1. Prepare a Cash Collections Budget

2. Prepare a Production Budget

3. Prepare a Direct Material Budget

4. Prepare a Manufacturing Overhead Budget

5. Prepare an Operating Expense Budget

6. Prepare a Cash Payments Budget

7. Prepare a Combined Cash Budget

8. Calculate the budgeted Manufacturing Cost per unit (**)

9. Prepare a budgeted Income Statement for the First Quarter

Assignment 1: ACC2320 Managerial Accounting Assignment 1 is an individual assignment composed of 5 Questions: Question 1: Question 2: Question 3: Question 4: Question 5: Absorption and Variable Costing Weighted-Average Contribution Margin Sensitivity Analysis using CVP Master Budget Performance Reports The assignment is due in class on Wednesday, April 12 no later than 9am. Students may choose, at their discretion, to hand in the assignment early. If you are unable to attend class on Wednesday, April 12, be sure to submit your assignment via email to CELINE.roy@cambriancollege.ca BEFORE 9am. Format Specifications: The Assignment is to be completed in Excel or Word. Students must choose a clear font (such as Arial, or Calibri). The font must be at least 12 points but no bigger than 16 points. Make sure to include your name and student number on every page of your assignment. Students who choose to submit their assignment in after the deadline will be penalized as follows: Assignments submitted after 9am but before the end of class: will be penalized by 5% of their mark Assignments submitted by midnight on April 12: will be penalized by 10% of their mark Assignments submitted on April 13 or by midnight on April 14: will be penalized by 20% of their mark. Assignments submitted later than April 14 at midnight will receive a grade of 0% for Assignment 1. Students who are unable to meet the original deadline of 9 am on April 12 can email their submission to CELINE.roy@cambriancollege.ca Question 1: Andra's Bakery produces frozen pizzas, which it sells for $10 each. The company uses the FIFO inventory costing method and it computes a new monthly fixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from Andra's Bakery first two months in business: July August Sales 1,500 1,800 Production 2,100 1,500 Variable manufacturing expense per pizza $6 $6 Sales commission expense per pizza $1.50 $1.50 Total fixed manufacturing overhead $1,050 $1,050 Total fixed marketing and administrative expenses$900 $900 Required: 1. Compute the product cost per meal produced under absorption costing and under variable costing. Do this first for July and then for August. 2. Prepare separate monthly income statements for July and for August, using (a) absorption costing and (b) variable costing. 3. Is operating income higher under absorption costing or variable costing in July? In August? Explain the pattern of differences in operating income based on absorption costing versus variable costing. Question 2: Arden Florists sells three types of bouquets at a kiosk in the mall: Carnations, Roses, and Mixtures. They sold 10,000 bouquets last year. Mixtures outsold Roses by a margin of 2 to 1. Sales of Carnations were the same as sales of Roses. Fixed costs for Arden Florists are $19,500 and additional information follows: Product Carnations Roses Mixed Unit Sales Prices $28.00 $40.00 $20.00 Unit Variable Cost $14.00 $18.00 $12.00 1. Calculate the sales mix percentage of all three products (based upon the number of bouquets). 2. Calculate the weighted average contribution margin for all three types of bouquets. 3. Calculate the break-even volume in number of bouquets. 4. Calculate the break-even sales in dollars. Question 3: Woodley Corporation management has budgeted the following amounts for its next fiscal year: Total fixed expenses $500,000 Sale price per unit $1,000 Variable expenses per unit $600 Requirements: 1. If Woodley Corporation can reduce fixed expenses by $20,000, how will break-even sales in units be affected? 2. If Woodley Corporation spends an additional $15,000 on advertising, sales volume should increase by 1,000 units. What effect will this have on operating income? 3. If Woodley Corporation can reduce fixed expenses by $50,000, by how much can variable expenses per unit increase and still allow the company to maintain the original break-even sales in units? 4. If fixed expenses increase by 20%, to maintain the original break-even sales in units, what would be the sale price per unit have to be? Question 4: Domino's Manufacturing is preparing its master budget for the first quarter of the upcoming year. The available data from their operations is as follows: Account Balances At December 31 Current Assets Cash Accounts Receivables (Net) Inventory Property, Plant & Equipment (net) Accounts Payable (all outstanding DM payments) Capital Stock Retained Earnings $ 5,640 $ 57,600 $ 15,600 $ 121,500 $ 42,800 $ 124,500 $ 22,800 a) Sales are 25% Cash and 75% Credit. 90% of credit sales are collected the following month, 9% are collected 2 months after the sale and 1% are uncollectible. b) Actual Sales in November were $96,000 and December sales were the same as budgeted sales at $72,000. The Selling price per unit is budgeted to remain the same at $12. Total Sales for the First 5 months are: January $104,400 February 108,000 March 112,800 April 109,200 May 105,600 c) The safety stock is 10% of the following month's sales d) Three Kilograms, at $2.00 per kg, is required for each unit. Domino's follows the following practices: 20% of direct materials are paid the month in which they are purchased. The remaining are paid the following month The safety stock is 30% of next month's production needs Beginning Direct Material Inventory is 8,235kg e) The Direct Labour required per unit is 0.10 hours. The direct labour cost is $15 per hour. Employees are paid semi-monthly for the month they are working. f) g) h) i) j) k) Domino's annual budgeted production is 116,800 units. The monthly Manufacturing Costs, which are paid the month they are incurred, are: $4,500 for rent $2,800 for other fixed manufacturing $1.05/unit produced for indirect materials and labour The administrative offices require new computers this year. They will purchase the following amounts on credit (terms are net 30): January $6,000 March $15,600 The selling and admin fees are as follows and are paid for in the same month they are incurred: $1,800 per month plus $1.30 per unit sold The depreciation for the Administrative offices (buildings and equipment), including new purchases, is budgeted to be $4,600 for the quarter. The ending cash balance at the end of any given month must be at least $4,200. In order to maintain this balance, Domino's has access to a line of Credit which is advanced in increments of $1,000 at the beginning of the month but cannot surpass $130,000. The interest rate is charged at 2% per month (simple interest). Domino's practice is to use any available funds at the end of the quarter to repay its borrowings. Interest payments are made quarterly, at the end of the quarter. Domino's Income tax rate is 30% of operating income less interest expenses. The company made a payment of $10,800 at the end of February. Requirements *Make sure to include the monthly breakdown as well as the totals for the first Quarter Unless otherwise specified, round all numbers to the nearest dollar. 1. 2. 3. 4. 5. 6. 7. 8. 9. Prepare a Cash Collections Budget Prepare a Production Budget Prepare a Direct Material Budget Prepare a Manufacturing Overhead Budget Prepare an Operating Expense Budget Prepare a Cash Payments Budget Prepare a Combined Cash Budget Calculate the budgeted Manufacturing Cost per unit (**) Prepare a budgeted Income Statement for the First Quarter Question 5: InTouch is a Lethbridge company that sells cell phones and PDAs on the web. InTouch has assistant managers for its digital and video cell phone operations. These assistant managers report to the manager of the total cell phone product line, who, with the manager of PDAs, reports to the manager for all sales of hand held devices, Rima Bouagada. Bouagada received the following data for November operations: Required: 1) Describe the four types of responsibility centers. Which responsibility best describes Bougada's role? Clearly explain your choice. 2) Arrange the data in a performance report for November results in thousands of dollars, for digital cell phones, for the total cell phone product line, and for all devices. Should Bouagada investigate the performance of digital cell phone operations? Why or why not