12.00 × $12.00 × $12.00 × $12.00 × $12.00Total direct labor cost $ 33,600 $ 27,300 $ 29,400 $ 31,500 $ 121,800


Requirement 2:Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company's direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.

Requirement 2:Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company's direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.

Total directlabor cost

1st Quarter $ 1 (0%

)

2nd Quarter $ 1 (0%

)

3rd Quarter $ 1 (0%

)

4th Quarter $ 1 (0%

)

Year $ 1 (0%

)

Total direct

labor cost1st Quarter $ 34,8002nd Quarter $ 31,2003rd Quarter $ 31,2004th Quarter $ 31,650Year $ 128,850


Assuming that the direct labor workforce is not adjusted each quarter and that overtime wages are paid, the direct labor budget is:

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter YearUnits to be produced 8,000 6,500 7,000 7,500 Direct labor time per unit (hours) × 0.35 × 0.35 × 0.35 × 0.35 Total direct labor hours needed 2,800 2,275 2,450 2,625 Regular hours paid 2,600 2,600 2,600 2,600 Overtime hours paid 200 0 0 25

Wages for regular hours (@ $12.00 per hour) $ 31,200 $ 31,200 $ 31,200 $ 31,200 $ 124,800Overtime wages (@ 1.5 hours × $12.00 per hour) 3,600 0 0 450 4,050Total direct labor cost $ 34,800 $ 31,200 $ 31,200 $ 31,650 $ 128,850



Exercise 9-5 Manufacturing Overhead Budget [LO6]The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:

1st Quarter

Budgeted direct labor-hours 8,000

Exercise 9-5 Manufacturing Overhead Budget [LO6]The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:

1st Quarter

Budgeted direct labor-hours 8,000

The company's variable manufacturing overhead rate is $3.25 per direct labor-hour and the company's fixed manufacturing overhead is $48,000 per quarter. The only non cash item included in fixed manufacturing overhead is depreciation, which is $16,000 per quarter.

Requirement 1:Compute the company's manufacturing overhead budget for the upcoming fiscal year. response.)

Cash disbursements for manufacturing

overhead

1st Quarter $ 1 (0%

)

2nd Quarter $ 1 (0%

)

3rd Quarter $ 1 (0%

)

4th Quarter $ 1 (0%

)

Year $ 1 (0%

)

The company's variable manufacturing overhead rate is $3.25 per direct labor-hour and the company's fixed manufacturing overhead is $48,000 per quarter. The only non cash item included in fixed manufacturing overhead is depreciation, which is $16,000 per quarter.

Requirement 1:Compute the company's manufacturing overhead budget for the upcoming fiscal year. response.)

Cash disbursements for manufacturing

overhead1st Quarter $ 58,0002nd Quarter $ 58,6503rd Quarter $ 59,6254th Quarter $ 57,350Year $ 233,625


Yuvwell CorporationManufacturing Overhead Budget

1st Quarter

2ndQuarter

3rdQuarter

4thQuarter Year

Budgeted direct labor-hours 8,000 8,200 8,500 7,800 32,500Variable overhead rate $ × 3.25 $ × 3.25 $ × 3.25 $ × 3.25 $ × 3.25Variable manufacturing overhead $ 26,000 $ 26,650 $ 27,625 $ 25,350 $ 105,625Fixed manufacturing overhead 48,000 48,000 48,000 48,000 192,000Total manufacturing overhead 74,000 74,650 75,625 73,350 297,625Less depreciation 16,000 16,000 16,000 16,000 64,000Cash disbursements for manufacturing overhead $ 58,000 $ 58,650 $ 59,625 $ 57,350 $ 233,625


Requirement 2:Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Manufacturing overhead rate for the year

Requirement 2:Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Manufacturing overhead rate for the year

Total grade: 0.0×1/1 = 0%

Feedback:

Total budgeted manufacturing overhead for the year (a) $ 297,625Total budgeted direct labor-hours for the year (b) 32,500Manufacturing overhead rate for the year (a) ÷ (b) $ 9.16



Exercise 9-6 Selling and Administrative Expense Budget [LO7]The budgeted unit sales of Weller Company for the upcoming fiscal year are provided below:

1st Quarter 2nd Quarter

Budgeted unit sales 15,000 16,000

The company's variable selling and administrative expense per unit is $2.50. Fixed selling and administrative expenses include advertising expenses of $8,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $20,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, property taxes of $8,000 will be paid in the second quarter.

Required:Prepare the company's selling and administrative expense budget for the upcoming fiscal year. values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Selling and Administrative Expense Budget

1st

QuarterVariable expense $ 1 Fixed selling and administrative expenses:

Advertising 1 Executive salaries 1 Insurance 1 Property taxes 1 Depreciation 1

Total fixed selling and administrative expenses

1

Total selling and administrative expenses 1

Exercise 9-6 Selling and Administrative Expense Budget [LO7]The budgeted unit sales of Weller Company for the upcoming fiscal year are provided below:


Budgeted unit sales 15,000 16,000

The company's variable selling and administrative expense per unit is $2.50. Fixed selling and administrative expenses include advertising expenses of $8,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $20,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, property taxes of $8,000 will be paid in the second quarter.

Required:Prepare the company's selling and administrative expense budget for the upcoming fiscal year. values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Selling and Administrative Expense Budget

1st

QuarterVariable expense $ 37,500Fixed selling and administrative expenses:

Advertising 8,000Executive salaries 35,000Insurance 5,000Property taxes Depreciation 20,000

Total fixed selling and administrative expenses

68,000

Total selling and administrative expenses 105,500

Less depreciation 1 Cash disbursements for selling and

administrative expenses$ 1

Less depreciation 20,000Cash disbursements for selling and

administrative expenses$ 85,500

Total grade: 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter Year

Budgeted unit sales 15,000 16,000 14,000 13,000 58,000Variable selling and administrative expense per unit

$ × 2.50 $ × 2.50 $ × 2.50 $ × 2.50 $ × 2.50

Variable expense $ 37,500 $ 40,000 $ 35,000 $ 32,500 $ 145,000



Exercise 9-7 Cash Budget [LO8]Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:

1st QuarterTotal cash receipts $ 180,000Total cash disbursements $ 260,000

The company's beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.

