Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Adams Inc. produces three different types of chairs: an outdoor chair, an office chair, and a kitchen chair. The outdoor chairs are made entirely of

image text in transcribedimage text in transcribed

image text in transcribed

Adams Inc. produces three different types of chairs: an outdoor chair, an office chair, and a kitchen chair. The outdoor chairs are made entirely of plastic. The office chairs have a plastic base and are covered in leather. The kitchen chairs are made out of wood with a leather seat. As the controller, you are expected to prepare Adams's operating budget for April of 2021. Here is Adams's balance sheet as of 3/31/2021: Cash 44,200 Accounts Receivable 9,000 DM Inventory 334.775 FG Inventory 1,129,300 Land 8,000 Buildings and Equipment 70,000 Accumulated Depreciation (29,200) Total Assets S 1,566,075 S Accounts Payable Capital Stock Retained Earnings Total Liabilities and Stockholders Equity 2.580 17.500 1,545,995 S 1,566,075 You have gathered the following information about expected activity in 2021: 1. The marketing department projects the following sales levels for each product in the second quarter of 2021: Outdoor Chairs Office Chairs Kitchen Chairs April 2021 3,600 4,300 3,000 May 2021 4,200 3,800 2,600 June 2021 5,300 4,700 3,500 The Outdoor Chairs are expected to sell for $190 each, the Office Chairs are expected to sell for $530 each, and the Kitchen Chairs are expected to sell for $710 each. 2. For each product, Adams plans to have ending finished goods inventory (in units) for each month that equals 20% of the next month's sales (in units). Finished Goods inventory on 3/31/2021 consists of 680 Outdoor Chairs at a cost of $160 per unit, 1,020 Office Chairs at a cost of $505 per unit, and 760 Kitchen Chairs at a cost of $665 per unit. Adams uses FIFO to account for its finished goods inventory. 3. Adams uses plastic, leather, and wood to make its chairs. Each Outdoor Chair requires 25 pounds of plastic. Each Office Chair requires 15 pounds of plastic and 21 square feet of leather. Each Kitchen Chair requires 9 square feet of leather and 42 board feet of wood. The company expects to pay $2.25 per pound of plastic, $10.95 per square foot of leather, and $8.00 per board foot of wood. 4. Direct Materials (DM) inventory on 3/31/2021 consists of 19,900 pounds of plastic at a cost of $1.75 per pound, 13,800 square feet of leather at a cost of $15.00 per square foot, and 14,300 board feet of wood at a cost of $6.50 per board foot. The target ending DM inventory (in units) for each material is budgeted to be 10% of the amount of material required to be used in production that month (e.g., the total pounds of plastic required to be used in production in a given month x 10% = the target ending inventory for plastic in that month). Adams uses FIFO to account for its DM inventory. 5. Each Outdoor Chair requires 3 hours of direct labor, each Office Chair requires 5 hours of direct labor, and each Kitchen Chair requires 5.5 hours of direct labor. The direct labor rate is expected to be $13 per hour. You are required to do the following: Prepare a complete operating budget for Adams Inc. for the month of April 2021. This should include all of the following schedules: - manufacturing overhead cost budget - budget of the ending finished goods inventory unit cost - ending inventories budget - cost of goods sold budget - nonmanufacturing costs budget - budgeted income statement for the month

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Benfords Law

Authors: Mark J. Nigrini

1st Edition

1118152859, 9781118152850

More Books

Students also viewed these Accounting questions

Question

What are the pros and cons regarding Angelica joining the union?

Answered: 1 week ago