3. Budgeting:
   1. Create a sales budget using the information for earning an average profit for the year. You will break the budget down into the four quarters for the year. (Sales tend to be consistent each quarter, you can only sale a whole unit so round-up if necessary) Use table 6 to complete the sales budget.
   2. Create a production budget for each quarter of the year (keep it in quarters; you do not need to break it down by month). You desire to keep 10% of next quarters sales in ending inventory. Sales for Qtr 1 the following year (year 2) are expected to be 21,000 boxes of cereal. There is not any beginning finished goods inventory for quarter one this year. Use table 7 to complete the production budget.
4. Running quarter one -- Weighted-average process costing. Table 8 presents the information for the packaging department. Complete the questions under table 8.
5. Actuals are in for quarter one. You sold 10% more units than you budgeted for (round to a whole unit), but price per unit was only $5.50.
6. 1. Calculate revenue
   2. Compute the cost of goods sold (total and per unit) before adjusting for actual OH cost
7. Actual corn usage for quarter one was 121,600 pounds at a price of $0.49 per pound. Actual equivalent units of production (boxes of cereal) completed through the first process (where the corn is added) was 40,848. Calculate the direct materials variances for the corn (price, usage, and total) and indicate if these variances are favorable or unfavorable.
8. Actual direct labor hours for the quarter were 6,322 at an average rate of $11.00 per hour. For actual production, you expected to use 6,250 direct labor hours. Calculate the direct labor variances (rate, efficiency and total) and indicate if these variances are favorable or unfavorable.
9. For next quarter, you have been asked to supply a special order of your cereal. The non-profit organization requesting this order would like a custom box (packaging) that will cost $0.50 instead of the normal $0.20 per box. The request is for 800 boxes of cereal. Based on your projections you have the capacity for this order. What is the minimum price per unit and total price you would be willing to accept on this order? (You cannot afford to take this offer at a loss, but you are fine with accepting it at cost).
10. Determine over- or under-applied overhead and close to cost of goods sold. Actual OH cost are given in table 13 (look at #11 for actual DL hours used to apply OH). Determine the new cost of goods sold amount.

11. Table 7 Production Budget

    	Qtr 1	Qtr 2	Qtr 3	Qtr 4

    Process Costing Packaging Department

    Direct materials are added 90% at the beginning of the process and the remaining 10% are added when the cereal is 50% complete with the packaging process. Direct labor and overhead are added evenly throughout the process.

    Table 8 Unit and cost information

    		Cost
    	Physical Units	Transferred-in	Direct Materials	Direct Labor	Overhead
    Beg WIP	4,000 (40% complete)	$16,620	$720	$359.25	$160
    Transferred In	35,520	$132,370.40
    End WIP	4,200 (30% complete)

    Added during Qtr 1:

    Direct Materials -- $8,273

    Direct Labor 775 hrs @ $11.00 per hour

    Overhead OH is applied based on predetermined OH rate and actual DL hours

12. Determine the number of units completed during quarter
13. Compute the equivalent units using the weighted average method
14. Compute the cost per equivalent unit using the weighted average method
15. Compute the cost of goods transferred to finished goods inventory
16. Compute the ending balance in WIP, Packaging

17. Table 9 Actual Results (calculate revenue and COGS)

    Units sold	Sales Price	Revenue
    Units sold	Cost per unit	COGS

    Table 10 DM Variances (corn only)

    Price Variance
    Usage Variance
    Total Variance

    Calculations:

    Table 11 Direct Labor Variances

    Rate Variance
    Efficiency Variance
    Total Variance

    Calculations:

    #12 Calculations (Minimum price on special order)

    Table 13 Actual OH cost for Quarter 1

    Description	Cost
    Indirect Materials	$2,400
    Indirect Labor	$15,000
    Machine Maintenance	$1,800
    Electricity	$2,800
    Depreciation	$1,800
    Quality Testing	$1,940

    Amount of applied OH:

    Amount of actual OH:

    Under or Over- Applied Amount:

    New COGS amouny