Scales and Weights Ltd manufactures three ranges of scales for use in weighing - Paper, Food and Parcels. Its accountant has prepared a draft budget for Year 8: Revenue Material Labour Variable overhead Fixed overhead Total costs Profit/(loss) Paper £000 46 13 20 16 7 56 (10) Food £000 52 13 7 7 8 35 17 Parcels £000 58 20 26 7 12 65 (7) Total £000 156 46 53 30 27 156 0 Fixed overheads are incurred for the company as a whole regardless of product line They are apportioned to each product line on the basis of direct labour hours. The directors are concerned because the company will make no profit overall. They are not able to increase the sales of any of the products because of high competitio They are considering various options. If the directors close down only the manufacture of Paper scales, what the effect on total profit? A) Total profit increases by 10,000 B) Total profit decreases by 10,000 C) Total profit decreases by 3,000 D) Total profit increases by 3,000

Scales and Weights Ltd manufactures three ranges of scales for use in weighing - Paper, Food and Parcels. Its accountant has prepared a draft budget for Year 8: Revenue Material Labour Variable overhead Fixed overhead Total costs Profit/(loss) Paper £000 46 13 20 16 7 56 (10) Food £000 52 13 7 7 8 35 17 Parcels £000 58 20 26 7 12 65 (7) Total £000 156 46 53 30 27 156 0 Fixed overheads are incurred for the company as a whole regardless of product line They are apportioned to each product line on the basis of direct labour hours. The directors are concerned because the company will make no profit overall. They are not able to increase the sales of any of the products because of high competitio They are considering various options. If the directors close down only the manufacture of Paper scales, what the effect on total profit? A) Total profit increases by 10,000 B) Total profit decreases by 10,000 C) Total profit decreases by 3,000 D) Total profit increases by 3,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 7CE: Refer to Cornerstone Exercise 8.6. Required: 1. Calculate the total budgeted cost of units produced...

