Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Chapter 7, Problem 8PA
Direct labor hours are estimated as 2,000 in Quarter 1; 2,100 in Quarter 2; 1,900 in Quarter 3; and 2,300 in Quarter 4. Prepare a manufacturing
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Check out a sample textbook solutionChapter 7 Solutions
Principles of Accounting Volume 2
Ch. 7 - Which of the following is not a part of budgeting?...Ch. 7 - Which of the following is an operating budget? A....Ch. 7 - Which of the following is a finance budget? A....Ch. 7 - Which approach is most likely to result in...Ch. 7 - Which approach requires management to justify all...Ch. 7 - Which of the following is true in a bottom-up...Ch. 7 - The most common budget is prepared for a...Ch. 7 - Which of the operating budgets is prepared first?...Ch. 7 - The direct materials budget is prepared using...Ch. 7 - Which of the following is not an operating budget?...
Ch. 7 - Which of the following statements is not correct?...Ch. 7 - The units required in production each period are...Ch. 7 - The cash budget is part of which category of...Ch. 7 - Which is not a section of the cash budget? cash...Ch. 7 - Which budget is the starting point in preparing...Ch. 7 - Which of the following includes only financial...Ch. 7 - Which budget evaluates the results of operations...Ch. 7 - What is the main difference between static and...Ch. 7 - What is a budget and what are the different types...Ch. 7 - What is the difference between budgeting and...Ch. 7 - What are the advantages and disadvantages of the...Ch. 7 - Why might a rolling budget require more management...Ch. 7 - What information is necessary for the operating...Ch. 7 - What operating budget exists for manufacturing but...Ch. 7 - What is the process for developing a budgeted...Ch. 7 - Which of the financial budgets is the most...Ch. 7 - A company has prepared the operating budget and...Ch. 7 - Fill in the blanks: A flexible budget summarizes...Ch. 7 - What information is included in the capital asset...Ch. 7 - Why does budget planning typically begin with the...Ch. 7 - What steps should be considered it a budget is to...Ch. 7 - Blue Book printing is budgeting sales of 25,000...Ch. 7 - How many units are in beginning inventory it...Ch. 7 - Navigator sells GPS trackers for $50 each. It...Ch. 7 - One Device makes universal remote controls and...Ch. 7 - Sunrise Poles manufactures hiking poles and is...Ch. 7 - Given the following information from Rowdy...Ch. 7 - Each unit requires direct labor of 2.2 hours. The...Ch. 7 - How many units are estimated to be sold it...Ch. 7 - Cash collections for Wax On Candles found that 60%...Ch. 7 - Nonnas Re-Appliance Store collects 55% of its...Ch. 7 - Dream Big Pillow Co. pays 65% of its purchases in...Ch. 7 - Desiccate purchases direct materials each month....Ch. 7 - What is the amount of budgeted cash payments if...Ch. 7 - Halifax Shoes has 30% of its sales in cash and the...Ch. 7 - Cold X, Inc. uses this information when preparing...Ch. 7 - Using the provided budgeted information for...Ch. 7 - The production cost for a waterproof phone case is...Ch. 7 - Lovely Wedding printing is budgeting sales of...Ch. 7 - How many units are in beginning inventory if...Ch. 7 - Barnstormer sells airplane accessories for $20...Ch. 7 - Rehydrator makes a nutrition additive and expects...Ch. 7 - Cloud Shoes manufactures recovery sandals and is...Ch. 7 - Given the following information from Power...Ch. 7 - Each unit requires direct labor of 4.1 hours. The...Ch. 7 - How many units are estimated to be sold if Kino,...Ch. 7 - Cash collections for Renew Lights found that 65%...Ch. 7 - My Aunts Closet Store collects 60% of its accounts...Ch. 7 - Gear Up Co. pays 65% of its purchases in the month...Ch. 7 - Drainee purchases direct materials each month. Its...Ch. 7 - What is the amount of budgeted cash payments if...Ch. 7 - Earthies Shoes has 55% of its sales in cash and...Ch. 7 - Judges Gavel uses this information when preparing...Ch. 7 - Using the following budgeted information for...Ch. 7 - The production cost for UV protective sunglasses...Ch. 7 - Lens Junction sells lenses for $45 each and is...Ch. 7 - The data shown were obtained from the financial...Ch. 7 - Echo Amplifiers prepared the following sales...Ch. 7 - Prepare a budgeted income statement using the...Ch. 7 - Spree Party Lights overhead expenses are: Prepare...Ch. 7 - Relevant data from the Poster Companys operating...Ch. 7 - Fill in the missing information from the following...Ch. 7 - Direct labor hours are estimated as 2,000 in...Ch. 7 - Fitbands estimated sales are: What are the...Ch. 7 - Sports Socks has a policy of always paying within...Ch. 7 - Prepare a flexible budgeted income for 120,000...Ch. 7 - Before the year began, the following static budget...Ch. 7 - Caribbean Hammocks currently sells 75.000 units at...Ch. 7 - Total Pops data show the following information:...Ch. 7 - Identify the document that contains