Flexible Budget for Selling and Administrative Expenses for a Service Company Morningside Technologies Inc. uses flexible budgets that are based on the following data: Sales commissions 5% of sales Advertising expense 23% of sales Miscellaneous administrative expense $1,850 per month plus 1% of sales Office salaries expense $17,000 per month Customer support expenses $2,600 plus 2% of sales Research and development expense 3,450 per month Prepare a flexible selling and administrative expenses budget for April for sales volumes of $115,000, $145,000, and $175,000. Enter all amounts as positive numbers.

Flexible Budget for Selling and Administrative Expenses for a Service Company Morningside Technologies Inc. uses flexible budgets that are based on the following data: Sales commissions 5% of sales Advertising expense 23% of sales Miscellaneous administrative expense $1,850 per month plus 1% of sales Office salaries expense $17,000 per month Customer support expenses $2,600 plus 2% of sales Research and development expense 3,450 per month Prepare a flexible selling and administrative expenses budget for April for sales volumes of $115,000, $145,000, and $175,000. Enter all amounts as positive numbers.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 7E: Professional foes earned budget for a service company LundquistFret well. CPAs, offer three types of...

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Static budget for a service company A bank manager of City Savings Bank Inc. uses the managerial accounting system to track the costs of operating the various departments within the bank. The departments include Cash Management, Trust, Commercial Loans, Mortgage Loans, Operations, Credit Card, and Branch Services. The static budget and actual results for the Operations Department are as follows: Resources Budget Actual Salaries 200,000 200,000 Benefits 30.000 30,000 Supplies 45,000 42,000 Travel 20,000 30,000 Training 25,000 35,000 Overtime 25,000 20,000 Total 345,000 357,000 Excess of actual over budget 12,000 a. What information is provided by the budget? Specifically, what questions can the bank manager ask of the Operations Department manager? b. What information does the static budget fail to provide? Specifically, could the budget information be presented differently to provide even more insight for the bank manager?
Static budget for a service company A bank manager of City Savings bank Inc. uses the managerial accounting system to track the costs of operating the various departments within the bank. The departments include Cash Management, Trust, Commercial Loans, Mortgage Loans, Operations, Credit Card, and Branch Services. The static budget and actual results for the Operations Department are as follows: Resources Budget Actual Salaries 200,000 200,000 Benefits 30,000 30,000 Supplies 45,000 42,000 Travel 20,000 30,000 Training 25,000 35,000 Overtime 25,000 20,000 Total 345.000 357,000 Excess of actual over budget 12,000 a. What information is provided by the budget? Specifically, what questions can the bank manager ask of the Operations Department manager? b. What information does the static budget fail to provide? Specifically, could the budget information be presented differently to provide even more insight for the bank manager?
Direct labor budget for a service business Ambassador Suites Inc. operates a downtown hotel property that has 300 rooms. On average, 80% of Ambassador Suites' rooms are occupied on weekdays and 40% are occupied during the weekend. The manager has asked you to develop a direct labor budget for the housekeeping and restaurant staff for weekdays and weekends. You have determined that the housekeeping staff requires 30 minutes to clean each occupied room. The housekeeping staff is paid 14 per hour. The housekeeping labor cost is fully variable to the number of occupied rooms. The restaurant has six full-time staff (eight-hour day) on duty, regardless of occupancy. However, for every 60 occupied rooms, an additional person is brought in to work in the restaurant for the eight-hour day. The restaurant staff is paid 12 per hour. Determine the estimated housekeeping, restaurant, and total direct labor cost for an average weekday and average weekend day. Format the budget in two columns, labeled as weekday and weekend day.
