Accounting Seminar Notes

Chapter 6 Homework Solutions 6-16 Sales budget, service setting. 1. Rouse & Sons 2011 Volume At 2011Selling harms judge 2012Change in Volume evaluate 2012 Volume registered nurse Tests 12,200 $290 +6% 12,932 Lead Tests 16,400 $240 -10% 14,760 Rouse & Sons Sales Budget For the Year Ended December 31, 2012 Selling Price Units Sold enumerate tax incomes Radon Tests $290 12,932 $3,750,280 Lead Tests $240 14,760 3,542,400 $7,292,680 2. Rouse & Sons 2011 Volume Planned 2012 Selling Prices Expected 2012 Change in Volume Expected 2012 Volume Radon Tests 12,200 $290 +6% 12,932Lead Tests 16,400 $230 -7% 15,252 Rouse & Sons Sales Budget For the Year Ended December 31, 2012 Selling Price Units Sold lend Revenues Radon Tests $290 12,932 $3,750,280 Lead Tests $230 15,252 3,507,960 $7,258,240 Expected revenues at the new 2012 prices are $7,258,240, which is lower than the expected 2012 revenues of $7,292,680 if the prices are unchanged. So, if the goal is to maximize stark(a ) revenue revenue and if Jim Rouses forecasts are reliable, the company should not lower its price for a lead test in 2012. 6-17 Sales and production budget. Budgeted sales in units200,000Add target ending accurate goods descent 25,000 innate requirements 225,000 recover beginning finished goods entry 15,000 Units to be produced 210,000 6-18Direct materials purchases budget. Direct materials to be used in production (bottles)2,500,000 Add target ending direct materials pedigree (bottles) 80,000 Total requirements (bottles)2,580,000 infer beginning direct materials inventory (bottles) 50,000 Direct materials to be purchased (bottles)2,530,000 6-19 Budgeting material purchases. Production Budget Finished Goods (units) Budgeted sales45,000 Add target ending finished goods inventory18,000Total requirements63,000 Deduct beginning finished goods inventory16,000 Units to be produced47,000 Direct Materials Purchases Budget Direct Materials (in gallons) Direct materials needed for pro duction (47,000 3)141,000 Add target ending direct materials inventory50,000 Total requirements191,000 Deduct beginning direct materials inventory 60,000 Direct materials to be purchased 131,000 6-20Revenues and production budget. 1. SellingPrice UnitsSold TotalRevenues 12-ounce bottles $0. 25 4,800,000a $1,200,000 4-gallon units 1. 50 1,200,000b 1,800,000 $3,000,000 a 400,000 ? 12 months = 4,800,000 b 100,000 ? 2 months = 1,200,000 2. Budgeted unit sales (12-ounce bottles)4,800,000 Add target ending finished goods inventory 600,000 Total requirements5,400,000 Deduct beginning finished goods inventory 900,000 Units to be produced4,500,000 3. = 1,200,000 + 200,000 1,300,000 = 100,000 4-gallon units 6-21 Budgeting direct material usage, manufacturing cost and gross margin. 1. Direct Material Usage Budget in Quantity and Dollars Material Wool color Total Physical Units Budget Direct materials required for spunky Rugs (200,000 rugs ? 36 skeins and 0. 8 gal. ) 7,200,00 0 skeins 160,000 gal. Cost Budget Available from beginning direct materials inventory (a) Wool 458,000 skeins $ 961,800 Dye 4,000 gallons $ 23,680 To be purchased this period (b) Wool (7,200,000 458,000) skeins ? $2 per skein 13,484,000 Dye (160,000 4,000) gal. ? $6 per gal. _________ 936,000 Direct materials to be used this period (a) + (b) $14,445,800 $ 959,680 $15,405,480 2. = = $2. 55 per DMLH = = $12 per MH 3. Budgeted Unit Cost of Blue Rug Cost perUnit of Input Input perUnit ofOutput Total Wool $2 36 skeins $ 72. 0 Dye 6 0. 8 gal. 4. 80 Direct manufacturing labor 13 62 hrs. 806. 00 Dyeing overhead 12 7. 21 mach-hrs. 86. 40 Weaving overhead 2. 55 62 DMLH 158. 10 Total $1127. 30 10. 2 machine hour per skein36 skeins per rug = 7. 2 machine-hrs. per rug. 4. Revenue Budget Units Selling Price Total Revenues Blue Rugs 200,000 $2,000 $400,000,000 Blue Rugs 185,000 $2,000 $370,000,000 5a. Sales = 200,000 rugs Cost of Goods Sold Budget Fr om Schedule Total Beginning finished goods inventory $ 0 Direct materials used $15,405,480 Direct manufacturing labor ($806 ? 200,000) 161,200,000 Dyeing overhead ($86. 40 ? 200,000) 17,280,000 Weaving overhead ($158. 10 ? 200,000) 31,620,000 225,505,480 Cost of goods available for sale 225,505,480 Deduct ending finished goods inventory 0 Cost of goods sold $225,505,480 5b. Sales = 185,000 rugs Cost of Goods Sold Budget From Schedule Total Beginning finished goods inventory $ 0 Direct materials used $ 15,405,480 Direct manufacturing labor ($806 ? 200,000) 161,200,000 Dyeing overhead ($86. 40 ? 200,000) 17,280,000 Weaving overhead ($158. 10 ? 200,000) 31,620,000 225,505,480 Cost of goods available for sale 225,505,480 Deduct ending finished goods inventory ($1,127. 30 ? 15,000) 16,909,500 Cost of goods sold $208,595,980 6. 200,000 rugs sold 185,000 rugs sold Revenue $400,000,000 $370,000,000 Less Cost of goods sold 225,505,480 208,595,980 Gross margin $ 174,49 4,520 $ 161,404,020