1.Flexible Budgeting

At the beginning of the period, the Fabricating Department budgeted direct labor of $94,600 and equipment depreciation of $31,000 for 8,600 hours of production. The department actually completed 10,800 hours of production.

Determine thebudgetfor the department, assuming that it uses flexible budgeting.

$fill in the blank 1

2.Production Budget

Pasadena Candle Inc. projected sales of 86,000 candles for January. The estimated January 1 inventory is 5,200 units, and the desired January 31 inventory is 9,000 units.

Prepare a production budget report in units for Pasadena Candle Inc. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pasadena Candle Inc.Production BudgetFor the Month Ending January 31

fill in the blank 2

fill in the blank 4

Total units availablefill in the blank 5

fill in the blank 7

Total units to be produced in Januaryfill in the blank 8

3.Direct Materials Purchases Budget

Pasadena Candle Inc. budgeted production of 730,000 candles for the January. Wax is required to produce a candle. Assume 12 ounces of wax is required for each candle. The estimated January 1 wax inventory is 17,200 pounds. The desired January 31 wax inventory is 14,500 pounds. If candle wax costs $1.50 per pound, determine the direct materials purchases budget for January. (One pound = 16 ounces.) Round all computed answers to the nearest whole number. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pasadena Candle Inc.Direct Materials Purchases BudgetFor the Month Ending January 31Pounds of wax required for production:

fill in the blank 2

fill in the blank 4

Total units availablefill in the blank 5

fill in the blank 7

Total pounds to be purchasedfill in the blank 8

Unit price$

fill in the blank 9

Total direct materials to be purchased in January$

fill in the blank 10

4.Direct Labor Cost Budget

Pasadena Candle Inc. budgeted production of 60,000 candles for January. Each candle requires molding. Assume that 10 minutes are required to mold each candle. If molding labor costs $9.5 per hour, determine the direct labor cost budget for January.

Round total direct labor cost to the nearest dollar, if required.

Pasadena Candle Inc.

Direct Labor Cost Budget

For the Month Ending January 31Hours required for assembly:Candlesfill in the blank 1

min.Convert minutes to hoursfill in the blank 2

min.Molding hoursfill in the blank 3

hrs.Hourly rate$fill in the blank 4

Total direct labor cost$fill in the blank 5

5.Cash Budget

Pasadena Candle Inc. pays 40% of its purchases on account in the month of the purchase and 60% in the month following the purchase. If purchases arebudgetedto be $40,000 for August and $36,000 for September.

Prepare a simple cash budget for Pasadena Candle Inc.

Pasadena Candle Inc.Schedule of Cash Payments for PurchasesFor the Month Ending September

$

fill in the blank 2

fill in the blank 4

Total payments for purchases on account$

fill in the blank 5

6.Flexible Budgetfor Selling and Administrative Expenses for a Service Company

Digital Solutions Inc. uses flexiblebudgetsthat are based on the following data:

Sales commissions14% of salesAdvertising expense20% of salesMiscellaneous administrative expense$7,500 per month plus 12% of salesOffice salaries expense$29,000 per monthCustomer support expenses$13,000 per month plus 20% of salesResearch and development expense$30,000 per month

Prepare a flexible selling and administrative expenses budget for October for sales volumes of $400,000, $500,000, and $600,000. (UseExhibit 5as a model.)

Digital Solutions Inc.Flexible Selling and Administrative Expenses BudgetFor the Month Ending October 31Total sales$400,000$500,000$600,000Variable cost:

$

fill in the blank 2

$

fill in the blank 3

$

fill in the blank 4

fill in the blank 6

fill in the blank 7

fill in the blank 8

fill in the blank 10

fill in the blank 11

fill in the blank 12

fill in the blank 14

fill in the blank 15

fill in the blank 16

Total variable cost$

fill in the blank 17

$

fill in the blank 18

$

fill in the blank 19

Fixed cost:

