Budgeting: Balance Sheet and Sales Essay

2786 WordsSep 9, 201212 Pages
ACCT556 Budgeting Project TO THE STUDENT Fantastic, Inc. is a case study which allows you to incorporate numerous financial and managerial accounting concepts into a single business setting. You will take the position of the company controller who will prepare the budget for the year ended December 31, 2006, using the actual data from 2001 through 2005 and information given to you by various departments. You will prepare a report for the president of the company describing the strengths and weakness of the corporation as well as to provide suggestions for the future. In short, you will be responsible for the planning and control procedures for the company from an accounting standpoint. In order to focus on important accounting…show more content…
Absorption costing is used for all outside reports. All non-direct fixed costs are allocated using various allocation bases as indicated throughout the project. The Company does not use a full ABC costing system; however, it does employee some of the ABC concepts in the budgeting process. The administrative department handles all of the purchasing, accounting, and secretarial duties in a highly efficient manner. The need for separate departments is not necessary at this time. 2005 INFORMATION SUPER STUPENDOUS DEPARTMENT DEPARTMENT Number of machines available 26 20 Annual capacity per machine 15,000 gallons 15,000 gallons Annual production capacity 390,000 gallons 300,000 gallons Machine hours available per machine 1,800 hours 1,800 hours Standard machine hour per gallon .12 hour/gallon .12 hour/gallon Standard labor hour per machine hour 1.25 labor hr/mach.hr 1.25 labor hr/mach.hr Actual sales volume 420,000 gallons 268,200 gallons Number of hourly employees 29 21 Supervisors (one per each eight hourly employees) 4 3 Raw material prices Cans 40¢ each 40¢ each Pigment $2.75 per pound $3.75 per pound Raw material usage Cans one per gallon one per gallon Pigment two pounds per gallon two pounds per gallon Direct labor rate $8.25 per hour $8.25 per hour 2006 PROJECTED SALES INFORMATION The sales department feels very good about the prospects for 2006. The reputation of the

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