the...Ch. 7 - Titanium Blades refines titanium for use in all...Ch. 7 - Lens & Shades sells sunglasses for $37 each and is...Ch. 7 - The following data were obtained from the...Ch. 7 - TIB makes custom guitars and prepared the...Ch. 7 - Prepare a budgeted income statement using the...Ch. 7 - Prepare a budgeted income statement using the...Ch. 7 - Relevant data from the operating budget of The...Ch. 7 - Fill in the missing information from the following...Ch. 7 - Mesa Aquatics, Inc. estimated direct labor hours...Ch. 7 - Amusement tickets estimated sales are: What are...Ch. 7 - All Temps has a policy of always paying within the...Ch. 7 - Prepare a flexible budgeted income statement for...Ch. 7 - Before the year began, the following static budget...Ch. 7 - Artic Camping Gears currently sells 35,000 units...Ch. 7 - Prob. 14PBCh. 7 - Identify the document that contains the...Ch. 7 - Replenish sells shampoo that removes chlorine from...Ch. 7 - Why is a clear understanding of managements goals...Ch. 7 - It is proper budgeting procedure to begin with...Ch. 7 - How would a human resources department use...Ch. 7 - How would maintenance departments use information...Ch. 7 - How might service industries predict revenue?Ch. 7 - The management of Hess, Inc., is developing a...Ch. 7 - When would a static budget be effective in...Ch. 7 - If management is being evaluated on their ability...Ch. 7 - If management is being evaluated on their ability...
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- 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.arrow_forwardDouglas Davis, controller for Marston, Inc., prepared the following budget for manufacturing costs at two different levels of activity for 20X1: During 20X1, Marston worked a total of 80,000 direct labor hours, used 250,000 machine hours, made 32,000 moves, and performed 120 batch inspections. The following actual costs were incurred: Marston applies overhead using rates based on direct labor hours, machine hours, number of moves, and number of batches. The second level of activity (the right column in the preceding table) is the practical level of activity (the available activity for resources acquired in advance of usage) and is used to compute predetermined overhead pool rates. Required: 1. Prepare a performance report for Marstons manufacturing costs in the current year. 2. Assume that one of the products produced by Marston is budgeted to use 10,000 direct labor hours, 15,000 machine hours, and 500 moves and will be produced in five batches. A total of 10,000 units will be produced during the year. Calculate the budgeted unit manufacturing cost. 3. One of Marstons managers said the following: Budgeting at the activity level makes a lot of sense. It really helps us manage costs better. But the previous budget really needs to provide more detailed information. For example, I know that the moving materials activity involves the use of forklifts and operators, and this information is lost when only the total cost of the activity for various levels of output is reported. We have four forklifts, each capable of providing 10,000 moves per year. We lease these forklifts for five years, at 10,000 per year. Furthermore, for our two shifts, we need up to eight operators if we run all four forklifts. Each operator is paid a salary of 30,000 per year. Also, I know that fuel costs about 0.25 per move. Assuming that these are the only three items, expand the detail of the flexible budget for moving materials to reveal the cost of these three resource items for 20,000 moves and 40,000 moves, respectively. Based on these comments, explain how this additional information can help Marston better manage its costs. (Especially consider how activity-based budgeting may provide useful information for non-value-added activities.)arrow_forwardA company estimates its manufacturing overhead will be $840,000 for the next year. What is the predetermined overhead rate given each of the following Independent allocation bases? Budgeted direct labor hours: 90,615 Budgeted direct labor expense: $750000 Estimated machine hours: 150,000arrow_forward
- Calculating factory overhead The standard capacity of a factory is 8,000 units per month. Cost and production data follow: Calculate the amount of factory overhead allowed for the actual volume of production each month and the variance between budgeted and actual overhead for each month.arrow_forwardThomas Textiles Corporation began November with a budget for 60,000 hours of production in the Weaving Department. The department has a full capacity of 75,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of November was as follows: The actual factory overhead was 725,000 for November. The actual fixed factory overhead was as budgeted. During November, the Weaving Department had standard hours at actual production volume of 64,500 hours. a. Determine the variable factory overhead controllable variance. b. Determine the fixed factory overhead volume variance.arrow_forwardBaldwin Printing Company uses a job order cost system and applies overhead based on machine hours. A total of 150,000 machine hours have been budgeted for the year. During the year, an order for 1,000 units was completed and incurred the following: The accountant computed the inventory cost of this order to be 4.30 per unit. The annual budgeted overhead in dollars was: a. 577,500. b. 600,000. c. 645,000. d. 660,000.arrow_forward