$

fill in the blank 21

$

fill in the blank 22

$

fill in the blank 23

fill in the blank 25

fill in the blank 26

fill in the blank 27

fill in the blank 29

fill in the blank 30

fill in the blank 31

fill in the blank 33

fill in the blank 34

fill in the blank 35

Total fixed cost$

fill in the blank 36

$

fill in the blank 37

$

fill in the blank 38

Total selling and administrative expenses$

fill in the blank 39

$

fill in the blank 40

$

fill in the blank 41

7.Static BudgetversusFlexible Budget

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

Hagerstown Company

Machining Department

Monthly Production BudgetWages$683,000Utilities32,000Depreciation54,000Total$769,000

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

Amount SpentUnits ProducedMay$725,00066,000June690,00060,000July656,00054,000

The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly staticbudgetof 769,000. 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$19.00Utility cost per direct labor hour$0.90Direct labor hours per unit0.50Planned monthly unit production72,000

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

Hagerstown CompanyMachining Department BudgetFor the Three Months Ending July 31MayJuneJulyUnits of production66,00060,00054,000

$

fill in the blank 9d9ea303f05d075_2

$

fill in the blank 9d9ea303f05d075_3

$

fill in the blank 9d9ea303f05d075_4

fill in the blank 9d9ea303f05d075_6

fill in the blank 9d9ea303f05d075_7

fill in the blank 9d9ea303f05d075_8

fill in the blank 9d9ea303f05d075_10

fill in the blank 9d9ea303f05d075_11

fill in the blank 9d9ea303f05d075_12

Total$

fill in the blank 9d9ea303f05d075_13

$

fill in the blank 9d9ea303f05d075_14

$

fill in the blank 9d9ea303f05d075_15

Supporting calculations:Units of production66,00060,00054,000Hours per unitx

fill in the blank 9d9ea303f05d075_16

x

fill in the blank 9d9ea303f05d075_17

x

fill in the blank 9d9ea303f05d075_18

Total hours of productionfill in the blank 9d9ea303f05d075_19

fill in the blank 9d9ea303f05d075_20

fill in the blank 9d9ea303f05d075_21

Wages per hourx $

fill in the blank 9d9ea303f05d075_22

x $

fill in the blank 9d9ea303f05d075_23

x $

fill in the blank 9d9ea303f05d075_24

Total wages$

fill in the blank 9d9ea303f05d075_25

$

fill in the blank 9d9ea303f05d075_26

$

fill in the blank 9d9ea303f05d075_27

Total hours of productionfill in the blank 9d9ea303f05d075_28

fill in the blank 9d9ea303f05d075_29

fill in the blank 9d9ea303f05d075_30

Utility costs per hourx $

fill in the blank 9d9ea303f05d075_31

x $

fill in the blank 9d9ea303f05d075_32

x $

fill in the blank 9d9ea303f05d075_33

Total utilities$

fill in the blank 9d9ea303f05d075_34

$

fill in the blank 9d9ea303f05d075_35

$

fill in the blank 9d9ea303f05d075_36

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

MayJuneJulyTotal flexible budget$fill in the blank a13bafffe004f82_1

$fill in the blank a13bafffe004f82_2

$fill in the blank a13bafffe004f82_3

Actual costfill in the blank a13bafffe004f82_4

fill in the blank a13bafffe004f82_5

fill in the blank a13bafffe004f82_6

Excess of actual cost over budget$fill in the blank a13bafffe004f82_7

$fill in the blank a13bafffe004f82_8

$fill in the blank a13bafffe004f82_9

What does this comparison suggest?

The Machining Department has performed better than originally thought.

The department is spending more than would be expected.

Static BudgetversusFlexible Budget

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

Hagerstown Company

Machining Department

Monthly Production BudgetWages$683,000Utilities32,000Depreciation54,000Total$769,000

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

Amount SpentUnits ProducedMay$725,00066,000June690,00060,000July656,00054,000

The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly staticbudgetof 769,000. 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$19.00Utility cost per direct labor hour$0.90Direct labor hours per unit0.50Planned monthly unit production72,000

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

Hagerstown CompanyMachining Department BudgetFor the Three Months Ending July 31MayJuneJulyUnits of production66,00060,00054,000