Required:Prepare the company's cash budget for the upcoming fiscal year. financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Exercise 9-7 Cash Budget [LO8]Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:

1st Quarter 2nd

Total cash receipts $ 180,000 $Total cash disbursements $ 260,000 $

The company's beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.

Required:Prepare the company's cash budget for the upcoming fiscal year. financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Cash balance, beginningTotal cash receiptsTotal cash availableLess total cash disbursementsExcess (deficiency) of cash available over disbursementsFinancing:

Borrowings (at beginnings of quarters)Repayments (at ends of quarters)Interest

Total financingCash balance, ending

Cash balance, beginningTotal cash receiptsTotal cash availableLess total cash disbursementsExcess (deficiency) of cash available over disbursementsFinancing:

Borrowings (at beginnings of quarters)Repayments (at ends of quarters)Interest


Total grade: 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:Borrowings (at beginnings of quarters):Since the deficiency of cash available over disbursements is $60,000, the company must borrow $70,000 to maintain the desired ending cash balance of $10,000.Interest:$70,000 × 3% × 2 = $4,200.

Question 8: Score 0.28/4


Exercise 9-8 Budgeted Income Statement [LO9]Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:

Budgeted unit salesSelling price per unitCost per unitVariable selling and administrative expenses (per unit)Fixed selling and administrative expenses (per year)Interest expense for the year

Required:Use the absorption costing income statement method, prepare the company's budgeted income statement. as positive values. Omit the "$" sign in your response.)

Exercise 9-8 Budgeted Income Statement [LO9]Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:

Budgeted unit salesSelling price per unitCost per unitVariable selling and administrative expenses (per unit)Fixed selling and administrative expenses (per year)Interest expense for the year

Required:Use the absorption costing income statement method, prepare the company's budgeted income statement. as positive values. Omit the "$" sign in your response.)

Gig Harbor Boating Budgeted Income Statement

Interest expense (0%) Selling and administrative expenses (0%)Gross profit (7%) Notes payable (0%) Net operating loss (0%) Notes payable (0%) Net loss (0%)

Gig Harbor Boating Budgeted Income Statement

SalesCost of goods soldGross profitSelling and administrative expensesNet operating incomeInterest expenseNet income

Total grade: 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 1.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 = 0% + 0% + 0% + 0% + 7% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%Feedback:

Sales (460 units × $1,950 per unit) = $897,000Cost of goods sold (460 units × $1,575 per unit) = $724,500Selling and administrative expenses (460 units × $75 per unit) + $105,000 = $139,500.



Exercise 9-9 Budgeted Balance Sheet [LO10]The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

EndingBalances

Cash ?Accounts receivable $ 8,100Supplies inventory $ 3,200Equipment $ 34,000Accumulated depreciation $ 16,000Accounts payable $ 1,800Common stock $ 5,000Retained earnings ?

The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800.

Required:Prepare the company's budgeted balance sheet. (Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

Exercise 9-9 Budgeted Balance Sheet [LO10]The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

EndingBalances

Cash ?Accounts receivable $ 8,100Supplies inventory $ 3,200Equipment $ 34,000Accumulated depreciation $ 16,000Accounts payable $ 1,800Common stock $ 5,000Retained earnings ?

The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800.

Required:Prepare the company's budgeted balance sheet. (Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

AssetsCurrent assets:

Cash (5%) $ 1 (0%) Common stock (0%) 1 (0%) Retained earnings (0%) 1 (0%)

Total current assetsPlant and equipment:

Building (0%) 1 (0%) Retained earnings (0%) 1 (0%)

Plant and equipment, netTotal assets

AssetsCurrent assets:

Cash $ 12,200Accounts receivable 8,100Supplies inventory 3,200

Total current assetsPlant and equipment:

Equipment 34,000Accumulated depreciation -16,000

Plant and equipment, netTotal assets

Total grade: 1.0×1/21 + 0.0×1/21 + 1.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 = 5% + 0% + 5% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:Cash: Plug figure.

Retained earnings, beginning balance $ 28,000Add net income 11,500

39,500Deduct dividends 4,800Retained earnings, ending balance $ 34,700



Exercise 9-10 Cash Budget Analysis [LO8]A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts in the table. Show deficiencies, repayments, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Cash balance, beginning

Add collections from customers

Total cash available

Exercise 9-10 Cash Budget Analysis [LO8]A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts in the table. Show deficiencies, repayments, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Cash balance, beginningAdd collections from customersTotal cash availableLess disbursements:

Purchases of inventory

Less disbursements:

Purchases of inventory

Operating expenses

Equipment purchases

Dividends

Total disbursements

Excess (deficiency) of cash available over disbursements

Financing:

Borrowings

Repayments (including interest)*

Total financing

Cash balance, ending

*Interest will total $1,000 for the year.

Operating expensesEquipment purchasesDividends

Total disbursementsExcess (deficiency) of cash available over disbursementsFinancing:

BorrowingsRepayments (including interest)*


*Interest will total $1,000 for the year.

Total grade: 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%



Exercise 9-11 Production and Direct Materials Budgets [LO3, LO4]The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year:

1st Quarter 2nd

Budgeted unit sales 8,000

The company expects to start the first quarter with 1,600 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,700 units.

In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3,120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14,820.

Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with

Exercise 9-11 Production and Direct Materials Budgets [LO3, LO4]The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year:

1st Quarter 2nd

Budgeted unit sales 8,000


In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3,120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14,820.

Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with

an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3,140 pounds. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.

Requirement 1:Prepare the company's production budget for the upcoming fiscal year.

1st QuarterBudgeted unit sales 1 Add desired ending inventory 1 Total units needed 1 Less beginning inventory 1 Required production 1

an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3,140 pounds. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.


1st QuarterBudgeted unit salesAdd desired ending inventoryTotal units neededLess beginning inventoryRequired production

Total grade: 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%


Requirement 2:(a)

Prepare the company's direct materials budget. (Input all amounts as positive values. Omit the "$" sign in your response.)

Production needsAdd desired ending inventoryTotal needsLess beginning inventoryRaw materials to be purchased


Requirement 2:(a)

Prepare the company's direct materials budget. (Input all amounts as positive values. Omit the "$" sign in your response.)

Production needsAdd desired ending inventoryTotal needsLess beginning inventoryRaw materials to be purchased


Total grade: 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter YearRequired production 7,800 6,800 6,200 7,300 28,100Raw materials per unit × 2 × 2 × 2 × 2 × 2Production needs 15,600 13,600 12,400 14,600 56,200


(b)

Prepare the schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Schedule of Expected Cash Disbursements for Materials

Accounts payable, beginning balance1st Quarter purchases2nd Quarter purchases3rd purchases4th Quarter purchasesTotal cash disbursements for materials

(b)

Prepare the schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Schedule of Expected Cash Disbursements for Materials

Accounts payable, beginning balance1st Quarter purchases2nd Quarter purchases3rd purchases4th Quarter purchasesTotal cash disbursements for materials

Total grade: 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%



Exercise 9-14 Direct Labor and Manufacturing Overhead Budgets [LO5, LO6]The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:


Units to be produced 12,000 14,000

Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour.In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is

$80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter.

Requirement 1:Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. sign in your response.)

Exercise 9-14 Direct Labor and Manufacturing Overhead Budgets [LO5, LO6]The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:


Units to be produced 12,000 14,000

Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour.In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is

$80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter.

Requirement 1:Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. sign in your response.)

Total direct labor-hours neededTotal direct labor cost

Total direct labor-hours neededTotal direct labor cost

Total grade: 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%Feedback:

Raredon CorporationDirect Labor Budget

1st

quarter 2nd quarter3rd

quarter4th

quarterYear

Units to be produced 12,000 14,000 13,000 11,000 50,000Direct labor time per unit (hours) ×0.70 ×0.70 ×0.70 ×0.70 ×0.70Total direct labor-hours needed 8,400 9,800 9,100 7,700 35,000Direct labor cost per hour $ 10.50 $ 10.50 $ 10.50 $ 10.50 $ 10.50

Total direct labor cost $ 88,200 $102,90

0$ 95,550 $ 80,850 $ 367,500


Requirement 2:Prepare the company's manufacturing overhead budget. (Omit the "$" sign in your response.)

Variable manufacturing overheadFixed manufacturing overheadTotal manufacturing overhead

Cash disbursements for manufacturing overhead

Requirement 2:Prepare the company's manufacturing overhead budget. (Omit the "$" sign in your response.)

Variable manufacturing overheadFixed manufacturing overheadTotal manufacturing overhead


Total grade: 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:Raredon Corporation

Manufacturing Overhead Budget

1st

quarter2nd

quarter3rd

quarter4th

quarterYear

Budgeted direct labor-hours 8,400 9,800 9,100 7,700 35,000Variable overhead rate $ ×1.50 $ ×1.50 $ ×1.50 $ ×1.50 $ ×1.50

Variable manufacturing overhead $12,60

0 $

14,700

$13,65

0 $ 11,550 $ 52,500

Fixed manufacturing overhead 80,60

0

80,000

80,00

0 80,000 320,000

Total manufacturing overhead 92,60

0

94,700

93,65

0 91,550 372,500

Less depreciation 22,00

0

22,000

22,00

0 22,000 88,000


$

70,600

$

72,700

$

71,650

$ 69,550

$ 284,500



Exercise 9-12 Sales and Production Budgets [LO2, LO3]The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):

1st Quarter 2nd QuarterBudgeted unit sales 11,000 12,000

The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200.


Requirement 1:(a)

Calculate the company's total sales. (Omit the "$" sign in your response.)

1

Total sales $

Exercise 9-12 Sales and Production Budgets [LO2, LO3]The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):

1st Quarter 2nd QuarterBudgeted unit sales 11,000 12,000

The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200.


Requirement 1:(a)

Calculate the company's total sales. (Omit the "$" sign in your response.)

1Total sales $


Jessi CorporationSales Budget

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter YearBudgeted unit sales 11,000 12,000 14,000 13,000 50,000Selling price per unit × $18.00 × $18.00 × $18.00 × $18.00 × $18.00

Total sales $ 198,000 $ 216,000 $ 252,000 $ 234,000 $ 900,000


(b) Prepare the schedule of expected cash collections. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Schedule of Expected Cash Collections

Accounts receivable, beginning balance

1st Quarter sales

2nd Quarter sales

3rd Quarter sales

4th Quarter sales

Total cash collections

(b) Prepare the schedule of expected cash collections. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Schedule of Expected Cash Collections

Accounts receivable, beginning balance1st Quarter sales2nd Quarter sales3rd Quarter sales4th Quarter salesTotal cash collections

Total grade: 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%



1st Quarter

Budgeted unit sales

Add desired ending inventory

Total units needed

Less beginning inventory

Required production


1st

Budgeted unit salesAdd desired ending inventoryTotal units neededLess beginning inventoryRequired production

Total grade: 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%



Exercise 10-1 Prepare a Flexible Budget [LO1]Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company's planning budget for May appears below:

Puget Sound DiversPlanning Budget

For the Month Ended May 31Budgeted diving-hours (q) Revenue ($365.00q) $ 36,500Expenses:

Wages and salaries ($8,000 + $125.00q) 20,500Supplies ($3.00q) Equipment rental ($1,800 + $32.00q) Insurance ($3,400) Miscellaneous ($630 + $1.80q)

Total expense 30,010Net operating income $

Required:During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity. amounts as positive values. Omit the "$" sign in your response.)

