1.

Micro Products Inc. has developed a very powerful electronic calculator. Each calculator requires three small chips that cost $4 each and are purchased from an overseas supplier. Micro Products has prepared a production budget for the calculator by quarters for year 2 and for the first quarter of year 3, as shown below:

	Year 2					Year 3
	First	Second	Third	Fourth		First
Budgeted production, in calculators	73,000	103,000	163,000	113,000		93,000

The chip used in production of the calculator is sometimes hard to get, so it is necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of chips at the end of a quarter must be equal to 20% of the following quarters production needs. A total of 49,000 chips will be on hand to start the first quarter of year 2.

Required: Prepare a direct materials purchases budget for chips, by quarter and in total, for year 2. At the bottom of your budget, show the dollar amount of purchases for each quarter and for the year in total.

2.

The manufacturing division manager of Davison Enterprises has submitted the following production forecast (in units) for each quarter of the next fiscal year. The plant produces seats for motorcycles:

	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Units to be produced	10,500	9,900	10,000	10,400

Each unit requires 0.50 direct labour-hours, and employees are paid $9 per hour.

Required: 1. Prepare the companys direct labour budget for the upcoming fiscal year, assuming that the direct labour workforce is adjusted each quarter to match the number of hours required to produce the forecast number of units.

2. Prepare the companys direct labour budget for the next fiscal year, assuming that the direct labour workforce is not adjusted each quarter. Instead, assume that the companys direct labour workforce consists of permanent employees who are guaranteed to be paid for at least 5,000 hours of work each quarter. If the number of required direct labour-hours is less than this number, the workers are paid for 5,000 hours anyway. Any hours worked in excess of 5,000 hours in a quarter are paid at a rate of 1.5 times the normal hourly rate for direct labour. (Do not leave any empty spaces; input a 0 wherever it is required.)

3.

The direct labour budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labour-hours:

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Budgeted direct labour-hours	9,600	9,000	9,300	10,100

The companys variable manufacturing overhead rate is $4.00 per direct labour-hour and the companys fixed manufacturing overhead is $64,000 per quarter. The only non-cash item included in fixed manufacturing overhead is depreciation, which is $16,000 per quarter.

Required: 1. Complete the companys manufacturing overhead budget for the upcoming fiscal year.

2. Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.

4.

Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the companys costs:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.90
Electricity	$	2,900			0.30
Maintenance					0.50
Wages and salaries		6,200			0.60
Depreciation		9,800
Rent		3,600
Administrative expenses		3,300			0.09

The company expects to charge customers an average of $7.40 per car washed.

Required: Prepare a flexible budget for October assuming either 9,000 or 10,000 cars are washed.