1.

Static Budget versus Flexible Budget

The production supervisor of the Machining Department for Celtic Company agreed to the following monthly static budget for the upcoming year:

Celtic Company Machining Department Monthly Production Budget
Wages	$981,000
Utilities	59,000
Depreciation	98,000
Total	$1,138,000

The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows:

	Amount Spent		Units Produced
January	$1,073,000		90,000
February	1,025,000		82,000
March	979,000		74,000

The Machining Department supervisor has been very pleased with this performance because actual expenditures for JanuaryMarch have been less than the monthly static budget of $1,138,000. However, the plant manager believes that the budget should not remain fixed for every month but should flex or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:

Wages per hour	$20.00
Utility cost per direct labor hour	$1.20
Direct labor hours per unit	0.50
Planned monthly unit production	98,000

Question Content Area

a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume that depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places.

Celtic Company-Machining Department Flexible Production Budget For the Three Months Ending March 31

	January	February	March
Units of production	fill in the blank ecc60706dff9faf_1	fill in the blank ecc60706dff9faf_2	fill in the blank ecc60706dff9faf_3
Wages	$fill in the blank ecc60706dff9faf_4	$fill in the blank ecc60706dff9faf_5	$fill in the blank ecc60706dff9faf_6
Utilities	fill in the blank ecc60706dff9faf_7	fill in the blank ecc60706dff9faf_8	fill in the blank ecc60706dff9faf_9
Depreciation	fill in the blank ecc60706dff9faf_10	fill in the blank ecc60706dff9faf_11	fill in the blank ecc60706dff9faf_12
Total	$fill in the blank ecc60706dff9faf_13	$fill in the blank ecc60706dff9faf_14	$fill in the blank ecc60706dff9faf_15

Question Content Area

b. Compare the flexible budget with the actual expenditures for the first three months.

	January	February	March
Actual cost	$fill in the blank 7d7f25044049054_1	$fill in the blank 7d7f25044049054_2	$fill in the blank 7d7f25044049054_3
Total flexible budget	fill in the blank 7d7f25044049054_4	fill in the blank 7d7f25044049054_5	fill in the blank 7d7f25044049054_6
Excess of actual cost over budget	$fill in the blank 7d7f25044049054_7	$fill in the blank 7d7f25044049054_8	$fill in the blank 7d7f25044049054_9

2.

Production Budget

FitHealth Inc. produces a small and large version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows:

	Bath Scale		Gym Scale
East Region unit sales	25,300		37,000
West Region unit sales	27,300		28,700
Total	52,600		65,700

The finished goods inventory estimated for October 1 for the Bath and Gym scale models is 1,400 and 2,000 units, respectively. The desired finished goods inventory for October 31 for the Bath and Gym scale models is 1,000 and 2,200 units, respectively.

Prepare a production budget for the Bath and Gym scales for the month ended October 31.

FitHealth Inc. Production Budget For the Month Ending October 31

	Units Bath Scale	Units Gym Scale
Expected units to be sold	fill in the blank 1	fill in the blank 2
Less desired inventory, October 31Less estimated inventory, October 1Plus desired inventory, October 31Plus estimated inventory, October 1	- Select -	- Select -
Total units required	fill in the blank 6	fill in the blank 7
Less desired inventory, October 31Less estimated inventory, October 1Plus desired inventory, October 31Plus estimated inventory, October 1	- Select -	- Select -
Total units to be produced	fill in the blank 11	fill in the blank 12

3.

Sales and Production Budgets

Vibrant Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget:

	Rumble		Thunder
Estimated inventory (units), June 1	288		71
Desired inventory (units), June 30	331		62
Expected sales volume (units):
North Region	4,350		3,850
South Region	5,100		4,450
Unit sales price	$120		$220

Question Content Area

a. Prepare a sales budget.

Vibrant Inc. Sales Budget For the Month Ending June 30

Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
Model Rumble:
North Region	fill in the blank d5a7ab07bfd4ff5_1	$fill in the blank d5a7ab07bfd4ff5_2	$fill in the blank d5a7ab07bfd4ff5_3
South Region	fill in the blank d5a7ab07bfd4ff5_4	fill in the blank d5a7ab07bfd4ff5_5	fill in the blank d5a7ab07bfd4ff5_6
Total	fill in the blank d5a7ab07bfd4ff5_7		$fill in the blank d5a7ab07bfd4ff5_8
Model Thunder:
North Region	fill in the blank d5a7ab07bfd4ff5_9	$fill in the blank d5a7ab07bfd4ff5_10	$fill in the blank d5a7ab07bfd4ff5_11
South Region	fill in the blank d5a7ab07bfd4ff5_12	fill in the blank d5a7ab07bfd4ff5_13	fill in the blank d5a7ab07bfd4ff5_14
Total	fill in the blank d5a7ab07bfd4ff5_15		$fill in the blank d5a7ab07bfd4ff5_16
Total revenue from sales			$fill in the blank d5a7ab07bfd4ff5_17

Question Content Area

b. Prepare a production budget.

Vibrant Inc. Production Budget For the Month Ending June 30

	Units Model Rumble	Units Model Thunder
Expected units to be sold	fill in the blank 4e39970b6f8600a_1	fill in the blank 4e39970b6f8600a_2
Less desired inventory, June 30Less estimated inventory, June 1Plus desired inventory, June 30Plus estimated inventory, June 1	- Select -	- Select -
Total units required	fill in the blank 4e39970b6f8600a_6	fill in the blank 4e39970b6f8600a_7
Less desired inventory, June 30Less estimated inventory, June 1Plus desired inventory, June 30Plus estimated inventory, June 1	- Select -	- Select -
Total units to be produced	fill in the blank 4e39970b6f8600a_11	fill in the blank 4e39970b6f8600a_12

4.

Bark & Purr Supplies Inc., a pet wholesale supplier, was organized on May 1. Projected sales for each of the first three months of operations are as follows:

May	$370,000
June	470,000
July	710,000

All sales are on account. 57 percent of sales are expected to be collected in the month of the sale, 33% in the month following the sale, and the remainder in the second month following the sale.

Prepare a schedule indicating cash collections from sales for May, June, and July.

Bark & Purr Supplies Inc. Schedule of Collections from Sales For the Three Months Ending July 31

	May	June	July
May sales on account:
Collected in May	$fill in the blank 1
Collected in June		$fill in the blank 2
Collected in July			$fill in the blank 3
June sales on account:
Collected in June		fill in the blank 4
Collected in July			fill in the blank 5
July sales on account:
Collected in July			fill in the blank 6
Total cash collected	$fill in the blank 7	$fill in the blank 8	$fill in the blank 9