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Assignment (Managerial Acc)

The document contains production budget and direct material budget information for a company over multiple months. It shows budgeted sales units, production units, beginning and ending finished goods and raw material inventories. The company produces more in July and August to build ending inventory above beginning levels, and fewer in September and October as beginning inventory covers needs. A special order calculation shows the order is profitable as incremental revenue exceeds incremental costs.

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56 views

Assignment (Managerial Acc)

The document contains production budget and direct material budget information for a company over multiple months. It shows budgeted sales units, production units, beginning and ending finished goods and raw material inventories. The company produces more in July and August to build ending inventory above beginning levels, and fewer in September and October as beginning inventory covers needs. A special order calculation shows the order is profitable as incremental revenue exceeds incremental costs.

Uploaded by

mo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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EX:8-13 Solution

1) Production Budget

JUL AUG SEP OCT NOV DEC


Budgeted Sales Unit 40,000 50,000 70,000 35,000 20,000 10,000
Add:​ Desired END FG INV 20,000 26,000 15,500 11,000 8,000
5K + 30% Of Next Month
Total Needs 60,000 76,000 85,500 46,000 28,000
Less:​ BEG FG INV (17,000) (20,000) (26,000) (15,500) (11,000)
Budgeted Production Units 43,000 56,000 59,500 30,500 17,000

2) The company produces more units than it sells in July and August because the
ending inventory is required to be greater than the beginning inventory, while the
company produces fewer units than it sells in Sep and Oct because the
beginning inventory is already covering the required ending inventory.

3) Direct Material Budget

JUL AUG SEP OCT NOV


Budgeted Production Units 43,000 56,000 59,500 30,500 17,000
Raw Material Production Needs (pounds) 129,000 168,000 178,500 91,500 51,000
3 Pounds Per Unit

Add:​ Desired Raw Material END INV 84,000 89,250 45,750 25,500
50% Of Next Month
Total Raw Material Needs 213,000 257,250 224,250 117,000
Less:​ Raw Material BEG INV (64,500) (84,000) (89,250) (45,750)
Raw Material Purchases (pounds) 148,500 173,250 135,000 71,250

EX:12-4 Solution

Incremental Revenue 10x $349.95 $3,499.50


Less: Incremental Costs -$2,825.00
Variable Costs 10x $(143+86+7)
Cost of special tool $465
Change in NOI if the offer is accepted $674.50

Accept the offer.

EX:12-14 Solution

Sepcial order < Idle Capacity

Incremental Revenue 2000 x $12 $24,000.00


Less: Incremental Costs -$15,000.00
Variable Manufacturing Costs 2000 x $(2.5+3+0.5)
Variable Selling Costs 2000 x $1.5
Change in NOI if the offer is accepted $9,000.00

Accept the offer.

Min sales price of inferior products = Variable Selling & Admin Cost = $1.5
Because other production costs are already incurred (Sunk costs)

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