Answered: Prepare Marigold & Hill’s ending…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 23BEA: Preparing a Direct Materials Purchases Budget Patrick Inc. makes industrial solvents sold in...

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George Garcia, Marigold & Garcia Fabricators’ production manager, has just received the company’s sales budget for the first quarter:

	January	February		March	Quarter
Budgeted unit sales	22,000		25,000		32,000	79,000
Budgeted ending inventory	5,000		6,400		7,200	7,200
Total units required	27,000		31,400		39,200	86,200
Beginning inventory	3,200		5,000		6,400	3,200
Budgeted production	23,800		26,400		32,800	83,000

Its manufacturing overhead budget for the first quarter is as follows:

	January		February	March	Quarter
DLH worked		4,760		5,280		6,560	16,600
VOH per DLH		$1.75		$1.75		$1.75	$1.75
Budgeted VOH		8,330		9,240		11,480	29,050
Budgeted FOH		101,900		101,900		101,900	305,700
Total Budgeted MOH		110,230		111,140		113,380	334,750
Noncash MOH items
Depreciation		35,000		35,000		35,000	105,000
Total Cash MOH cost		$75,230		$76,140		$78,380	$229,750

He also has received the direct materials purchases budget and direct labor budget which were as follows:

	January	February		March	Quarter	April
Budgeted production	23,800		26,400		32,800		83,000	34,000
Standard pounds per unit	× 6		× 6		× 6		× 6	× 6
Production needs	142,800		158,400		196,800		498,000	204,000
Budgeted ending inventory	15,840		19,680		20,400		20,400
Total DM required (lbs.)	158,640		178,080		217,200		518,400
Beginning inventory	13,000		15,840		19,680		13,000
Budgeted purchases (lbs.)	145,640		162,240		197,520		505,400
Standard cost per pound	$1.00		$1.00		$1.00		$1.00
Budgeted purchases cost	$145,640		$162,240		$197,520		$505,400

	January	February		March	Quarter
Budgeted production	23,800		26,400		32,800	83,000
Standard DLH per unit	× 0.20		× 0.20		× 0.20	× 0.20
Total DLH required	4,760		5,280		6,560	16,600
Standard wage rate	× $20		× $20		× $20	× $20
Budgeted DL cost	$95,200		$105,600		$131,200	$332,000

Joshua plans to have 3,200 finished bricks at a cost of $46,000 in inventory at the beginning of the year. The company applies manufacturing overhead based on direct labor hours, and the current predetermined rates are $12.25 per direct labor hour for fixed manufacturing overhead and $1.75 per direct labor hour for variable manufacturing overhead.

Prepare Marigold & Hill’s ending inventory and cost of goods sold budget for the first quarter. Assuming that the company has no beginning and ending WIP inventory. (Round unit cost to 2 decimal places, e.g. 5.33 & all other answers to 0 decimal places, e.g. 5,275.)

Direct Materials
select an opening name for this budget		$enter a dollar amount
select an item		enter a dollar amount
select an item		enter a dollar amount
select a closing name for this budget		$enter a total amount

Finished Goods Inventory
select an opening section name :
select an item		$enter a dollar amount rounded to 2 decimal places
select an item		enter a dollar amount rounded to 2 decimal places
select an item		enter a dollar amount rounded to 2 decimal places
select a closing section name		$enter a total amount for this section rounded to 2 decimal places
select an item		enter a number of units
select a closing name for this budget		$enter a total amount for this budget

Cost of Goods Sold
select an opening name for this budget		$enter a dollar amount
select an item		enter a dollar amount
select an item		enter a dollar amount
select an item		enter a dollar amount
select a summarizing line for the first part		enter a total amount for the first part
select an item		enter a dollar amount
select a closing name for this budget		enter a total amount for the second part
select an item		enter a dollar amount
select an item		enter a dollar amount
select a closing cost of goods sold budget item		$enter a total amount for this budget

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