Question
1- In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types
1-
In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items:
Cost Formula | |
Maintenance | $34,600 + $1.25 DLH |
Power | $0.50 DLH |
Indirect labor | $68,500 + $2.30 DLH |
Rent | $31,100 |
At the end of the year, Meliore, Inc., actually produced 310,000 units of the standard model and 115,000 of the deluxe model. The actual overhead costs incurred were:
Maintenance | $ 64,250 |
Power | 12,410 |
Indirect labor | 129,460 |
Rent | 31,100 |
Required:
Prepare a performance report for the period. If there is no variance, enter "0" for the amount and select "NA" in the last column.
Meliore, Inc. | ||||
Performance Report | ||||
For the Year Ended December 31 | ||||
Actual | Budget | Variance | ||
DLH for units produced | ||||
Production costs: | ||||
$ | $ | $ | ||
Total | $ | $ | $ |
|
2-
Sales and Production Budgets
Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below.
Deluxe | Standard | |
First quarter | 12,000 | 90,000 |
Second quarter | 14,500 | 88,600 |
Third quarter | 16,800 | 92,000 |
Fourth quarter | 20,000 | 91,400 |
The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarters sales for deluxes and 10 percent of next quarters sales for standards.
Required:
1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period.
Berring Company | |||||
Sales Budget | |||||
For the Year Ended December 31 | |||||
Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Year | |
Deluxe: | |||||
Units | |||||
Unit price | $ | $ | $ | $ | $ |
Sales | $ | $ | $ | $ | $ |
Standard: | |||||
Units | |||||
Unit price | $ | $ | $ | $ | $ |
Sales | $ | $ | $ | $ | $ |
Total Sales | $ | $ | $ | $ | $ |
2. Prepare a separate production budget for each product for each of the first three quarters of the year.
Production budget for deluxes:
Berring Company | |||
Production Budget for Deluxes | |||
First Three Quarters of the Year | |||
Quarter 1 | Quarter 2 | Quarter 3 | |
Unit sales | |||
Total needed | |||
Units produced |
Production budget for standards:
Berring Company | |||
Production Budget for Standards | |||
First Three Quarters of the Year | |||
Quarter 1 | Quarter 2 | Quarter 3 | |
Unit sales | |||
Total needed | |||
Units produced |
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