Company Info Ford Seasoning makes only one product, 12-spice, a spice designed to make fried chicken taste just like the chicken of a popular fast food restaurant. Ford Seasoning is about to begin its fifth year of operations in 20XX. The company's management has already compiled information from the various managers at the firm and has passed them off to the accounting staff so that the staff can determine what level of sales volume the company must achieve to meet its profit goals and prepare a master 3 budget based upon the production level necessary to achieve that target level of profit. 4 Cost Volume Profit (CVP) Analysis Ford Seasoning's management has compiled budgeted information regarding sales and production of 12-spice for January of 20XX. Use the information provided in the chart below to determine what quantity of 12-spice jars Ford Seasoning must produce and sell 3 during January 20XX in order to meet its target amount of operating income. 4 Item Amount 5 Expected selling price of a jar of 12-spice 11.50 6 Expected direct materials cost of producing a jar of 12-spice 3.00 7 Expected direct labor cost of producing a jar of 12-spice 2.00 8 Expected variable overhead cost of producing a jar of 12-spice 9 Expected monthly fixed costs 25,000 10 Target monthly operating income for January 20XX 50,000 11 Requirement 1.50 Complete the following chart using CVP analysis techniques to determine how many jars of 12 12-spice the company must sell in order to meet its target operating income for the month. 13 Fixed Costs 14 Add: Target Operating Income for the Month 15 Total Required Contribution Margin 16 Divide by: Unit Contribution Margin 17 Required Sales Volume to Achieve Target Operating Income 18 19 D E Comprehensive Assignment #2 Sales Budget Ford Seasoning's management has asked its accounting staff to prepare a sales budget for the first quarter of 20XX. According to managements predictions, the selling price per jar of 12-spice will be the same for the entire three months. Because management expects sales to grow rapidly due to a new promotional strategy, they have asked the accounting staff to budget for an increase to sales over the three-month period. The expected rate of sales growth for each month is as follows. For your 3 convenience, the per-jar sales price is also listed. 4 Month Expected Sales Price per Jar during 5 January $ 11.50 per jar of 12-spice 6 Requirement Prepare Ford Seasoning's sales budget for the first quarter of 20XX. Set January's budgeted jars to be sold equal to the required sales volume determined by your CVP analysis. Then, increase the budgeted jars to 7 be sold each month by the percentages given in the table above. 8 Ford Seasoning 9 Sales Budget 10 For the Quarter Ended March 31, 20XX 11 January 12 Budgeted Jars to be Sold 13 Times: Sales Price per Jar 14 Total Monthly Sales Revenue 15 Production Budget Ford Seasonings management has asked its accounting staff to prepare a production budget for the upcoming quarter. Like all businesses, Ford Seasoning wants to have extra finished goods inventory on hand at the end of each period to serve as a buffer. Information about the firm's inventory balance at the beginning of the quarter and its desired level of ending inventory for each month during the quarter is as follows: Jars in Beginning Inventory, 1-1-XX 1,500 Desired Jars in Ending Inventory, 1-31-XX 10% of February's budgeted sales (in jars) Jars expected to be sold during February 20XX 15,000 Requirement Use the information from the table above and your sales budget to prepare Ford Seasoning's production budget for the upcoming quarter. Ford Seasoning Production Budget For the Month Ended January 31, 20XX January Budgeted Jars to be Sold Add:Desired Jars in Ending Inventory 5 Toul Jars Needed 6 Less: Jars in Beginning Inventory 7 Budgeted Jars to be Produced 1 8 9 Direct Materials Budget Ford Seasoning's management has compiled a list of standards from the various managers at the company and handed this information off to the company's accounting staff to prepare the direct materials budget. In addition to the per-jar standards, these managers have made an estimate about the quantity of direct materials needed at the end of the month. This information, as well as Ford Seasoning's current