Consider the information given in problem 6-37 on pages 235 and 236 of the text. The questions below refer to modifications of that problem. The following four modifications are applicable to all questions: (i) the projected sales of Thingone and Thingtwo are to be increased by the last four digits of your student identification number(7481) (i.e., add the last four digits of your student identification number to unit sales) (ii) the variable overhead rate is set at $8 per direct labor hour, (iii) the fixed manufacturing overhead is budgeted at $8,336,000 and the fixed manufacturing overhead rate is not fixed, but is set equal to the quotient of budgeted fixed overhead divided by budgeted direct labor hours, and (iv) the units in beginning and ending finished goods inventories are assumed to be valued at the current unit production costs. Modifications given in individual questions are not to be carried over to other questions. Each student will have a different answer for all questions. You are, however, permitted, and even encouraged, to work with classmates in building a spreadsheet model that will allow you to easily answer all questions. 1. What is the budgeted finished goods inventory at the end of December 31, 2020 (in dollars)? 2. What is the 2020 budgeted gross profit (or loss) for the Chen Corporation? 3. Suppose the units of Thingone are sold for $300 (instead of $160) and the units of Thingtwo are sold for $400 (instead of $258), what would be the 2020 budgeted gross profit (or loss) for the Chen Corporation? 4. How many units of Thingone are budgeted to be produced for 2020? 5. Suppose that the production of Thingone is modified so that it requires 3 pounds of material A, 2 pounds of material B, and 1 unit of Material C. What would be the total budgeted DM purchases for 2020? 6. Suppose that the target ending inventory of Thingone is modified from 29,000 to 24,000 units. How many units of Thingone would be budgeted to be produced in 2020? 7. Suppose that the target ending inventory of Thingone is modified from 29,000 to 25,000 units. What would be the total manufacturing labor (in dollars) to be budgeted for 2020? 8. Suppose the price of Material A decreases to $10 per pound, what would be the total DM purchases in dollars for 2020? 9. Suppose that the production of Thingone is modified so that it requires 3 pounds of material A, 2 pounds of material B and 2 units of Material C. What would be the budgeted finished goods inventory at the end of December 31, 2020 (in dollars)? 10. Suppose that the target ending inventory of Thingone is modified from 29,000 to 26,000 units. What would be the budgeted finished goods inventory at December 31, 2020 (in dollars)? 11. Suppose the price of Material A decreases to $10 per pound. What is the budgeted finished goods inventory at the end of December 31, 2020 (in dollars)? 12. Suppose that the production of Thingone is modified so that it requires 3 pounds of material A, 2 pounds of material B and 2 units of Material C. What would be the total DM purchases (in dollars) for 2020? 13. Suppose that the target ending inventory of Thingone is modified from 29,000 to 27,000 units, and the target ending inventory of Thingtwo is modified from 8,000 to 7,000 units. What would be Chens budgeted gross profit (or loss) for 2020? 14. Suppose that the target ending inventory of Thingone is modified from 29,000 to 30,000 units, and the target ending inventory of Thingtwo is modified from 8,000 to 12,000 units. What would be Chens budgeted gross profits for 2020? 15. Suppose the price of Material B decreases to $4 per pound, what would be the total budgeted DM purchases in dollars for 2020?

2 USA chooses to be environmentally responsible and switches to the new ove the changel Process will allow production managers to implement Kaizen costing. If USA can reduce fabric and labor conta dach by 1% per month on all the shirts it manufactures, by how much will overall costs decrease at the end of 12 months? (Round to the nearest dolar for calculating cost reductions. Mhefer to requirement 2. How could the reduction in material and labor costs be accomplished? Are there any problems with this plan? 5-37 Revenue and production budgets. (CPA, adapted The Chan Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2018, Chan's budget department gathered the following data to prepare budgets for 2020: 2020 Projected Sales Product Thingone Thingtwo Units 69,000 44,000 Price $180 5258 2020 Inventories in Units Product Thingone Thingtwo Expected Target January 1, 2020 December 31, 2020 24,000 29,000 7,000 8,000 The following direct materials are used in the two products: Direct Material B C Amount Used per Unit Unit Thingone Thingtwo pound 8 7 pound 4 5 Bach 0 3 mo Projected data for 2020 for direct materials are: Direct Material A B C Anticipated Purchase Price $13 8 7 Expected Inventories January 1, 2020 36,000 lb 31,000 lb. 9,000 units Target Inventories December 31, 2020 38,000 lb. 34,000 lb. 12,000 units Projected direct manufacturing labor requirements and rates for 2020 are: Product Thingone Thingtwo Hours per Unit 4 Rate per Hour $13 18 Manufacturing overhead is allocated at the rate of $24 per direct manufacturing labor-hour. Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the following budgets for 2020 1. Revenues budget lin dollars) 2 What questions might the CEO ask the marketing manager when reviewing the revenues budget? Explain briefly 3. Production budget in units) 2 USA chooses to be environmentally responsible and switches to the new ove the changel Process will allow production managers to implement Kaizen costing. If USA can reduce fabric and labor conta dach by 1% per month on all the shirts it manufactures, by how much will overall costs decrease at the end of 12 months? (Round to the nearest dolar for calculating cost reductions. Mhefer to requirement 2. How could the reduction in material and labor costs be accomplished? Are there any problems with this plan? 5-37 Revenue and production budgets. (CPA, adapted The Chan Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2018, Chan's budget department gathered the following data to prepare budgets for 2020: 2020 Projected Sales Product Thingone Thingtwo Units 69,000 44,000 Price $180 5258 2020 Inventories in Units Product Thingone Thingtwo Expected Target January 1, 2020 December 31, 2020 24,000 29,000 7,000 8,000 The following direct materials are used in the two products: Direct Material B C Amount Used per Unit Unit Thingone Thingtwo pound 8 7 pound 4 5 Bach 0 3 mo Projected data for 2020 for direct materials are: Direct Material A B C Anticipated Purchase Price $13 8 7 Expected Inventories January 1, 2020 36,000 lb 31,000 lb. 9,000 units Target Inventories December 31, 2020 38,000 lb. 34,000 lb. 12,000 units Projected direct manufacturing labor requirements and rates for 2020 are: Product Thingone Thingtwo Hours per Unit 4 Rate per Hour $13 18 Manufacturing overhead is allocated at the rate of $24 per direct manufacturing labor-hour. Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the following budgets for 2020 1. Revenues budget lin dollars) 2 What questions might the CEO ask the marketing manager when reviewing the revenues budget? Explain briefly 3. Production budget in units)