$

fill in the blank 9d9ea303f05d075_2

$

fill in the blank 9d9ea303f05d075_3

$

fill in the blank 9d9ea303f05d075_4

fill in the blank 9d9ea303f05d075_6

fill in the blank 9d9ea303f05d075_7

fill in the blank 9d9ea303f05d075_8

fill in the blank 9d9ea303f05d075_10

fill in the blank 9d9ea303f05d075_11

fill in the blank 9d9ea303f05d075_12

Total$

fill in the blank 9d9ea303f05d075_13

$

fill in the blank 9d9ea303f05d075_14

$

fill in the blank 9d9ea303f05d075_15

Supporting calculations:Units of production66,00060,00054,000Hours per unitx

fill in the blank 9d9ea303f05d075_16

x

fill in the blank 9d9ea303f05d075_17

x

fill in the blank 9d9ea303f05d075_18

Total hours of productionfill in the blank 9d9ea303f05d075_19

fill in the blank 9d9ea303f05d075_20

fill in the blank 9d9ea303f05d075_21

Wages per hourx $

fill in the blank 9d9ea303f05d075_22

x $

fill in the blank 9d9ea303f05d075_23

x $

fill in the blank 9d9ea303f05d075_24

Total wages$

fill in the blank 9d9ea303f05d075_25

$

fill in the blank 9d9ea303f05d075_26

$

fill in the blank 9d9ea303f05d075_27

Total hours of productionfill in the blank 9d9ea303f05d075_28

fill in the blank 9d9ea303f05d075_29

fill in the blank 9d9ea303f05d075_30

Utility costs per hourx $

fill in the blank 9d9ea303f05d075_31

x $

fill in the blank 9d9ea303f05d075_32

x $

fill in the blank 9d9ea303f05d075_33

Total utilities$

fill in the blank 9d9ea303f05d075_34

$

fill in the blank 9d9ea303f05d075_35

$

fill in the blank 9d9ea303f05d075_36

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

MayJuneJulyTotal flexible budget$fill in the blank a13bafffe004f82_1

$fill in the blank a13bafffe004f82_2

$fill in the blank a13bafffe004f82_3

Actual costfill in the blank a13bafffe004f82_4

fill in the blank a13bafffe004f82_5

fill in the blank a13bafffe004f82_6

Excess of actual cost over budget$fill in the blank a13bafffe004f82_7

$fill in the blank a13bafffe004f82_8

$fill in the blank a13bafffe004f82_9

What does this comparison suggest?

The Machining Department has performed better than originally thought.

The department is spending more than would be expected.

8.Flexible Budgetfor Assembly Department

Cabinaire Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department:

Direct labor per filing cabinet20 minutesSupervisor salaries$150,000 per monthDepreciation$18,000 per monthDirect labor rate$24 per hour

Prepare a flexible budget for 14,000, 18,000, and 21,000 filing cabinets for the month ending February 28 in the Assembly Department similar toExhibit 5.Round your final answers to the whole dollar, if required.

Cabinaire Inc.Assembly Department BudgetFor the Month Ending February 28 (assumed data)Units of production14,00018,00021,000Variable cost:

$

fill in the blank 2

$

fill in the blank 3

$

fill in the blank 4

Total variable cost$

fill in the blank 5

$

fill in the blank 6

$

fill in the blank 7

Fixed cost:

$

fill in the blank 9

$

fill in the blank 10

$

fill in the blank 11

fill in the blank 13

fill in the blank 14

fill in the blank 15

Total fixed cost$

fill in the blank 16

$

fill in the blank 17

$

fill in the blank 18

Total department costs$

fill in the blank 19

$

fill in the blank 20

$

fill in the blank 21

9.Production Budget

Healthy Measures Inc. produces a Bath and Gym version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows:

Bath ScaleGym ScaleNorthern Region unit sales21,40039,400Southern Region unit sales23,10024,300Total44,50063,700

The finished goods inventory estimated for March 1, for the Bath and Gym scale models is 1,400 and 2,700 units, respectively. The desired finished goods inventory for March 31 for the Bath and Gym scale models is 1,000 and 2,900 units, respectively.

Prepare a production budget for the Bath and Gym scales for the month ended March 31. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Healthy Measures Inc.Production BudgetFor the Month Ending March 31Units Bath ScaleUnits Gym Scale

fill in the blank 2

fill in the blank 3

fill in the blank 5

fill in the blank 6

Total units availablefill in the blank 7

fill in the blank 8

fill in the blank 10

fill in the blank 11

Total units to be producedfill in the blank 12

fill in the blank 13

10.SalesandProduction Budgets

Sonic 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:

RumbleThunderEstimated inventory (units), June 131177Desired inventory (units), June 3035767Expected sales volume (units):Midwest Region4,3003,800South Region5,9005,150Unit sales price$135$205

a.Prepare a sales budget.

