The Real Estate Products Division of Blossom Co. is operated as a profit center. Sales for the division were budgeted for 2022 at $1,416,000. The only variable costs budgeted for the division were cost of goods sold ($656,000) and selling and administrative ($103,000). Fixed costs were budgeted at $176,500 for cost of goods sold, $154,500 for selling and administrative costs, and $118,000 for noncontrollable fixed costs. Actual results for these items were as follows: Sales $1,337,710 Cost of goods sold Variable 579,500 Fixed 191,500 Selling and administrative Variable 128,000 Fixed 123,000 Noncontrollable fixed 128,000

The Real Estate Products Division of Blossom Co. is operated as a profit center. Sales for the division were budgeted for 2022 at $1,416,000. The only variable costs budgeted for the division were cost of goods sold ($656,000) and selling and administrative ($103,000). Fixed costs were budgeted at $176,500 for cost of goods sold, $154,500 for selling and administrative costs, and $118,000 for noncontrollable fixed costs. Actual results for these items were as follows: Sales $1,337,710 Cost of goods sold Variable 579,500 Fixed 191,500 Selling and administrative Variable 128,000 Fixed 123,000 Noncontrollable fixed 128,000

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter19: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 2CMA: Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing...

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At the beginning of the period, the Fabricating Department budgeted direct labor of 72,000 and equipment depreciation of 18,500 for 2,400 hours of production. The department actually completed 2,350 hours of production. Determine the budget for the department, assuming that it uses flexible budgeting.
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.
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Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the follow sales: In Shalimars experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are 4,900,000 and for the fourth quarter of the current year are 6,850,000. Required: 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. 2. Construct a cash receipts budget for Shalimar Company for each quarter of the next year, showing the cash sales and the cash collections from credit sales. 3. What if the recession led Shalimars top management to assume that in the next year 10 percent of credit sales would never be collected? The expected payment percentages in the quarter of sale and the quarter after sale are assumed to be the same. How would that affect cash received in each quarter? Construct a revised cash budget using the new assumption.
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Nashler Company has the following budgeted variable costs per unit produced: Budgeted fixed overhead costs per month include supervision of 98,000, depreciation of 76,000, and other overhead of 245,000. Required: 1. Prepare a flexible budget for all costs of production for the following levels of production: 160,000 units, 170,000 units, and 175,000 units. 2. What is the per-unit total product cost for each of the production levels from Requirement 1? (Round each unit cost to the nearest cent.) 3. What if Nashler Companys cost of maintenance rose to 0.22 per unit? How would that affect the unit product costs calculated in Requirement 2?
Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following. At the end of the year, actual sales revenue for Product R and Product S was 3,075,000 and 3,254,000, respectively. The actual price charged for Product R was 25 and for Product S was 20. Only 10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled 540,000 for this product. Required: 1. Calculate the sales price and sales volume variances for each of the three products based on the original budget. 2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product?
Iona Company, a large printing company, is in its fourth year of a five-year, quality improvement program. The program began in 20x0 with an internal study that revealed the quality costs being incurred. In that year, a five-year plan was developed to lower quality costs to 10 percent of sales by the end of 20x5. Sales and quality costs for each year are as follows: Budgeted figures. Quality costs by category are expressed as a percentage of sales as follows: The detail of the 20x5 budget for quality costs is also provided. All prevention costs are fixed; all other quality costs are variable. During 20x5, the company had 12 million in sales. Actual quality costs for 20x4 and 20x5 are as follows: Required: 1. Prepare an interim quality cost performance report for 20x5 that compares actual quality costs with budgeted quality costs. Comment on the firms ability to achieve its quality goals for the year. 2. Prepare a one-period quality performance report for 20x5 that compares the actual quality costs of 20x4 with the actual costs of 20x5. How much did profits change because of improved quality? 3. Prepare a graph that shows the trend in total quality costs as a percentage of sales since the inception of the quality improvement program. 4. Prepare a graph that shows the trend for all four quality cost categories for 20x1 through 20x5. How does this graph help management know that the reduction in total quality costs is attributable to quality improvements? 5. Assume that the company is preparing a second five-year plan to reduce quality costs to 2.5 percent of sales. Prepare a long-range quality cost performance report assuming sales of 15 million at the end of five years. Assume that the final planned relative distribution of quality costs is as follows: proofreading, 50 percent; other inspection, 13 percent; quality training, 30 percent; and quality reporting, 7 percent.
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