direct materials balance, is listed in the information below: Pounds of Direct Materials per Each Unit (ar) 0.50 Cost per Pound of Direct Materials 6.00 Direct Materials in Beginning Inventory, I-L-XX 1,500 Desired Direct Materials Ending Inventory, 1-31.XX 10% of February Budgeted Dirre Materials Needed for Production Direct Materials needed for production during February 20XX 15,000 Pounds of Duect Materials Requirement Use the information from the table above, as well as your prior budgets, to prepare Ford Seasoning's direct materials budget for the month of 0 January 20XX 1 Ford Seasoning 12 Direct Materials Budget 13 For the Month Ended January 31, 20XX 14 15 Budgeted Jars to be produced 16 Times: Pound of Direct Materials per Unit (ar) 17 Direct Materials Needed for Production 18 Add: Desired Direct Materials in Ending Inventory 19 Total Direct Materials Needed 20 Less: Direct Materialstu Beginning Inventory 21 Budgeted Purchases of Direct Materials 22 Times: Direct Materials Cost per Pound 23 Budgeted Cost of Direct Materials Purchases 24 Direct Labor Budget The production managers and HR employees at Ford Seasoning has compiled information about standards related to direct labor requirements during January 20XX and passed it along to the accounting staff. The standards for the amount of labor 3 hours required to make each jar of 12-spice as well as the expected average hourly costs of labor are as follows: 4 Direct Labor Hours Required per Unit (ar) 0.10 hours 5 Average Hourly Wage of Direct Laborers $ 20.00 per hour 6 Requirement Use information obtained from the table above and the previous budgets to prepare Ford Seasoning's direct labor budget for 7 the month of January Ford Seasoning Direct Labor Budget 10 For the Month Ended January 31, 20XX 11 Januar 12 Budgeted Jars to be Produced 13 Times: Direct Labor Hours Required per Unit (ar) 14 Direct Labor Hours Required for Production 15 Times. Estimated Direct Labor Cost per Hour 16 Total Direct Labor Costs 17 8 9 18 1 CO B C D Comprehensive Assignment #2 2 Manufacturing Overhead Budget Ford Seasonings management has provided the accounting staff with the following information related to the company's 3 estimated manufacturing overhead for the month of January 20XX 4 Estimated Variable Overhead 1.50 5 Estimated Fixed Depreciation per jar 6,600 per month 6 Estimated Utilities, Insurance, & Property Taxes for the Manufacturing Plant: 7 During January $ 4,650 8 Requirement Use the information from the table above and the previous budgets to prepare Ford Seasoning's manufacturing 9 overhead budget for the month 10 Ford Seasoning 11 Manufacturing Overhead Budget 12 For the Month Ended January 31, 20XX 13 Jantan 14 Budgeted Jars to be Produced 15 Times: Variable Overhead per Jar 16 Total Budgeted Variable Overhead Coats 17 Budgeted Fixed Overhead Costs: 18 Fixed Depreciation 19 Ulities, Insurance, & Property Taxes 20 Total Budgeted Fixed Overhead 21 Total Budgeted Manufacturing Overhead Costs 22 Divide by: Budgeted Jars to Produced 23 Budgeted Manufacturing Overhead per Jar 24 10 2 Comprehensive Assignment #2 Cost of Goods Sold Budget Ford Seasoning's management has asked the accounting staff to used the information obtained from the prior budgets to determine the company's expected manufacturing cost per jar for the month and then prepare the firm's cost of goods sold 3 budget for period 4 Requirement One 5 Determine Ford Seasoning's total cost to manufacture one jar of 12-spice during January 6 January 7 Direct Materials Cost per Jar 8 Direct Labor Cost per Jar 9 Manufacturing Overhead Cost per Jar 10 Total Cost to Manufacture One Jar of 12 Spice 11 Requirement Two 12 The following info relates to Ford Seasoning's beginning inventory: 13 Quantity Unit Cost Total Cost 14 Finished Jars in Beginning Inventory, 1-1-XX 1,500 $ 7.25$ 10,875 Use the information regarding beginning finished goods inventory, your answer to requirement one, and info from your prior 15 budgets to prepare Ford Seasoning's cost of goods sold budget for the month of January 20XX. 16 Ford Seasoning Cost of Goods Sold Budget For the Month Ended January 31, 20XX January 20 Beginning Inventory, 1.500 Jars 21 Add: Cost of Jars Produced & Sold During Quarter 22 Budgeted Monthly Cost of Goods Sold 17 18 19 23 24 25 fx E m