See similar textbooks

Similar questions

Refer to Cornerstone Exercise 8.6. Required: 1. Calculate the total budgeted cost of units produced for Play-Disc for the coming year. Show the cost of direct materials, direct labor, and overhead. 2. Prepare a cost of goods sold budget for Play-Disc for the year. 3. What if the beginning inventory of finished goods was 75,200 (for 16,000 units)? How would that affect the cost of goods sold budget? (Assume Play-Disc uses the FIFO method.) Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs: For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 285,000 of them. Budgeted beginning inventory in units is 16,000 with unit cost of 4.75. (There are no beginning or ending inventories of work in process.) Required: 1. Prepare an ending finished goods inventory budget for Play-Disc for the coming year. 2. What if sales increased to 290,000 discs? How would that affect the ending finished goods inventory budget? Calculate the value of budgeted ending finished goods inventory.
Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing cost information for the next year: If Adam uses the step-down (sequential) method, beginning with the Maintenance Department, to allocate support department costs to production departments, the total overhead (rounded to the nearest dollar) for the Machining Department to allocate to its products would be: a. 407,500. b. 422,750. c. 442,053. d. 445,000.
Mesa Aquatics, Inc. estimated direct labor hours as 1,900 in quarter 1, 2,000 in quarter 2.2,200 in quarter 3, and 1,800 in quarter 4. a sales and administration budget using the information provided.
The Dixon Company begins the budget period with 20 pounds in Materials Inventory costing $1.50 per pound, for a total of $30. The company will purchase 100 pounds of materials costing $1.60 per pound, for a total of $160. The company has budgeted a transfer of 80 pounds of materials into production. Using FIFO flow, these cost $126. The $126 cost should be recorded on Group of answer choices the left inner column of Materials inventory and the right inner column of Accounts payable the left inner column of Work in process inventory and the right inner column of Materials inventory the left inner column of Materials inventory and the right inner column of Work in process inventory the left inner column of Accounts payable and the right inner column of Materials inventory
Adams Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price $ 36.90 Materials cost 9.00 Labor cost 4.50 Overhead cost 5.50 Selling, general, and administrative costs 7.00 Planned fixed costs Manufacturing overhead $ 133,000 Selling, general, and administrative 45,000 Adams planned to make and sell 22,000 copies of the book. Required: a-d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements assuming production volumes of 21,000 and 23,000 units. Determine the sales and variable cost volume variances assuming the volume is actually 23,000 units. Indicate whether the variances are favorable (U) select "None" if there is no effect (i.e zero variance) Master budget Flexible budgets Flexible budgets Volume variances Number of units…
Main Company has two service departments, Factory administration and Maintenance, and two operating departments, Cutting and Assembly. Selected budgeted information relating to these departments for the next year of operation is given below: Service department Operating Department Factory admin Maintenance Cutting Assembly Departmental costs R113 400 R80 000 R700 000 R600 000 Number of employees 3 5 40 60 Total labour hours 4 000 6 000 80 000 120 000 The company allocates service department costs by the step method. Factory administration costs are allocated first on the basis of number of employees and then Maintenance costs are allocated on the basis of total labour hours. The total Maintenance costs allocated to the Cutting Department is closest to: A. R31 068 B. R34 160 C. R32 000 D. R51 240
Vernon Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price $ 36.30 Materials cost 8.30 Labor cost 4.00 Overhead cost 5.40 Selling, general, and administrative costs 6.80 Planned fixed costs Manufacturing overhead $ 130,000 Selling, general, and administrative 46,000 Vernon planned to make and sell 39,000 copies of the book. Required: a. - d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 38,000 and 40,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 40,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)
Stuart Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price $ 36.10 Materials cost 8.90 Labor cost 4.20 Overhead cost 5.90 Selling, general, and administrative costs 6.30 Planned fixed costs Manufacturing overhead $ 128,000 Selling, general, and administrative 49,000 Stuart planned to make and sell 30,000 copies of the book. Required: a. - d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 29,000 and 31,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 31,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)
EFE company manufactures and sells boats. The company’s management accountant gathered the following data to prepare budgets for 2012; Direct Materials Requirements Material A 12 metres per boat Material B 14 square meter per boat Inventory data of Direct Materials are; Beginning Inventory Material A 5.000 meters Material B 2.400 square meters Inventory data of Finished Goods are; Beginning Inventory Target Ending Inventory Boats 1.000 units 3.000 units Moreover, unit purchase price of material A was $60 and unit purchase price of material B was $10. For the coming year 2021 it is expected that unit purchase price of material A will be $64 and unit purchase price of material B will not change. The company uses FIFO inventory method. Labor hours required to produce 1 boat is 3 hours and the company plans to…
EFE company manufactures and sells boats. The company’s management accountant gathered the following data to prepare budgets for 2012; Direct Materials Requirements Material A 12 metres per boat Material B 14 square meter per boat Inventory data of Direct Materials are; Beginning Inventory Material A 5.000 meters Material B 2.400 square meters Inventory data of Finished Goods are; Beginning Inventory Target Ending Inventory Boats 1.000 units 3.000 units Moreover, unit purchase price of material A was $60 and unit purchase price of material B was $10. For the coming year 2021 it is expected that unit purchase price of material A will be $64 and unit purchase price of material B will not change. The company uses FIFO inventory method. Labor hours required to produce 1 boat is 3 hours and the company plans to pay $12…
EFE company manufactures and sells boats. The company’s management accountant gathered the following data to prepare budgets for 2012; Direct Materials Requirements Material A 12 metres per boat Material B 14 square meter per boat Inventory data of Direct Materials are; Beginning Inventory Material A 5.000 meters Material B 2.400 square meters Inventory data of Finished Goods are; Beginning Inventory Target Ending Inventory Boats 1.000 units 3.000 units Moreover, unit purchase price of material A was $60 and unit purchase price of material B was $10. For the coming year 2021 it is expected that unit purchase price of material A will be $64 and unit purchase price of material B will not change. The company uses FIFO inventory method. Labor hours required to produce 1 boat is 3 hours and the company plans to…
EFE company manufactures and sells boats. The company’s management accountant gathered the following data to prepare budgets for 2012; Direct Materials Requirements Material A 12 metres per boat Material B 14 square meter per boat Inventory data of Direct Materials are; Beginning Inventory Material A 5.000 meters Material B 2.400 square meters Inventory data of Finished Goods are; Beginning Inventory Target Ending Inventory Boats 1.000 units 3.000 units Moreover, unit purchase price of material A was $60 and unit purchase price of material B was $10. For the coming year 2021 it is expected that unit purchase price of material A will be $64 and unit purchase price of material B will not change. The company uses FIFO inventory method. Labor hours required to produce 1 boat is 3 hours and the company plans to pay $12…