Puget Sound DiversFlexible Budget

For the Month Ended May 31

Revenue $ 1 (0%

Expenses:

Wages and salaries 1 (0%

Supplies 1 (0%

Equipment rental 1 (0%

Exercise 10-1 Prepare a Flexible Budget [LO1]Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company's planning budget for May appears below:

Puget Sound DiversPlanning Budget

For the Month Ended May 31Budgeted diving-hours (q) Revenue ($365.00q) $ 36,500Expenses:

Wages and salaries ($8,000 + $125.00q) 20,500Supplies ($3.00q) Equipment rental ($1,800 + $32.00q) Insurance ($3,400) Miscellaneous ($630 + $1.80q)

Total expense 30,010Net operating income $

Required:During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity. amounts as positive values. Omit the "$" sign in your response.)

Puget Sound DiversFlexible Budget

For the Month Ended May 31Revenue $ 38,325Expenses:

Wages and salaries 21,125Supplies Equipment rental 5,160Insurance 3,400Miscellaneous

Total expense 30,819

Insurance 1 (0%

Miscellaneous 1 (0%

Total expense 1 (0%

Net operating income $ 1 (0%

Net operating income $ 7,506

Total grade: 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%Feedback:

Revenue ($365.00 × 105) = $38,325Wages and salaries ($8,000 + ($125.00 × 105)) = $21,125Supplies ($3.00 × 105) = $315Equipment rental ($1,800 + ($32.00 × 105)) = $5,160Miscellaneous ($630 + ($1.80 × 105)) = $819



Exercise 10-2 Prepare a Report Showing Activity Variances [LO2]Flight Café is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company's planning budget for July appears below:

Flight CaféPlanning Budget

For the Month Ended July 31Budgeted meals (q) 18,000Revenue ($4.50q) $ 81,000Expenses:

Raw materials ($2.40q) 43,200Wages and salaries ($5,200 + $0.30q) 10,600Utilities ($2,400 + $0.05q) Facility rent ($4,300) Insurance ($2,300) Miscellaneous ($680 + $0.10q)

Total expense 66,180Net operating income $ 14,820

In July, 17,800 meals were actually served. The company's flexible budget for this level of activity appears below:

Flight CaféFlexible Budget

Exercise 10-2 Prepare a Report Showing Activity Variances [LO2]Flight Café is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company's planning budget for July appears below:

Flight CaféPlanning Budget




In July, 17,800 meals were actually served. The company's flexible budget for this level of activity appears below:

Flight CaféFlexible Budget




Required:Prepare a report showing the company's activity variances for July. required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Flight CaféActivity Variances

For the Month Ended July 31Activity Variances

Revenue $ 1 (0%) U Expenses:

Raw materials 1 (0%) F (6%)Wages and salaries 1 (0%) None Utilities 1 (0%) None Facility rent 1 (0%) NoneInsurance 1 (0%) NoneMiscellaneous 1 (0%) F (6%)

Total expense 1 (0%) U Net operating income $ 1 (0%) U




Required:Prepare a report showing the company's activity variances for July. required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Flight CaféActivity Variances


Revenue $ 900 UExpenses:

Raw materials 480 FWages and salaries 60 FUtilities 10 FFacility rent 0 NoneInsurance 0 NoneMiscellaneous 20 F

Total expense 570 FNet operating income $ 330 U

Total grade: 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 1.0×1/18 = 0% + 6% + 0% + 6% + 0% + 0% + 0% + 0% + 0% + 6% + 0% + 6% + 0% + 6% + 0% + 0% + 0% + 6%

Feedback:Flight Café

Activity VariancesFor the Month Ended July 31

PlanningBudget

Flexible Budget Activity Variances

Meals 18,000 17,800 Revenue ($4.50q) $ 81,000 $ 80,100 $ 900 UExpenses:

Raw materials ($2.40q) 43,200 42,720 480 FWages and salaries ($5,200 + $0.30q) 10,600 10,540 60 FUtilities ($2,400 + $0.05q) 3,300 3,290 10 F

Facility rent ($4,300) 4,300 4,300 0 NoneInsurance ($2,300) 2,300 2,300 0 NoneMiscellaneous ($680 + $0.10q) 2,480 2,460 20 F

Total expense 66,180 65,610 570 FNet operating income $ 14,820 $ 14,490 $ 330 U



Exercise 10-3 Prepare a Report Showing Revenue and Spending Variances [LO3]Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 pounds of oysters in August. The company's flexible budget for August appears below:

Quilcene OysteriaFlexible Budget

For the Month Ended August 31Actual pounds (q) Revenue ($4.00q) $ 32,000Expenses:

Packing supplies ($0.50q) Oyster bed maintenance ($3,200) Wages and salaries ($2,900 +$0.30q) Shipping ($0.80q) Utilities ($830) Other ($450 + $0.05q)


The actual results for August appear below:

Quilcene OysteriaIncome Statement

For the Month Ended August 31Actual pounds Revenue $ 35,200Expenses:

Packing supplies Oyster bed maintenance Wages and salaries Shipping Utilities Other


Exercise 10-3 Prepare a Report Showing Revenue and Spending Variances [LO3]Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 pounds of oysters in August. The company's flexible budget for August appears below:

Quilcene OysteriaFlexible Budget

For the Month Ended August 31Actual pounds (q) Revenue ($4.00q) $ 32,000Expenses:

