Question
1.Lakeside Components wishes to purchase parts in one month for sale in the next. On May 31, the company has 13,000 parts in stock, although
1.Lakeside Components wishes to purchase parts in one month for sale in the next. On May 31, the company has 13,000 parts in stock, although sales for the next month (June) are estimated to total 11,400 parts. Total sales of parts are expected to be 11,900 in July and 11,200 in August.
Parts are purchased at a wholesale price of $25. The supplier has a financing arrangement by which Lakeside Components pays 70 percent of the purchase price in the month when the parts are delivered and 30 percent in the following month. Lakeside purchased 16,000 parts in May. Required:
a. Estimate purchases (in units) for June and July.
2.Information on Bowgie Chemicals direct materials costs follows:
Actual quantities of direct materials used | 31,300 | ||
Actual costs of direct materials used | $ | 141,800 | |
Standard price per unit of direct materials | $ | 4.33 | |
Flexible budget for direct materials | $ | 122,300 | |
Bowgie Chemicals has no materials inventories.
Required:
a. Prepare a short report for management showing Bowgie Chemicalss direct materials price and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
b. Estimate the cash required to make purchases in June and July.
3.Information on Grand Corporations direct materials costs follows:
Quantities of chemical Y purchased and used | 19,800 | gallons | |
Actual cost of chemical Y used | $ | 428,000 | |
Standard price per gallon of chemical Y | $ | 23.10 | |
Standard quantity of chemical Y allowed | 18,200 | gallons | |
Grand Corporation has no materials inventories.
Required:
a. What were Grand Corporations direct materials price and efficiency variances? (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
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