Sales, production, direct materials purchases, and direct labor cost budgets The budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July is summarized as follows: A. Estimated sales for July by sales territory: Maine: Backyard Chef............................. 310 units at 700 per unit Master Chef............................... 150 units at 1,200 per unit Vermont: Backyard Chef............................. 240 units at 750 per unit Master Chef............................... 110 units at 1,300 per unit New Hampshire: Backyard Chef............................. 360 units at 750 per unit Master Chef............................... 180 units at 1,400 per unit B. Estimated inventories at July 1: Direct materials: Finished products: Grates..................... 290 units Backyard Chef........ 30 units Stainless steel.............. 1,500 lbs. Master Chef........... 42 units Burner subassemblies...... 170 units Shelves.................... 340 units C. Desired inventories at July 31: Direct materials: Finished products: Grates......................... 340 units Backyard Chef........ 40 units Stainless steel.................. 1,800 lbs. Master Chef........... 20 units Burner subassemblies.......... 155 units Shelves........................ 315 units D. Desired materials used in production In manufacture of Backyard Chef: Grates........................................ 3 units per unit of product Stainless steel................................. 24 lbs. per unit of product Burner subassemblies......................... 2 units per unit of product Shelves....................................... 4 units per unit of product In manufacture of Master Chef: Grates........................................ 6 units per unit of product Stainless steel................................. 42 lbs. per unit of product Burner subassemblies......................... 4 units per unit of product Shelves....................................... 5 units per unit of product E. Anticipated purchase price for direct materials: Grates................. 15 per unit Stainless steel.......... 6 per lb. Burner subassemblies...... 110 per unit Shelves.................... 10 per unit F. Desired labor requirements: Backyard Chef: Stamping Department...................... 0.50 hr. at 17 per hr. Forming Department....................... 0.60 hr. at 15 per hr. Assembly Department...................... 1.00 hr. at 14 per hr. Master Chef: Stamping Department...................... 0.60 hr. at 17 per hr. Forming Department....................... 0.80 hr. at 15 pr hr. Assembly Department...................... 1.50 hrs. at 14 per hr. Instructions 1. Prepare a sales budget for July. 2. Prepare a production budget for July. 3. Prepare a direct materials purchases budget for July. 4. Prepare a direct labor cost budget for July.
Budgeted income statement and supporting budgets The budget director of Birds of a Feather Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January: a. Estimated sales for January: Birdhouse 6.000 units at 55 per unit Bird feeder 4,500 units at 75 per unit b. Estimated inventories at January 1: Direct materials: Finished products: Wood 220 ft. Birdhouse 300 units at 23 per unit Plastic 250 lb. Bird feeder 240 units at 34 per unit c. Desired inventories at January 31: Direct materials: Finished products: Wood 180 ft. Birdhouse 340 units at 23 per unit Plastic 210 lb. Bird feeder 200 units at 34 per unit d. Direct materials used in production: In manufacture of Birdhouse: In manufacture of Bird Feeder: Wood ... 0.80 ft. per unit of product Wood 1.20 ft. per unitof product Plastic . . 0.50 lb. per unit of product Plastic 0.75 lb. per unit of product e. Anticipated cost of purchases and beginning and ending inventory of direct materials: Wood 8.00 per ft. Plastic 1.20 per lb. f. f. Direct labor requirements: Birdhouse: Fabrication Department 0.20 hr. at15 per hr. Assembly Department 0.30 hr. at 12 per hr. Bird Feeder: Fabrication Department 0.40 hr. at15 per hr. Assembly Department 0.35 hr. at 12 per hr. g. Estimated factory overhead costs for January: Indirect factory wages 80,000 Power and light 8,000 Depreciation of plant and equipment 25,000 Insurance and property tax 2,000 h. Estimated operating expenses for January: Sales salaries expense 90,000 Advertising expense 20,000 Office salaries expense 18,000 Depredation expenseoffice equipment 800 Telephone expenseselling 500 Telephone expenseadministrative 200 Travel expenseselling 5,000 Office supplies expense 250 Miscellaneous administrative expense 450 i. Estimated other income and expense for January: Interest revenue 300 Interest expense 224 j. Estimated tax rate: 30% Instructions 1. Prepare a sales budget for January. 2. Prepare a production budget for January. 3. Prepare a direct materials purchases budget for January. 4. Prepare a direct labor cost budget for January. 5. Prepare a factory overhead cost budget for January. 6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be 29,000, and work in process at the end of January is estimated to be 35,400. 7. Prepare a selling and administrative expenses budget for January. 8. Prepare a budgeted income statement for January.
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2015 and 2016: May 2015 180,000 June 180,000 July 360,000 August 540,000 September 720,000 October 360,000 November 360,000 December 90,000 January 2016 180,000 Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: May 2015 90,000 June 90,000 July 126,000 August 882,000 September 306,000 October 234,000 November 162,000 December 90,000 General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2015. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1 30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2014 and 2015: May 2014 180,000 June 180,000 July 360,000 August 540,000 September 720,000 October 360.000 November 360,000 December 90,000 January 2015 180.000 Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: May 2014 90,000 June 90,000 July 126,000 August 882.000 September 306,000 October 234,000 November 162,000 December 90,000 General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses arc S2,700 a month. Income tax payments of 63,000 arc due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2014. b. Prepare monthly estimates of the required financing or excess funds that is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 130 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.