Sonic Inc.Sales BudgetFor the Month Ending June 30Product and AreaUnit Sales VolumeUnit Selling PriceTotal SalesModel: RumbleMidwest Regionfill in the blank 1947250bbfb5fa5_1

$

fill in the blank 1947250bbfb5fa5_2

$

fill in the blank 1947250bbfb5fa5_3

South Regionfill in the blank 1947250bbfb5fa5_4

fill in the blank 1947250bbfb5fa5_5

fill in the blank 1947250bbfb5fa5_6

Totalfill in the blank 1947250bbfb5fa5_7

$

fill in the blank 1947250bbfb5fa5_8

Model: ThunderMidwest Regionfill in the blank 1947250bbfb5fa5_9

$

fill in the blank 1947250bbfb5fa5_10

$

fill in the blank 1947250bbfb5fa5_11

South Regionfill in the blank 1947250bbfb5fa5_12

fill in the blank 1947250bbfb5fa5_13

fill in the blank 1947250bbfb5fa5_14

Totalfill in the blank 1947250bbfb5fa5_15

$

fill in the blank 1947250bbfb5fa5_16

Total revenue from sales$

fill in the blank 1947250bbfb5fa5_17

b.Prepare a production budget. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Sonic Inc.Production BudgetFor the Month Ending June 30Units RumbleUnits Thunder

fill in the blank df8b24032fd104c_2

fill in the blank df8b24032fd104c_3

fill in the blank df8b24032fd104c_5

fill in the blank df8b24032fd104c_6

Total units availablefill in the blank df8b24032fd104c_7

fill in the blank df8b24032fd104c_8

fill in the blank df8b24032fd104c_10

fill in the blank df8b24032fd104c_11

Total units to be producedfill in the blank df8b24032fd104c_12

fill in the blank df8b24032fd104c_13

11.Direct Materials Purchases Budget

Anticipated sales for Safety Grip Company were 59,000 passenger car tires and 18,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires as follows:

Passenger CarTruckRubber26 lbs. per unit61 lbs. per unitSteel belts6 lbs. per unit15 lbs. per unit

The purchase prices of rubber and steel are $2.90 and $3.80 per pound, respectively. The desired ending inventories of rubber and steel belts are 55,000 and 12,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 65,000 and 10,000 pounds, respectively.

Prepare a direct materials purchases budget for Safety Grip Company for the year ended December 31, 20Y9.

Safety Grip CompanyDirect Materials Purchases BudgetFor the Year Ending December 31, 20Y9RubberSteel BeltsTotalPounds required for production:Passenger tiresfill in the blank 1

lbs.fill in the blank 2

lbs.Truck tiresfill in the blank 3

fill in the blank 4

fill in the blank 6

fill in the blank 7

Total pounds availablefill in the blank 8

lbs.fill in the blank 9

lbs.

fill in the blank 11

fill in the blank 12

Total units purchasedfill in the blank 13

lbs.fill in the blank 14

lbs.Unit pricex $

fill in the blank 15

x $

fill in the blank 16

Total direct materials to be purchased$

fill in the blank 17

$

fill in the blank 18

$

fill in the blank 19

12.Direct Labor Cost Budget

Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. Theproduction budgetfor July for the two rackets is as follows:

JuniorPro StrikerProduction budget6,600 units21,700 units

Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

Forming DepartmentAssembly DepartmentJunior0.20 hour per unit0.40 hour per unitPro Striker0.30 hour per unit0.75 hour per unit

The direct labor rate for each department is as follows:

Forming Department$15.00 per hourAssembly Department$10.00 per hour

Prepare the direct labor cost budget for July.

