Apparently the overhead budget is not correct, the professor said : "I said to NOT tweak the overhead rate - a common error by students."

Thank you

You are a manager for Peyton Approved, a pet supplies manufacturer. This responsibility requires you to create budgets, m operations to determine if changes need to be made to make the company more efficient. You will be preparing a budget for the quarter July through September 2015. You are provided the following information. T Peyton Approved Budgeted Balance Sheet 30-Jun-15 ASSETS Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment Less accumulated depreciation Total assets LIABILITIES AND EQUITY Accounts payable Short-term notes payable Taxes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity All assumptions are new and apply to the July through September budget period. 1. Sales were 20,000 units in June 2015. Forecasted sales in units are as follows: July, 18,000; August, 22,000; September, 2 is $18.00 per unit and its total product cost is $14.35 per unit. 2. The June 30 finished goods inventory is 16,800 units. 3. Going forward, company policy calls for a given month's ending finished goods inventory to equal 70% of the next month 4. The June 30 raw materials inventory is 4,600 units. The budgeted September 30 raw materials inventory is 1,980 units. R unit requires 0.50 units of raw materials. Company policy calls for a given month's ending raw materials inventory to equal 5. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour. 6. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $1.35 per unit produced fixed factory overhead. 7. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the 8. Sales representatives' commissions are 12% of sales and are paid in the month of the sales. The sales manager's monthly Specifically, the following critical elements must be addressed when creating an Operating Budget by completing the budge Step 1: Prepare a Sales Budget Complete the Sales Budget on the Budgets tab below by using the information found in the budgeted balance sheet above Consider assumption 1 when completing this critical element: Sales were 20,000 units in June 2015. Forecasted sales in un September, 20,000; October, 24,000. The product's selling price is $18.00 per unit and its total product cost is $14.35 per u You can find an example of a sales budget in Exhibit 22-5 on page 1324 of the textbook. Step 2: Prepare a Production Budget Complete the Production Budget on the Budgets tab below by using the information found in the budgeted balance sheet Consider assumption 1 while completing this critical element: Sales were 20,000 units in June 2015. Forecasted sales in uni September, 20,000; October, 24,000. The product's selling price is $18.00 per unit and its total product cost is $14.35 per u Consider assumption 2 while completing this critical element: The June 30 finished goods inventory is 16,800 units. Consider assumption 3 while completing this critical element: Going forward, company policy calls for a given month's end next month's expected unit sales. You can find an example of a production budget in Exhibit 22-6 on page 1325 of the textbook. Step 3: Prepare a Manufacturing Budget Complete the Manufacturing Budget on the Budgets tab below by using the information found in the budgeted balance sh three parts: the Raw Materials Budget, the Direct Labor Budget, and the Factory Overhead Budget. Raw Material Budget Consider assumption 4 while completing this critical element: The June 30 raw materials inventory is 4,600 units. The budg 1,980 units. Raw materials cost $7.75 per unit. Each finished unit requires 0.50 units of raw materials. Company policy calls inventory to equal 20% of the next month's materials requirements. Consider units to be produced found in the production budget while completing this critical element. Direct Labor Budget Consider assumption 5 while completing this critical element: Each finished unit requires 0.50 hours of direct labor at a rate Consider units to be produced found in the production budget while completing this critical element. Factory Overhead Budget Consider assumption 6 while completing this critical element: Overhead is allocated based on direct labor hours. The prede produced. Depreciation of $20,000 per month is treated as fixed factory overhead. Consider units to be produced found in the production budget while completing this critical element. Step 4: Prepare a Selling Budget Complete the Selling Expense Budget. Consider assumption 8 while completing this critical element: 8. Sales representatives' commissions are 12% of sales and a manager's monthly salary is $3,750 per month. Step 5: General and Administrative Expense Budget Complete the General and Administrative Expense Budget. Consider assumption 7 while completing this critical element: 7. Monthly general and administrative expenses include $12 interest on the long-term note payable. The following critical elements must be addressed when performing the Budget Variance Analysis using the Budget Varianc can be found in the Assignment Guidelines and Rubrics folder. The