During the first calendar quarter of 2016, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 10,000 units in the urban region at a unit price of $53 and 9,000 units in the rural region at $48 each. Because the sales manager expects the product to catch on, he has asked for production sufficient to generate a 8,000-unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses: Variable Fixed (per unit) (total) Manufacturing costs: Direct materials A (4 lb. @ $3.15/lb.) $12.60 - B (2 lb. @ $4.65/lb.) 9.30 - Direct labor (0.5 hours per unit) 7.50 - Manufacturing overhead: Depreciation - $7,650 Factory supplies 0.90 4,500 Supervisory salaries - 28,800 Other 0.75 22,950 Operating expenses: Selling: Advertising - 22,500 Sales salaries& commissions* 1.50 15,000 Other* 0.90 3,000 Administrative: Office salaries - 2,700 Supplies 0.15 1,050 Other 0.08 1,950 *Varies per unit sold, not per unit produced. Selling and administrative expenses Fixed Variable Total Selling expenses: Advertising Answer Answer Answer Sales salaries and commissions Answer Answer Answer Other Answer Answer Answer Total selling expenses Answer Administrative expenses: Office salaries Answer Answer Answer Supplies Answer Answer Answer Other Answer Answer Answer Total administrative expenses Answer Total selling and administrative expenses Answer b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar quarter. Assume an overall effective income tax rate of 30%. Round answers to the nearest whole number. Do not use negative signs with your answers. Clinton Corporation Budgeted Income Statement For the Quarter Ended March 31, 2016 Sales Answer Cost of Goods Sold: Beginning Inventory - Finished Goods Answer Material: Beginning Inventory - Material Answer Material Purchases Answer Material Available Answer Ending Inventory - Material Answer Direct Material Answer Direct Labor Answer Manufacturing Overhead Answer Total Manufacturing Cost Answer Cost of Goods Available for Sale Answer Ending Inventory - Finished Goods Answer Cost of Goods Sold Answer Gross Profit Answer Operating Expenses: Selling Expenses Answer Administrative Expenses Answer Total Operating Expenses Answer Income before Income Taxes Answer Income Tax Expense Answer Net Income Answer

During the first calendar quarter of 2016, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 10,000 units in the urban region at a unit price of $53 and 9,000 units in the rural region at $48 each. Because the sales manager expects the product to catch on, he has asked for production sufficient to generate a 8,000-unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses: Variable Fixed (per unit) (total) Manufacturing costs: Direct materials A (4 lb. @ $3.15/lb.) $12.60 - B (2 lb. @ $4.65/lb.) 9.30 - Direct labor (0.5 hours per unit) 7.50 - Manufacturing overhead: Depreciation - $7,650 Factory supplies 0.90 4,500 Supervisory salaries - 28,800 Other 0.75 22,950 Operating expenses: Selling: Advertising - 22,500 Sales salaries& commissions* 1.50 15,000 Other* 0.90 3,000 Administrative: Office salaries - 2,700 Supplies 0.15 1,050 Other 0.08 1,950 *Varies per unit sold, not per unit produced. Selling and administrative expenses Fixed Variable Total Selling expenses: Advertising Answer Answer Answer Sales salaries and commissions Answer Answer Answer Other Answer Answer Answer Total selling expenses Answer Administrative expenses: Office salaries Answer Answer Answer Supplies Answer Answer Answer Other Answer Answer Answer Total administrative expenses Answer Total selling and administrative expenses Answer b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar quarter. Assume an overall effective income tax rate of 30%. Round answers to the nearest whole number. Do not use negative signs with your answers. Clinton Corporation Budgeted Income Statement For the Quarter Ended March 31, 2016 Sales Answer Cost of Goods Sold: Beginning Inventory - Finished Goods Answer Material: Beginning Inventory - Material Answer Material Purchases Answer Material Available Answer Ending Inventory - Material Answer Direct Material Answer Direct Labor Answer Manufacturing Overhead Answer Total Manufacturing Cost Answer Cost of Goods Available for Sale Answer Ending Inventory - Finished Goods Answer Cost of Goods Sold Answer Gross Profit Answer Operating Expenses: Selling Expenses Answer Administrative Expenses Answer Total Operating Expenses Answer Income before Income Taxes Answer Income Tax Expense Answer Net Income Answer

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 10Q: If the sales forecast estimates that 50,000 units of product will be sold during the following year,...

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Question

	Variable	Fixed
	(per unit)	(total)
Manufacturing costs:
Direct materials
A (4 lb. @ $3.15/lb.)	$12.60	-
B (2 lb. @ $4.65/lb.)	9.30	-
Direct labor (0.5 hours per unit)	7.50	-
Manufacturing overhead:
Depreciation	-	$7,650
Factory supplies	0.90	4,500
Supervisory salaries	-	28,800
Other	0.75	22,950
Operating expenses:
Selling:
Advertising	-	22,500
Sales salaries& commissions*	1.50	15,000
Other*	0.90	3,000
Administrative:
Office salaries	-	2,700
Supplies	0.15	1,050
Other	0.08	1,950

*Varies per unit sold, not per unit produced.

Selling and administrative expenses

	Fixed	Variable	Total
Selling expenses:
Advertising	Answer	Answer	Answer
Sales salaries and commissions	Answer	Answer	Answer
Other	Answer	Answer	Answer
Total selling expenses			Answer
Administrative expenses:
Office salaries	Answer	Answer	Answer
Supplies	Answer	Answer	Answer
Other	Answer	Answer	Answer
Total administrative expenses			Answer
Total selling and administrative expenses			Answer

b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar quarter. Assume an overall effective income tax rate of 30%.

Round answers to the nearest whole number.
Do not use negative signs with your answers.

Clinton Corporation Budgeted Income Statement For the Quarter Ended March 31, 2016
Sales			Answer
Cost of Goods Sold:
Beginning Inventory - Finished Goods		Answer
Material:
Beginning Inventory - Material	Answer
Material Purchases	Answer
Material Available	Answer
Ending Inventory - Material	Answer
Direct Material	Answer
Direct Labor	Answer
Manufacturing Overhead	Answer
Total Manufacturing Cost		Answer
Cost of Goods Available for Sale		Answer
Ending Inventory - Finished Goods		Answer
Cost of Goods Sold			Answer
Gross Profit			Answer
Operating Expenses:
Selling Expenses		Answer
Administrative Expenses		Answer
Total Operating Expenses			Answer
Income before Income Taxes			Answer
Income Tax Expense			Answer
Net Income			Answer

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