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Category > Accounting Posted 21 Apr 2017 My Price 16.00

Module 9 Budget Problem Part 1 and Part 2

Module 9 - Budget Problem

Country Cookin' Inc. begins the budgeting process for the following year in the 1st quarter of the current year. With the information provided below, prepare the sales, production and direct materials budgets for the 1st quarter of next year. Also determine the budgeted manufacturing cost per unit and prepare the budgeted income statement for January of next year.

Country Cookin' Inc. sells the cooker/smokers they manufacture to various retailers for $130 each. Each cooker/smoker requires 11 ounces of raw material, which is purchased by Country Cookin' Inc. for $8.00 per ounce. To prepare for next month's production, Country Cookin' Inc. likes to maintain an ending stock of raw material equal to 10% of the production requirements for the current month. The company would also like to maintain an ending stock of finished cooker/smokers equal to 20% of next month's sales.

Sales are projected to be 6,000 for January, 8,000 for February and 14,000 for March.

Your Company expects to sell 12,000 cooker/smokers in April and needs 132,000 ounces of direct materials for production. Country Cookin' will start the year with an inventory of 7744 of raw material

15% of sales from Country Cookin' Inc. to retailers are cash sales, while the remaining 85% are sold on account.

Additional budgeted information includes:

Month

1st
Quarter

Projections For Next Year

January

February

March

Direct labor

$ 24,000

$ 34,500

$ 51,000

$ 109,500

Manufacturing overhead:

Variable

$ 28,800

$ 41,400

$ 61,200

$ 131,400

Fixed ¹

$ 41,000

$ 123,000

Total operating expenses ²

$ 71,000

$ 74,000

$ 95,000

$ 240,000

Each cooker/smoker requires 0.25 of an hour of direct labor at the rate of $15.00.

Country Cookin' Inc. estimated at the beginning of the year that it would produce 307,500 cooker/smokers next year.

Interest expense is budgeted at zero since the company has no outstanding debt.

Income tax expense is budgeted at 35% of income before taxes.

Prepare next year's 1st quarter sales budget for Country Cookin' Inc.

Country Cookin' Inc.

Sales Budget

For the Quarter Ended March 31

Month

1st
Quarter

January

February

March

Unit sales

Unit selling price

Total sales revenue

Type of Sale

Cash sales

Credit sales

Total sales revenue

Prepare next year's 1st quarter production budget for Country Cookin' Inc.

Country Cookin' Inc.

Production Budget

For the Quarter Ended March 31

Month

1st
Quarter

January

February

March

Unit sales

Plus: Desired ending inventory

Total needed

Less: Beginning inventory

Units to produce

Prepare next year's 1st quarter direct materials budget for Country Cookin'.

Country Cookin' Inc.

Direct Materials Budget

For the Quarter Ended March 31

Month

1st
Quarter

January

February

March

Units to be produced

x Ounces of direct materials needed per unit

Ounces needed for production

Plus: Desired ending inventory of direct materials

Total ounces needed

Less: Beginning inventory of direct materials

Ounces to purchase

x Cost per ounce

Total cost of direct materials purchases

Prepare next year's budgeted manufacturing cost per unit for Country Cookin' Inc.

Country Cookin' Inc.

Budgeted Manufacturing Cost per Unit

January

Direct materials

Direct labor

Manufacturing overhead:

Variable

Fixed

hint: you must take into account total annualized fixed costs in relation to total expected units for the year

Cost of manufacturing each widget

Prepare next year's budgeted income statement for the month ended January 31 for Country Cookin' Inc.

Country Cookin' Inc.

Budgeted Income Statement

For the month ended January 31

Sales Revenue

Less: Cost of goods sold

Gross profit

Less: Operating expenses

Operating income

Less: Interest expense

Less: Income tax expense

Net income

It is now the end of April and Country Cookin' management is ready to evaluate its first quarter performance. Prepare a flexible budget for sales levels of 26,000, 28,000, and 30,000 smokers.
Next prepare a performance report based on the following actual results, flexible budget, and master budget prepared in week 4.
Evaluate the first quarter performance of Country Cookin'.


Country Cookin' Inc.					Country Cookin' Inc.
Flexible Budget					Performance Report
For the Quarter Ended March 31					For the Quarter Ended March 31
		Units Sold					Actual	Variance	Flexible	Variance	Master
		26,000	28,000	30,000	Units Sold		27,000
Sales Revenue	$130				Sales	130	$ 3,830,000
Direct Materials	88				Direct Materials	88	2,476,000
Direct Labor	3.75				Direct Labor	3.75	98,000
VOH	4.5				VOH	4.5	125,600
Total VC					V S&A	3.12	83,000
FOH	41000				Contribution Margin
Total Costs					FOH		41,000		41,000		41,000
Gross Profit					F S&A	50,923	50,923		50,923		50,923
					Operating Income

Answers

SmartExpert

(118)

Status NEW Posted 21 Apr 2017 05:04 AM My Price 16.00

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file 1492751716-Module 9 Budget Problem Part 1 and Part 2.xlsx preview (529 words )

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