Packing supplies ($0.50q) Oyster bed maintenance ($3,200) Wages and salaries ($2,900 +$0.30q) Shipping ($0.80q) Utilities ($830) Other ($450 + $0.05q)


The actual results for August appear below:

Quilcene OysteriaIncome Statement

For the Month Ended August 31Actual pounds Revenue $ 35,200Expenses:

Packing supplies Oyster bed maintenance Wages and salaries Shipping Utilities Other



Required:Prepare a report showing the company's revenue and spending variances for August. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Quilcene OysteriaRevenue and Spending VariancesFor the Month Ended August 31

Revenue andSpending Variances

Revenue $ 1 (0%) F (6%)Expenses:

Packing supplies 1 (0%) F Oyster bed maintenance 1 (0%) U Wages and salaries 1 (0%) None Shipping 1 (0%) F Utilities 1 (0%) None Other 1 (0%) U

Total expense 1 (0%) U Net operating income $ 1 (0%) F (6%)


Required:Prepare a report showing the company's revenue and spending variances for August. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Quilcene OysteriaRevenue and Spending VariancesFor the Month Ended August 31


Revenue $ 3,200 FExpenses:

Packing supplies 200 UOyster bed maintenance 100 FWages and salaries 340 UShipping 550 UUtilities 20 FOther 130 U

Total expense 1,100 UNet operating income $ 2,100 F

Total grade: 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 1.0×1/18 = 0% + 6% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 6% + 0% + 6% + 0% + 6%

Feedback:Quilcene Oysteria

Revenue and Spending VariancesFor the Month Ended August 31

FlexibleBudget

ActualResult

Revenue and Spending Variances

Pounds 8,000 8,000 Revenue ($4.00q) $ 32,000 $ 35,200 $ 3,200 FExpenses:

Packing supplies ($0.50q) 4,000 4,200 200 UOyster bed maintenance ($3,200) 3,200 3,100 100 FWages and salaries ($2,900 + $0.30q) 5,300 5,640 340 UShipping ($0.80q) 6,400 6,950 550 UUtilities ($830) 830 810 20 FOther ($450 + $0.05q) 850 980 130 U

Total expense 20,580 21,680 1,100 UNet operating income $ 11,420 $ 13,520 $ 2,100 F



Exercise 10-4 Prepare a Flexible Budget Performance Report [LO4]Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company's operations in July appear below:

Vulcan FlyoversOperating Data

For the Month Ended July 31

PlanningBudget

Flights (q) Revenue ($320.00q) $Expenses:

Wages and salaries ($4,000 + $82.00q) Fuel ($23.00q) Airport fees ($650 + $38.00q) Aircraft depreciation ($7.00q) Office expenses ($190 + $2.00q)

Total expense Net operating income $

The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:Prepare a flexible budget performance report for July. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Vulcan FlyoversFlexible Budget Performance Report


Revenue $ 1 (0%)Expenses:

Wages and salaries 1 (0%)Fuel 1 (0%)Airport fees 1 (0%)Aircraft depreciation 1 (0%)Office expenses 1 (0%)

Total expense 1 (0%)Net operating income $ 1 (0%)

Exercise 10-4 Prepare a Flexible Budget Performance Report [LO4]Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company's operations in July appear below:

Vulcan FlyoversOperating Data


PlanningBudget

Flights (q) Revenue ($320.00q) $ 16,000Expenses:

Wages and salaries ($4,000 + $82.00q) 8,100Fuel ($23.00q) 1,150Airport fees ($650 + $38.00q) 2,550Aircraft depreciation ($7.00q) Office expenses ($190 + $2.00q)


The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:Prepare a flexible budget performance report for July. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Vulcan FlyoversFlexible Budget Performance Report


Revenue $ 640Expenses:

Wages and salaries 164Fuel 46Airport fees 76Aircraft depreciation 14Office expenses 4

Total expense 304Net operating income $ 336

Total grade: 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 1.0×1/32 + 0.0×1/32 + 1.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 1.0×1/32 + 0.0×1/32 +

0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 1.0×1/32 + 0.0×1/32 + 0.0×1/32 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 3% + 0% + 3% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 3% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 3% + 0% + 0%

Feedback:Vulcan Flyovers

Flexible Budget Performance ReportFor the Month Ended July 31

PlanningBudget

ActivityVariances

FlexibleBudget

Revenue andSpendingVariances

ActualResults

Flights (q) 50 48 48Revenue ($320.00q) $ 16,000 $ 640 U $ 15,360 $ 1,710 U $ 13,650Expenses:

Wages and salaries($4,000 + $82.00q)

8,100

164 F

7,936 494 U

8,430

Fuel ($23.00q) 1,150 46 F 1,104 156 U 1,260Airport fees ($650 + $38.00q) 2,550 76 F 2,474 124 F 2,350Aircraft depreciation ($7.00q) 350 14 F 336 0 None 336Office expenses ($190 + $2.00q) 290 4 F 286 174 U 460

Total expense 12,440 304 F 12,136 700 U 12,836Net operating income $ 3,560 $ 336 U $ 3,224 $ 2,410 U $ 814



Exercise 10-5 Prepare a Flexible Budget with More Than One Cost Driver [LO5]Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below:

Fixed CostPer Month

Vessel operating costs $

Advertising $

Administrative costs $

Insurance $

For example, vessel operating costs should be $5,200 per month plus $480 per cruise plus $2 per passenger. The company's sales should average $25 per passenger. The company's planning budget for July is based on 24 cruises and 1,400 passengers.

Exercise 10-5 Prepare a Flexible Budget with More Than One Cost Driver [LO5]Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below:

Fixed CostPer Month

Vessel operating costs $ 5,200Advertising $ 1,700Administrative costs $ 4,300Insurance $ 2,900

For example, vessel operating costs should be $5,200 per month plus $480 per cruise plus $2 per passenger. The company's sales should average $25 per passenger. The company's planning budget for July is based on 24 cruises and 1,400 passengers.

