Answer #10 based on the information provided.

9) For June, the company expects to produce and sell the same number of unit they sold (actual) in May at the same $45 per unit. Fixed overhead is still budgeted at $85,000 a month and Selling and Administrative expenses are estimated consistent with the method in June. Use this information and the new standards for June. a) Prepare the "Planning Budget" for June. b) Assume the actual number of units sold it June were 10% higher than planned. How many units were actually sold? Prepare the Flexible Budget for the number of units sold. Koontz Company June Planning Budget Flexible Budget Budgeted # of units Sales Revenue Cost of Goods Sold: Direct Material Direct Labor Variable overhead Fixed Overhead Total Cost of Goods Sold Gross Profit Selling $ Administrative Expenses Net Operating Income PLANNING BUDGET FLEXIBLE BUDGET Units 10000 11000 sales revenue 450000 495000 Cost Of Goods Sold DM 18000 19800 DL 135000 148500 VOH 54000 59400 FOH 85000 85000 Total COGS 292000 312700 S & A expense 29596 29596 NOI 128404 152704 Koontz Company had the following situations happen during June. Situation A: One of Koontz Company's full-time employees quit. A replacement employee was hired at $16.50 an hour. This employee worked 160 hours during June. Situation B: Power outages occurred three times during the month that caused all production to shut down for.75 hours twice and 1.5 hours the third time. During these times, 4 workers remained on site, but no work was performed. Situation C: An order of raw material was received damaged during shipping. The end of the stack of material (all material in the order) was damaged such that 12% of the order was not usable. Based on the standard, the order was expected to produce 2,000 of the units for the month of June. Situation D: Purchasing was able to negotiate a $2,000 discount for the damaged order from c) above. 10) Consider the four variances for JUNE; Materials Price Variance, Material Quantity Variance, Labor Rate Variance, and Labor Efficiency Variance. a) For Situation A, which of the four variances will be affected by the situation? will it be favorable or unfavorable? Estimate how much of the variance will be impacted by the situation. Hint: Use the formula for the specific variance impacted. Determine the "change the situation will have on each element of the formula (actual and standards) and determine the dollar value of the impact. b) For Situation B, which of the four variances will be affected by the situation? Will the variance be favorable or unfavorable? Estimate the impact to the variance. c) For Situation C, which of the four variances will be affected by the situation? Will it be favorable or unfavorable? Estimate the impact to the variance. d) For Situation D, which of the four variances will be affected by the situation? Will it be favorable or unfavorable? Estimate the impact to the variance. Using the information for C and D, do you think purchasing did well with its negotiation of the discount? Explain. 9) For June, the company expects to produce and sell the same number of unit they sold (actual) in May at the same $45 per unit. Fixed overhead is still budgeted at $85,000 a month and Selling and Administrative expenses are estimated consistent with the method in June. Use this information and the new standards for June. a) Prepare the "Planning Budget" for June. b) Assume the actual number of units sold it June were 10% higher than planned. How many units were actually sold? Prepare the Flexible Budget for the number of units sold. Koontz Company June Planning Budget Flexible Budget Budgeted # of units Sales Revenue Cost of Goods Sold: Direct Material Direct Labor Variable overhead Fixed Overhead Total Cost of Goods Sold Gross Profit Selling $ Administrative Expenses Net Operating Income PLANNING BUDGET FLEXIBLE BUDGET Units 10000 11000 sales revenue 450000 495000 Cost Of Goods Sold DM 18000 19800 DL 135000 148500 VOH 54000 59400 FOH 85000 85000 Total COGS 292000 312700 S & A expense 29596 29596 NOI 128404 152704 Koontz Company had the following situations happen during June. Situation A: One of Koontz Company's full-time employees quit. A replacement employee was hired at $16.50 an hour. This employee worked 160 hours during June. Situation B: Power outages occurred three times during the month that caused all production to shut down for.75 hours twice and 1.5 hours the third time. During these times, 4 workers remained on site, but no work was performed. Situation C: An order of raw material was received damaged during shipping. The end of the stack of material (all material in the order) was damaged such that 12% of the order was not usable. Based on the standard, the order was expected to produce 2,000 of the units for the month of June. Situation D: Purchasing was able to negotiate a $2,000 discount for the damaged order from c) above. 10) Consider the four variances for JUNE; Materials Price Variance, Material Quantity Variance, Labor Rate Variance, and Labor Efficiency Variance. a) For Situation A, which of the four variances will be affected by the situation? will it be favorable or unfavorable? Estimate how much of the variance will be impacted by the situation. Hint: Use the formula for the specific variance impacted. Determine the "change the situation will have on each element of the formula (actual and standards) and determine the dollar value of the impact. b) For Situation B, which of the four variances will be affected by the situation? Will the variance be favorable or unfavorable? Estimate the impact to the variance. c) For Situation C, which of the four variances will be affected by the situation? Will it be favorable or unfavorable? Estimate the impact to the variance. d) For Situation D, which of the four variances will be affected by the situation? Will it be favorable or unfavorable? Estimate the impact to the variance. Using the information for C and D, do you think purchasing did well with its negotiation of the discount? Explain