Acc400 Accounting for Decision Making: Week 4 (BE23.6, E23.1, E23.8, E23.9, E24.2, E24.4, E24.6)

Acc400 Accounting for Decision Making
Week 4 Assignment (BE23.6, E23.1, E23.8, E23.9, E24.2, E24.4, E24.6)
BE23.6 Elements of the budget Identify the budgets in Column B from which dollar amounts are transferred directly in constructing the budgets listed in Column
A. Column A Column B
1. Budgeted income statement a. Direct materials budget
2. Budgeted balance sheet       b. Cost of goods sold budget
3. Cash flow budget                  c. Production budget
4. Cost of goods sold budget     d. Payable budget
5. Production budget e. Sales budget f. Budgeted income statement

E23.1 Budgeting Purchases and Cash Payments
The following information is from the manufacturing budget and the budgeted financial statements of Fabor Fabrication: Direct materials inventory, Jan 1 73,000 Direct materials inventory, Dec 31 85,000 Direct materials budgeted for use during the year 264,000 Accounts payable to suppliers of materials, Jan 1 46,000 Accounts payable to suppliers of materials, Dec 31 77,000 Compute the budgeted amounts for:
a. Purchases of direct materials during the year.
b. Cash payments during the year to suppliers of materials.

E23.8 Budgeting Cash Receipts
Sales on account for the first two months of the current year are budgeted as follows: January 800,000 February 880,000 All sales are made on terms of 2/10, n/30 (2% discount if paid in 10 days, full amount by 30 days); collections on accounts receivable are typically made as follows: Collections within the month of sale: Within discount period 70% After discount period 10% Collections within the month following sale: Within discount period 12% After discount period 6% Returns, allowances, and uncollectibles 2% Total 100% Compute the estimated cash collections on accounts receivable for the month of February.

E23.9 Budgeting an Ending Cash Balance
On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company’s sales are made on account. The following information has been provided by Spicer’s management: Month Credit Sales Jan 300,000 (actual) Feb 400,000 (actual) Mar 600,000 (actual) Apr 700,000 (estimated) May 800,000 (estimated) The company’s collection activity on credit sales historically has been as follows: Collections in the month of the sale 50% Collections one month after the sale 30% Collections two months after the sale 15% Uncollectible accounts 5% Spicer’s total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter.
Compute Spicer’s budgeted cash balance at the ends of March, April, and May.

E24.2 Relationships among Standard Costs, Actual Costs, and Cost Variances The standard costs and variances for direct materials, direct labor, and factory overhead for the month of May are as follows: Variances Standard Cost Unfavorable Favorable Direct materials 85,000 Price variance . 5,000 Quantity variance 3,000 Direct labor 150,000 Rate variance 2,700 Efficiency variance 6,200 Manufacturing overhead 300,000 Spending variance 4,000 Volume variance 5,000 Determine the actual costs incurred during the month of May for direct materials, direct labor, and manufacturing overhead.

E24.4 Computing Materials Cost Variances
Gumchara Corporation reported the following information with respect to the materials required to manufacture amalgam florostats during the current month: Standard price per gram of materials $4 Standard quantity of materials per amalgam florostat 5 grams Actual materials purchased and used in production 6,000 grams Actual amalgam florostats produced during the month 1,000 units Actual cost of materials purchased $18,000 Normal monthly output 900 units
a. Determine Gumchara's materials price variance
b. Determine Gumchara's materials quantity variance
c. Will Gumchara's overhead volume variance be favorable or unfavorable? Why?

E24.6 Computing Labor Cost Variances
Marlo Enterprises produces radon mitigation pumps. Information pertaining to the company’s monthly direct labor usage is provided below: Standard labor rate per hour $16 Standard hours allowed per radon mitigation pump 0.50 hours Actual pumps produced during the current month 9,000 units Actual labor hours worked during the current month 3,600 hours Actual labor cost for the current month $64,800
a. Compute the company’s labor rate variance.
b. Compute the company’s labor efficiency variance.
c. An extremely large order of radon mitigation pumps was filled during the month for exportation to Saudi Arabia. Filling this order resulted in extended hours for many of the company’s workers. Which labor variance reflects the extra hours worked by Marlo’s employees? Was their time well utilized? Explain.
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