- 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.arrow_forwardThe cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be 3,150,000, and total direct labor costs would be 1,800,000. During February, the actual direct labor cost totalled 160,000, and factory overhead cost incurred totaled 283,900. a. What is the predetermined factory overhead rate based on direct labor cost? b. Journalize the entry to apply factory overhead to production for February. c. What is the February 28 balance of the account Factory OverheadBlending Department? d. Does the balance in part (c) represent over- or underapplied factory overhead?arrow_forwardFlexible budget for factory overhead Presented below are the monthly factory overhead cost budget (at normal capacity of 5,000 units or 20,000 direct labor hours) and the production and cost data for a month. The predetermined overhead rate is based on normal capacity. Required: 1. Assuming that variable costs will vary in direct proportion to the change in volume, prepare a flexible budget for production levels of 80%, 90%, and 110% of normal capacity. Also determine the predetermined factory overhead rate at each level of volume in both units and direct labor hours. 2. Prepare a flexible budget for production levels of 80%, 90%, and 110%, assuming that variable costs will vary in direct proportion to the change in volume, but with the following exceptions. (Hint: Set up a third category for semi-variable expenses.) a. At 110% of capacity, another supervisor will be needed at a salary of 24,000 annually. b. At 80% of capacity, the repairs expense will drop to one-half of the amount at 100% capacity. c. At 80% of capacity, one part-time maintenance worker, earning 10,000 a year, will be laid off. d. At 110% of capacity, a machine not normally in use and on which no depreciation is normally recorded will be used in production. Its cost was 12,000, it has a 10-year life, and straight-line depreciation will be taken.arrow_forward
- The sales department of F. Pollard Manufacturing Co. has forecast sales in March to be 20,000 units. Additional information follows: Materials used in production: Prepare the following: a. A production budget for March (in units). b. A direct materials budget for the month (in units and dollars).arrow_forwardBusiness Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of direct labor and direct materials per unit for the year are as follows: The standard price paid per pound of direct materials is 1.60. The standard rate for labor is 8.00. Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is as follows: The company expects to work 12,000 direct labor hours during the year; standard overhead rates are computed using this activity level. For every small stapler produced, the company produces two regular staplers. Actual operating data for the year are as follows: a. Units produced: small staplers, 35,000; regular staplers, 70,000. b. Direct materials purchased and used: 56,000 pounds at 1.5513,000 for the small stapler and 43,000 for the regular stapler. There were no beginning or ending direct materials inventories. c. Direct labor: 14,800 hours3,600 hours for the small stapler and 11,200 hours for the regular stapler. Total cost of direct labor: 114,700. d. Variable overhead: 607,500. e. Fixed overhead: 350,000. Required: 1. Prepare a standard cost sheet showing the unit cost for each product. 2. Compute the direct materials price and usage variances for each product. Prepare journal entries to record direct materials activity. 3. Compute the direct labor rate and efficiency variances for each product. Prepare journal entries to record direct labor activity. 4. Compute the variances for fixed and variable overhead. Prepare journal entries to record overhead activity. All variances are closed to Cost of Goods Sold. 5. Assume that you know only the total direct materials used for both products and the total direct labor hours used for both products. Can you compute the total direct materials and direct labor usage variances? Explain.arrow_forwardGeorgia Gasket Co. budgets 8,000 direct labor hours for the year. The total overhead budget is expected to amount to 20,000. The standard cost for a unit of the companys product estimates the variable overhead as follows: The actual data for the period follow: Using the four-variance method, calculate the overhead variances. (Hint: First compute the budgeted fixed overhead rate.)arrow_forward
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