actual quantity of material used was 31,000 with an actual cost of $7.75 per unit. The actual labor hours were 33,000 w Step 1: Complete A. Develop a variance analysis including a budget variance performance report and appropriate varianc Start with the Labor and Materials Variance tab. Standard costs/quantities come from the raw materials budget and the labor budget. Use Exhibits 23-11 on page 1235 and 23-12 on page 1237 in the textbook as guides. After completing the Labor and Materials Variance tab, transfer variances to the Budget Variance Report tab. Congratulations! You have completed the workbook portion of Final Project Part I. To complete the remainder of the Budge use the Final Project Part I Budget Variance Report Template. The Budget Variance Report Template can be found in the Ass pricing decisions, and analyze the results of budgeted balance sheet on June 30, 2015, is: $42,000 259,900 35,650 241,080 578,630 $720,000 240,000 480,000 $1,058,630 $63,400 24,000 10,000 97,400 300,000 397,400 $600,000 61,230 661,230 $1,058,630 00; October, 24,000. The product's selling price xpected unit sales. materials cost $7.75 per unit. Each finished % of the next month's materials requirements. epreciation of $20,000 per month is treated as -term note payable. ary is $3,750 per month. emplates found on the "Budgets" tab below. re as follows: July, 18,000; August, 22,000; ve. re as follows: July, 18,000; August, 22,000; finished goods inventory to equal 70% of the above. The manufacturing budget consists of d September 30 raw materials inventory is a given month's ending raw materials $16 per hour. mined variable overhead rate is $1.35 per unit aid in the month of the sales. The sales 0 administrative salaries and 0.9% monthly Worksheet. The Budget Variance Worksheet an actual rate per hour of $15. or materials, labor, and overhead. ariance Analysis portion of Final Project Part I, ment Guidelines and Rubrics folder. Sales Budget Peyton Approved Sales Budgets July, August, and September 2015 Budgeted Units Jul-15 Aug-15 Sep-15 18,000 22,000 20,000 Total for the first quarter 60,000 Production Budget Peyton Ap Production July, August, and S Next month's budgeted sales Percentage of inventory to future sales Budgeted ending inventory Add budgeted sales Required units to be produced Deduct beginning inventory (Previous month ending inventory) Units to be produced Manufacturing Budget - contains raw materials budget, direct labor budg Peyton Approved Raw Materials Budge July, August, and Septemb July Production budget (units) 16,600 Materials requirement per unit 0.5 Materials needed for production 8,300 Add budgeted ending inventory 2,060 Total materials requirements (units) 10,360 Deduct beginning inventory (previous month ending inventory) 4,600 Materials to be purchased 5,760 Material price per unit 7.75 Total cost of direct material purchases $44,600 Peyton Approved Direct Labor Budget July, August, and Septemb July Budgeted production (units) Labor requirements per unit (hours) Total labor hours needed Labor rate (per hour) Labor dollars 16,660 0.5 8,300 16.00 $132,800 Peyton Approved Factory Overhead Bud July, August, and Septemb July Budgeted production (units) 16,600 Variable factory overhead rate 0.68 Budgeted variable overhead 11,205 Fixed overhead 20,000 Budgeted total overhead $31,205 Selling Expense Budget Peyton Approved Selling Expense Budget July, August, and September 2015 July Budgeted sales Sales commission percent Sales commissions expense Sales salaries Total selling expenses $324,000 August $396,000 12% 12% 38,880 47,520 3,570 3,570 $42,450 $51,090 General and Administrative Expense Budget Peyton Approved General and Administrative Expense Budget July, August, and September 2015 July Salaries Interest on long-term note Total expenses August $12,000 $12,000 2,700 2,700 $14,700 $14,700 ed s ember 2015 Budgeted Unit Price 18.00 18.00 18.00 Budgeted Total Dollars $324,000 $396,000 $360,000 $1,080,000 Peyton Approved Production Budget July, August, and September 2015 July August Sept. Total 22,000 20,000 24,000 66,000 70% 70% 70% 15,400 14,000 16,800 46200 18,000 22,000 20,000 60000 33,400 36,000 36,800 106200 16,800 15,400 14,000 46,200 16,600 20,600 22,800 60,000 ls budget, direct labor budget, and factory overhead budget Peyton Approved Raw Materials Budget July, August, and September 2015 August Sept. Total 20,600 22,800 60,000 0.5 0.5 0.5 10,300 11,400 30,000 2,280 1,980 6,320 12,580 13,380 36,320 2,060 2,280 8,940 10,520 11,100 27,380 7.75 ### $81,530 $80,025 $172,195 Peyton Approved Direct Labor Budget July, August, and September 2015 August Sept. Total 20,600 22,800 60000 0.5 0.5 0.5 10,300 11,400 30,000 16.00 ### 16.00 $164,800 $182,400 $480,000 Peyton Approved Factory Overhead Budget July, August, and September 2015 August Sept. 60,000 20,600 22,800 ### 0.675 13,905 $15,390 40,500 20,000 20,000 60,000 $33,905 $35,390 100,500 pproved nse Budget September 2015 Sept. Total $360,000 1,080,000 12% 43,200 $129,600 3,570 10,710 $46,770 $140,310 ed Expense Budget ember 2015 Sept. Total Total $12,000 $36,000 2,700 8,100 $14,700 $44,100 Total