Required:Prepare the company's planning budget for July. (Input all amounts as positive values. Omit the "$" sign in your response.)

Required:Prepare the company's planning budget for July. (Input all amounts as positive values. Omit the "$" sign in your response.)

Alyeski ToursPlanning Budget


Revenue $ 1 (0%

)Expenses:

Vessel operating costs 1 (0%

)

Advertising 1 (0%

)

Administrative costs 1 (0%

)

Insurance 1 (0%

)

Total expense 1 (0%

)

Net operating income $ 1 (0%

)

Alyeski ToursPlanning Budget

For the Month Ended July 31Revenue $ 35,000Expenses:

Vessel operating costs 19,520Advertising 1,700Administrative costs 6,276Insurance 2,900


Total grade: 0.0×1/7 + 0.0×1/7 + 0.0×1/7 + 0.0×1/7 + 0.0×1/7 + 0.0×1/7 + 0.0×1/7 = 0% + 0% + 0% + 0% + 0% + 0% + 0%Feedback:

Revenue ($25.00 × 1,400) = $35,000Vessel operating costs ($5,200 + ($480.00 × 24) + ($2.00 × 1,400)) = $19,520Administrative costs ($4,300 + ($24.00 × 24) + ($1.00 × 1,400)) = $6,276



Exercise 10-8 Flexible Budget [LO1]Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company's costs:

Fixed CostPer Month Car Washed

Cleaning supplies

Electricity $1,20

0

Maintenance

Wages and salaries $5,00

0

Depreciation $6,00

0


Fixed CostPer Month

Cost perCar Washed

Cleaning supplies Electricity $ 1,200 Maintenance Wages and salaries $ 5,000 Depreciation $ 6,000 Rent $ 8,000 Administrative expenses $ 4,000

Rent $8,00

0

Administrative expenses $4,00

0

For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 per car washed.

Required:Prepare the company's planning budget for August. (Input all amounts as positive values. Omit the "$" sign in your response.)

Lavage RapidePlanning Budget

For the Month Ended August 31

Revenue $

Expenses:

Cleaning supplies

Electricity

Maintenance

Wages and salaries

Depreciation

Rent

Administrative expenses

Total expense

Net operating income $

For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 per car washed.

Required:Prepare the company's planning budget for August. (Input all amounts as positive values. Omit the "$" sign in your response.)

Lavage RapidePlanning Budget

For the Month Ended August 31Revenue $Expenses:

Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses



Revenue ($4.90 × 9,000) = $44,100Cleaning supplies ($0.80 × 9,000) = $7,200Electricity ($1,200 + ($0.15 × 9,000)) = $2,550Maintenance ($0.20 × 9,000) = $1,800Wages and salaries ($5,000 + ($0.30 × 9,000)) = $7,700Administrative expenses ($4,000 + ($0.10 × 9,000)) = $4,900





Cleaning supplies

Electricity $1,20

0

Maintenance


0

Depreciation $6,00

0

Rent $8,00

0


0

For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company actually washed 8,800 cars in August and to collect an average of $4.90 per car washed.

Required:Prepare the company's flexible budget for August. (Input all amounts as positive values. Omit the "$" sign in your response.)

Lavage RapideFlexible Budget


Revenue $

Expenses:

Cleaning supplies

Electricity

Maintenance

Wages and salaries

Depreciation

Rent

Administrative expenses


Fixed CostPer Month

Cost perCar Washed


For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company actually washed 8,800 cars in August and to collect an average of $4.90 per car washed.

Required:Prepare the company's flexible budget for August. (Input all amounts as positive values. Omit the "$" sign in your response.)

Lavage RapideFlexible Budget

For the Month Ended August 31Revenue $Expenses:



Total expense



Revenue ($4.90 × 8,800) = $43,120Cleaning supplies ($0.80 × 8,800) = $7,040Electricity ($1,200 + ($0.15 × 8,800)) = $2,520Maintenance ($0.20 × 8,800) = $1,760Wages and salaries ($5,000 + ($0.30 × 8,800)) = $7,640Administrative expenses ($4,000 + ($0.10 × 8,800)) = $4,880



Exercise 10-10 Prepare a Report Showing Activity Variances [LO2]Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company's costs:


Cleaning supplies

Electricity $1,20

0

Maintenance


0

Depreciation $6,00

0

Rent $8,00

0


0

For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 per car washed.The actual operating results for August appears below.

Lavage RapideIncome Statement


Exercise 10-10 Prepare a Report Showing Activity Variances [LO2]Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company's costs:

Fixed CostPer Month

Cost perCar Washed




For the Month Ended August 31Actual cars washedRevenueExpenses:

Cleaning suppliesElectricity

Actual cars washedRevenueExpenses:

Cleaning suppliesElectricityMaintenanceWages and salariesDepreciationRentAdministrative expenses

Total expenseNet operating income

Required:Prepare a report showing the company's activity variances for August. wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Lavage RapideActivity Variances

For the Month Ended August 31Activity Variances


Cleaning supplies 1 (0%)Electricity 1 (0%)Maintenance 1 (0%)Wages and salaries 1 (0%)Depreciation 1 (0%)Rent 1 (0%)Administrative expenses 1 (0%)


MaintenanceWages and salariesDepreciationRentAdministrative expenses


Required:Prepare a report showing the company's activity variances for August. wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Lavage RapideActivity Variances

For the Month Ended August 31Activity Variances

Revenue $ 980Expenses:

Cleaning supplies 160Electricity 30Maintenance 40Wages and salaries 60Depreciation Rent Administrative expenses 20

Total expense 310Net operating income $ 670

Total grade: 0.0×1/20 + 1.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 1.0×1/20 = 0% + 5% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 5%