B D 1 Comprehensive Assignment #2 2. Selling & Administrative Expense Budget Ford Seasoning's management has compiled the following information about their predicted selling and 3. administrative expenses for the upcoming month 4 Expense Cost 5 Fixed Administrative Salaries $ 8,200 6 Fixed Depreciation Expense 3,150 7 Other Fixed S&A Expenses 2,400 8 Requirement S 0 9 Prepare ford Seasoning's selling and administrative expense budget for the upcoming first quarter of 20XX. 10 Ford Seasoning 11 Selling & Administrative Expense Budget 12 For the Month Ended January 31, 20XX 13 January 14 Administrative Salaries Expense 15 Fixed Depreciation Expense 16 Other Fixed S&A Expenses 17 Total Budgeted Fixed S&A Expenses 18 19 20 Comprehensive Assignment #2 Budgeted Income Statement Requirement Use the information obtained from previously prepared budgets to prepare Ford Seasoning's comparative budgeted income statement for the month of January ( up until operating income.) Ford Seasoning Budgeted Income Statement For the Month Ending January 31, 20XX January Sales Revenue Cost of Goods Sold Gross Profit Selling & Administrative Expenses Operating Income 10 Unit Requirement Complete Ford Seasoning's flex budget performance report for the month. The company's actual results and budgeted amounts per unit have been provided for you. The numbers for the static budget portion of the document need to be taken from the individual budgets you 5 prepared in your master budget. 6 Ford Seasonings 7 Flexible Budget Performance Report For the Month Ended January 31, 20XX 9 Budgeted Amounts per Flexible Budget Sales Volume Actual Results Flexible Budget Static Budget Variance Variance 11 Units Sold (in Jars) 14,900 12 Sales Revenue $ 11.50 $ 170,605 13 Variable costs 14 Manufacturing: 15 Direct Materials 3.00 44,400 16 Direct Labor 2.00 34,020 17 Variable Overhead 1.50 22,110 18 Total Variable Costs 100,530 19 Contribution Margin 70,075 20 Fixed Costs: 21 Fixed Manufacturing Overhead 10,800 22 Fixed S&A Expenses 14,000 23 Total Fixed Costs 24,800 24 Operating Income $ 45,275 25 26 27 E per hour per hour 1 Comprehensive Assignment #2 2 Variance Analysis Prior to making the company's budget for month of January 20XX, the various managers at Ford Seasoning set the following 3 standards related to the costs of production 4 Standard Cost Information 5 Quantity Cost 6 Direct Materials 0.50 pounds per jar S 6.00 7 Ditect Labor per pound 0.10 hours per jar 20.00 per bour 8 VOH 0.10 hours per jar 15.00 9 FOH 0.10 hours per jaar 16.67 10 11 Actual Cost Information 12 Item Amount 13 Actual Pounds of Direct Materials Used 7,500 14 Actual Cost of Direct Materials 44,400 15 Actual Amount of Direct Labor Hours Used 1,620 16 Actual Cost of Direct Labor $ 34,020 17 Actual Vanable Manufacturing Overhead 22,110 18 Actual Fixed Manufacturing Costs 24,800 19 Requirement 20 Determine the actual direct materials cost per pound and the actual direct labor cost per hour 21 Direct Materials 22 Actual Cost of Direct Materials 23 Divide by: Actual Pounds of Direct Mats Used 24 Actual Direct Materials Cost per Pound 25 Direct Labor 26 Actual Cost of Direct Labor 27 Divide by Actual Amount of Direct Labor Hours 28. Actual Direct Labor Cost per hour 29 Requirement $ 8 Actual Direct Labor Cost per Hour 9 Requirement 30 Calculate the following variances between Ford Seasoning's budgeted figures and the company's actual results. Direct Materials Cost. Variance Actual Cost per Standard Cost per Actual Pounds of 31 Pound of DM Pound of DM DM Used 32 Actual Pounds of Standard Quantity Standard Cost per Direct Materials Effeciency Variance 33 DM Used of DM Used Pound of DM 34 Actual Cost per DL Standard Cost per Actual Amount of Direct Labor Cost Variance 35 Hour DL Hour DL Hours Used 36 Actual Amount of Standard Quantity Standard Cost per Direct Labor Efficiency Variance 37 DL Hours Used of DL Hours Used DL Hour 38 Actual VOH Cost Standard VOH Actual Amount of VOH Cost Variance 39 Per DL Hour Cost per DL Hour DL Hours Used 40 Actual Amount of Standard Quantity Standard VOH VOH Efficiency Vanance DL Hours Used of DL Hours Used Cost per DL Hour 42 Budgeted Fixed Fixed Cost Varance Actual Fixed Costs Costs 41 43 44 Budgeted Fixed Costs Allocated Fixed Costs Fixed Cost Volume Variance 45 46 47 48 49 50