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