Feedback:Lavage Rapide

Activity VariancesFor the Month Ended August 31

PlanningBudget

Flexible Budget Activity Variances

Cars washed (q) 9,000 8,800 Revenue ($4.90q) $ 44,100 $ 43,120 $ 980 UExpenses:

Cleaning supplies ($0.80q) 7,200 7,040 160 FElectricity ($1,200 + $0.15q) 2,550 2,520 30 FMaintenance ($0.20q) 1,800 1,760 40 F

Wages and salaries ($5,000 + $0.30q) 7,700 7,640 60 FDepreciation ($6,000) 6,000 6,000 0 NoneRent ($8,000) 8,000 8,000 0 NoneAdministrative expenses

($4,000 + $0.10q)

4,900

4,880

20 FTotal expense 38,150 37,840 310 FNet operating income $ 5,950 $ 5,280 $ 670 U



Exercise 10-11 Prepare a Report Showing Revenue and Spending Variances [LO3]Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company's costs:


Cleaning supplies

Electricity $1,20

0

Maintenance


0

Depreciation $6,00

0

Rent $8,00

0


0




Cleaning suppliesElectricityMaintenanceWages and salariesDepreciationRent

Exercise 10-11 Prepare a Report Showing Revenue and Spending Variances [LO3]Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company's costs:

Fixed CostPer Month

Cost perCar Washed





Cleaning suppliesElectricityMaintenanceWages and salariesDepreciationRentAdministrative expenses


Administrative expensesTotal expenseNet operating income

Required:Prepare a report showing the company's revenue and spending variances for August. enter "0" wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Lavage RapideRevenue and Spending VariancesFor the Month Ended August 31

Revenue and Spending


Cleaning supplies 1 (0%)Electricity 1 (0%)Maintenance 1 (0%)Wages and salaries 1 (0%)Depreciation 1 (0%)Rent 1 (0%)Administrative expenses 1 (0%)


Required:Prepare a report showing the company's revenue and spending variances for August. enter "0" wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Lavage RapideRevenue and Spending VariancesFor the Month Ended August 31

Revenue and Spending VariancesRevenue $ 40Expenses:

Cleaning supplies 520Electricity 150Maintenance 500Wages and salaries 860Depreciation Rent Administrative expenses 70


Total grade: 0.0×1/20 + 1.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 1.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 1.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 1.0×1/20 + 0.0×1/20 + 0.0×1/20 = 0% + 5% + 0% + 0% + 0% + 0% + 0% + 5% + 0% + 0% + 0% + 0% + 0% + 5% + 0% + 0% + 0% + 5% + 0% + 0%


Revenue and Spending VariancesFor the Month Ended August 31

FlexibleBudget

ActualResults


Cars washed (q) 8,800 8,800 Revenue ($4.90q) $ 43,120 $ 43,080 $ 40 UExpenses:

Cleaning supplies ($0.80q) 7,040 7,560 520 UElectricity ($1,200 + $0.15q) 2,520 2,670 150 UMaintenance ($0.20q) 1,760 2,260 500 UWages and salaries

($5,000 + $0.30q)

7,640

8,500

860 UDepreciation ($6,000) 6,000 6,000 0 NoneRent ($8,000) 8,000 8,000 0 NoneAdministrative expenses

($4,000 + $0.10q)

4,880

4,950

70 UTotal expense 37,840 39,940 2,100 UNet operating income $ 5,280 $ 3,140 $ 2,140 U



Exercise 10-12 Prepare a Flexible Budget Performance Report [LO4]Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company's costs:

Fixed CostPer Month

Cost per Car

Cleaning supplies

Electricity $1,20

0

Maintenance


0

Depreciation $6,00

0

Rent $8,00

0


0



For the Month Ended August 31Actual cars washed 8,800Revenue $ 43,080Expenses:

Cleaning supplies 7,560Electricity 2,670Maintenance 2,260Wages and salaries 8,500Depreciation 6,000Rent 8,000Administrative expenses 4,950


Exercise 10-12 Prepare a Flexible Budget Performance Report [LO4]Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company's costs:

Fixed CostPer Month

Cost per CarWashed




For the Month Ended August 31Actual cars washed 8,800Revenue $ 43,080Expenses:

Cleaning supplies 7,560Electricity 2,670Maintenance 2,260Wages and salaries 8,500Depreciation 6,000Rent 8,000Administrative expenses 4,950


Required:Prepare a flexible budget performance report that shows the company's activity variances and revenue and spending variances for August. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Required:Prepare a flexible budget performance report that shows the company's activity variances and revenue and spending variances for August. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Lavage RapideFlexible Budget Performance Report


Revenue $ Expenses:



Lavage RapideFlexible Budget Performance Report


Revenue $Expenses:



Total grade: 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 0.0×1/40 + 1.0×1/40 + 0.0×1/40 + 0.0×1/40 = 0% + 0% + 0% + 0% + 0% + 3% + 0% + 3% + 0% + 3% + 0% + 3% + 0% + 0% + 0% + 0% + 0% + 3% + 0% + 3% + 0% + 0% + 0% + 0% + 0% + 3% + 0% + 0% + 0% + 3% + 0% + 3% + 0% + 0% + 0% + 0% + 0% + 3% + 0% + 0%


Flexible Budget Performance ReportFor the Month Ended August 31

PlanningBudget

ActivityVariances

FlexibleBudget

Revenue and SpendingVariances

ActualResults

Cars washed (q) 9,000 8,800 8,800Revenue ($4.90q) $ 44,100 $ 980 U $ 43,120 $ 40 U $ 43,080Expenses:

Cleaning supplies ($0.80q) 7,200 160 F 7,040 520 U 7,560Electricity ($1,200 + $0.15q) 2,550 30 F 2,520 150 U 2,670Maintenance ($0.20q) 1,800 40 F 1,760 500 U 2,260Wages and salaries

