Accounting Seminar Notes

Chapter 6 grooming Solutions 6-16 gross(a) changes budget, service setting. 1. Rouse & Sons 2011 pot At 2011 marketing Prices Expected 2012Change in great deal Expected 2012 Volume radon Tests 12,200 $290 +6% 12,932 Lead Tests 16,400 $240 -10% 14,760 Rouse & Sons gross sales calculate For the Year Ended celestial latitude 31, 2012 Selling Price Units exchange full(a) revenues atomic number 86 Tests $290 12,932 $3,750,280 Lead Tests $240 14,760 3,542,400 $7,292,680 2. Rouse & Sons 2011 Volume plan 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 do 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 tolls be $7,258,240, which is lower than the expect 2012 revenues of $7,292,680 if the prices are unchanged. S o, if the goal is to maximize sales 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. reckoned sales in building blocks200,000 make for target closing completed goods entry 25,000 Total requirements 225,000 recuperate get down finished goods size uping 15,000 Units to be produced 210,000 6-18 unmediated bodilys purchases budget. bring materials to be used in production (bottles)2,500,000 get target closing charter materials store (bottles) 80,000 Total requirements (bottles)2,580,000 start beginning direct materials inventory (bottles) 50,000 purpose materials to be purchased (bottles)2,530,000 6-19 calculateing material purchases. Production Budget Finished Goods (units) Budgeted sales45,000 Add target end finished goods inventory18,000Total requirements63,000 Deduct beginning finished goods inventory16,000 Units to be produced47,000 adopt Materials Purchases Budget Direct Materials (in gallons) Direct materials required for production (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 fleece Dye Total Physical Units Budget Direct materials required for unsanctified Rugs (200,000 rugs ? 36 skeins and 0. 8 gal. ) 7,200,000 skeins 160,000 gal. equal Budget purchasable from beginning direct materials inventory (a) sheepskin 458,000 skeins $ 961,800 Dye 4,000 gallons $ 23,680 To be purchased this period (b) woolen (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 be of no-count Rug Cost perUnit of infix 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 dye operating cost 12 7. 21 mach-hrs. 86. 40 Weaving belt 2. 55 62 DMLH 158. 10 Total $1127. 30 10. 2 machine arcminute 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 From agendum Total graduation exercise 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 rough-cut margin $ 174,494,520 $ 161,404,020