Ace Racket CompanyDirect Labor Cost BudgetFor the Month Ending July 31Forming DepartmentAssembly DepartmentHours required for production:Juniorfill in the blank 1

fill in the blank 2

Pro Strikerfill in the blank 3

fill in the blank 4

Totalfill in the blank 5

fill in the blank 6

Hourly ratex$

fill in the blank 7

x$

fill in the blank 8

Total direct labor cost$

fill in the blank 9

$

fill in the blank 10

13.Factory Overhead Cost Budget

Sweet Tooth Candy Companybudgetedthe following costs for anticipated production for August:

Advertising expenses$254,660Manufacturing supplies13,960Power and light41,630Sales commissions275,140Factory insurance24,240Production supervisor wages122,440Production control wages31,830Executive officer salaries259,560Materials management wages35,010Factory depreciation19,840

Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only fixed factory costs.

Sweet Tooth Candy CompanyFactory Overhead Cost BudgetFor the Month Ending August 31Variable factory overhead costs:

$

fill in the blank 2

fill in the blank 4

fill in the blank 6

fill in the blank 8

fill in the blank 10

Total variable factory overhead costs$

fill in the blank 11

Fixed factory overhead costs:

$

fill in the blank 13

fill in the blank 15

Total fixed factory overhead costsfill in the blank 16

Total factory overhead costs$

fill in the blank 17

14.The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the followingbudgetinformation:

SeptemberOctoberNovemberSales$140,000$168,000$227,000Manufacturing costs59,00072,00082,000Selling and administrative expenses49,00050,00086,000Capital expenditures__54,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $53,000, marketable securities of $76,000, and accounts receivable of $156,600 ($33,600 from July sales and $123,000 from August sales). Sales on account for July and August were $112,000 and $123,000, respectively. Current liabilities as of September 1 include $10,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $20,000 will be made in October. Bridgeport's regular quarterly dividend of $10,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $52,000.

Required:

1.Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

Bridgeport Housewares Inc.Cash BudgetFor the Three Months Ending November 30SeptemberOctoberNovemberEstimated cash receipts from:

$

fill in the blank 2703cdfb6fc1068_2

$

fill in the blank 2703cdfb6fc1068_3

$

fill in the blank 2703cdfb6fc1068_4

fill in the blank 2703cdfb6fc1068_6

fill in the blank 2703cdfb6fc1068_7

fill in the blank 2703cdfb6fc1068_8

Total cash receipts$

fill in the blank 2703cdfb6fc1068_9

$

fill in the blank 2703cdfb6fc1068_10

$

fill in the blank 2703cdfb6fc1068_11

Less estimated cash payments for:

$

fill in the blank 2703cdfb6fc1068_13

$

fill in the blank 2703cdfb6fc1068_14

$

fill in the blank 2703cdfb6fc1068_15

fill in the blank 2703cdfb6fc1068_17

fill in the blank 2703cdfb6fc1068_18

fill in the blank 2703cdfb6fc1068_19

fill in the blank 2703cdfb6fc1068_21

Other purposes:

fill in the blank 2703cdfb6fc1068_23

fill in the blank 2703cdfb6fc1068_25

Total cash payments$

fill in the blank 2703cdfb6fc1068_26

$

fill in the blank 2703cdfb6fc1068_27

$

fill in the blank 2703cdfb6fc1068_28

$

fill in the blank 2703cdfb6fc1068_30

$

fill in the blank 2703cdfb6fc1068_31

fill in the blank 2703cdfb6fc1068_32

fill in the blank 2703cdfb6fc1068_34

fill in the blank 2703cdfb6fc1068_35

fill in the blank 2703cdfb6fc1068_36

Cash balance at end of month$

fill in the blank 2703cdfb6fc1068_37

$

fill in the blank 2703cdfb6fc1068_38

$

fill in the blank 2703cdfb6fc1068_39

fill in the blank 2703cdfb6fc1068_41

fill in the blank 2703cdfb6fc1068_42

fill in the blank 2703cdfb6fc1068_43

Excess or (deficiency)$

fill in the blank 2703cdfb6fc1068_44

$

fill in the blank 2703cdfb6fc1068_45

$

fill in the blank 2703cdfb6fc1068_46

2.On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?

The budget indicates that the minimum cash balance

be maintained in November. This situation can be corrected by

and/or by the

of the marketable securities, if they are held for such purposes. At the end of September and October, the cash balance will

the minimum desired balance.