($5,000 + $0.30q)

7,700

60 F

7,640 860 U

8,500Depreciation ($6,000) 6,000 0 None 6,000 0 None 6,000Rent ($8,000) 8,000 0 None 8,000 0 None 8,000Administrative expenses

($4,000 + $0.10q)

4,900

20 F

4,880 70 U

4,950Total expense 38,150 310 F 37,840 2,100 U 39,940Net operating income $ 5,950 $ 670 U $ 5,280 $ 2,140 U $ 3,140



Exercise 10-13 Flexible Budget [LO1]Wyckam Manufacturing Inc. has provided the following information concerning its manufacturing costs:

Fixed CostPer Month

Cost perMachine-Hour

Direct materials $4.2

5

Direct labor $36,80

0

Supplies $0.3

0

Utilities $ 1,400 $0.0

5

Depreciation $16,70

0

Insurance $12,70

0

For example, utilities should be $1,400 per month plus $0.05 per machine-hour. The company expects to work 5,000 machine-hours in June. Note that the company's direct labor is a fixed cost.

Required:Prepare the company's planning budget for manufacturing costs for June.

Wyckam Manufacturing Inc.Planning Budget for Manufacturing Cost

For the Month Ended June 30

Direct materials $ 1 (0%

)

Direct labor 1 (0%

)

Supplies 1 (0%

)

Utilities 1 (0%

)

Depreciation 1 (0%

)

Insurance 1 (0%

)

Total manufacturing cost $ 1 (0%

)

Exercise 10-13 Flexible Budget [LO1]Wyckam Manufacturing Inc. has provided the following information concerning its manufacturing costs:

Fixed CostPer Month

Cost perMachine-Hour

Direct materials $ 4.25Direct labor $ 36,800Supplies $ 0.30Utilities $ 1,400 $ 0.05Depreciation $ 16,700Insurance $ 12,700

For example, utilities should be $1,400 per month plus $0.05 per machine-hour. The company expects to work 5,000 machine-hours in June. Note that the company's direct labor is a fixed cost.

Required:Prepare the company's planning budget for manufacturing costs for June.

Wyckam Manufacturing Inc.Planning Budget for Manufacturing Cost

For the Month Ended June 30Direct materials $ 21,250Direct labor 36,800Supplies 1,500Utilities 1,650Depreciation 16,700Insurance 12,700Total manufacturing cost $ 90,600

Total grade: 0.0×1/7 + 0.0×1/7 + 0.0×1/7 + 0.0×1/7 + 0.0×1/7 + 0.0×1/7 + 0.0×1/7 = 0% + 0% + 0% + 0% + 0% + 0% + 0%Feedback:

Direct materials ($4.25 × 5,000) = $21,250

Supplies ($0.30 × 5,000) = 1,500

Utilities ($1,400 + ($0.05 × 5,000)) = 1,650



Exercise 10-14 Flexible Budgets and Activity Variances [LO1, LO2]Jake's Roof Repair has provided the following data concerning its costs:

Fixed CostPer Month

Wages and salaries $ 23,200 Parts and supplies Equipment depreciation $ 1,600 Truck operating expenses $ 6,400 Rent $ 3,480 Administrative expenses $ 4,500

For example, wages and salaries should be $23,200 plus $16.30 per repair-hour. The company expected to work 2,800 repair-hours in May, but actually worked 2,900 repair-hours. The company expects its sales to be $44.50 per repair-hour.

Required:Prepare a report showing the company's activity variances for May. favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)

Jake's Roof RepairActivity Variances

For the Month Ended May 31 Revenue $Expenses:

Wages and salariesParts and supplies

Equipment depreciation

Truck operating expensesRentAdministrative expenses

Total expense

Exercise 10-14 Flexible Budgets and Activity Variances [LO1, LO2]Jake's Roof Repair has provided the following data concerning its costs:

Fixed CostPer Month

Wages and salaries $ 23,200 Parts and supplies Equipment depreciation $ 1,600 Truck operating expenses $ 6,400 Rent $ 3,480 Administrative expenses $ 4,500

For example, wages and salaries should be $23,200 plus $16.30 per repair-hour. The company expected to work 2,800 repair-hours in May, but actually worked 2,900 repair-hours. The company expects its sales to be $44.50 per repair-hour.

Required:Prepare a report showing the company's activity variances for May. favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)

Jake's Roof RepairActivity Variances

For the Month Ended May 31 RevenueExpenses:

Wages and salariesParts and suppliesEquipment depreciationTruck operating expensesRentAdministrative expenses



Total grade: 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 1.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 0.0×1/18 + 1.0×1/18 = 0% + 6% + 0% + 0% + 0% + 6% + 0% + 0% + 0% + 6% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 6%

Feedback:Jake's Roof RepairActivity Variances

For the Month Ended May 31

PlanningBudget

FlexibleBudget

ActivityVariances

Repair-hours (q) 2,800 2,900 Revenue ($44.50q) $ 124,600 $ 129,050 $ 4,450 F

Expenses: Wages and salaries

($23,200 + $16.30q)

68,840

70,470

1,630 UParts and supplies ($8.60q) 24,080 24,940 860 UEquipment depreciation

($1,600 + $0.40q)

2,720

2,760

40 UTruck operating expenses

($6,400 + $1.70q)

11,160

11,330

170 URent ($3,480) 3,480 3,480 0 NoneAdministrative expenses

($4,500 + $0.80q)

6,740

6,820

80 UTotal expense 117,020 119,800 2,780 U

Net operating income $ 7,580 $ 9,250 $ 1,670 F

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Documents

peak sales

sales peak

months sales

companys sales budget

month of sale

total cash collections

cash collections peak

total grade