I have a question that needs to be solved for practice 6-32. Please also show the solutions so I know what I am doing wrong. Thank you.

Problem 6-32 Gerald/Brooke, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows. Direct materials Direct labor Variable overhead Fixed overhead Standard Price $1.6 per yard $12 per DLH $4 per DLH $6 per DLH Standard Quantity 1.25 yards 0.25 DLH 0.25 DLH 0.25 DLH Standard Cost $2 3 1 1.5 $7.50 Bobby Brickley, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he was seeing. In an attempt to understand what had happened, Bobby asked CFO Lila Davis for more information. She provided the following overhead budgets, along with the actual results for November. The company purchased and used 116,700 yards of fabric during the month. Fabric purchases during the month were made at $1.45 per yard. The direct labor payroll ran $254,947, with an actual hourly rate of $12.1 per direct labor hour. The annual budgets were based on the production of 1,005,840 shirts, using 258,500 direct labor hours. Though the budget for November was based on 88,200 shirts, the company actually produced 84,280 shirts during the month. Indirect material Indirect labor Equipment repair Equipment power Total Supervisory salaries Insurance Property taxes Depreciation Utilities Quality inspection Total Variable Overhead Budget Annual Per November Budget Shirt Actual $452,600 $0.45 $37,400 300,600 0.3 33,890 204,000 0.2 18,500 51,800 0.05 14,500 $1,009,000 $1.00 $104,290 Fixed Overhead Budget Annual November Budget Actual $264,700 $22,600 351,800 30,200 81,900 8,000 323,200 35,600 213,700 23,900 281,800 31,000 $1,517,100 $151,300 (a) Calculate the direct materials price and quantity variances for November. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Direct material price variance Direct material quantity variance $ (b) Calculate the direct labor rate and efficiency variances for November. (Round answers to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Direct labor rate variance $ Direct labor efficiency variance (c) Calculate the variable overhead spending and efficiency variances for November. (Round answers to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Variable overhead spending variance $ Variable overhead efficiency variance (d) Calculate the fixed overhead spending variance for November. (Round answer to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Fixed overhead spending variance Bill Thomas, Bates & Hill's controller, has received all the budgets prepared by the various operating units and is ready to compile the pro-forma financial statements for the first quarter. The company's balance sheet of December 31 is as follows: Cash Accounts Receivable (net) Finished Goods Inventory Raw Materials Inventory Property, Plant & Equipment Accumulated Depreciation $ 37,200 36,270 30,380 4,687 186,000 (46,500 ) Total Assets $248,037 Accounts Payable Income Tax Payable Common Stock Retained Earnings $ 11,160 46,661 62,000 128,216 Total Liabilities & Owners Equity Budgeted revenue Selling and administrative expense Interest expense Cash Cost of Goods Sold Accounts receivable Direct materials Finished goods Acounts payable Notes payable $248,037 Quarter $874,200 165,168 2,096 19,081 622,089 84,630 3,447 36,589 20,584 25,420 Additional Information: Bates & Hill plans to declare and pay dividends totaling $30,380 in January. Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $44,640. Bates & Hill plans to purchase equipment in March at a cost of $37,200. Depreciation for manufacturing overhead $18,600 per month and for selling and administrative $6,200 per month. The company expects a 19% income tax rate, and all quarterly taxes are paid in the first month of the following quarter. Prepare Bates & Hill's pro-forma income statement for the first quarter. Pro-forma Income Statement $ $ 2) Strum Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Claire Strum, the company's sales manager, prepared the following sales forecast for 2015. The forecasted sales prices include a 5 percent increase in the acoustic guitar price and a 10 percent increase in the electric guitar price, to cover anticipated increases in raw materials prices. Sales Price Acoustic guitar sales Electric guitar sales 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $1,340 400 600 340 660 $2,690 250 90 110 120 Don't show me this message again for the assignment (a) Prepare Strum's sales budget for 2015. Sales Budget st 2nd Quarter 3rd Quarter 4th Quarter $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1 Quarter Annual Acoustic: Electric: Total revenue 3) Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating income, confirming her decision to push the workers to get those last 250 cases off the production line before the end of the month. But as she glanced over the rest of numbers, Lexi couldn't help but wonder if there were errors in some of the line items. She was puzzled how most of the operating expenses could be higher than the budget since she had worked hard to manage the production line to improve efficiency and reduce costs. Yet the report, shown below, showed a different story. Actual 10,250 Budget 10,000 $1,947,500 $1,870,000 Direct material 561,000 550,000 Direct labor 267,650 260,000 Variable manufacturing overhead 285,012 280,000 Variable selling expenses 93,130 90,000 Variable administrative expenses 41,740 40,000 Contribution margin 698,968 650,000 Fixed manufacturing overhead 111,000 110,000 Fixed selling expenses Fixed administrative expenses 69,500 129,800 70,000 130,000 $388,668 $340,000 Cases produced and sold Sales revenue Operating income Variance 250 Favorable $77,500 Favorable Unfavorabl 11,000 e Unfavorabl 7,650 e Unfavorabl 5,012 e Unfavorabl 3,130 e Unfavorabl 1,740 e 48,968 Favorable Unfavorabl 1,000 e 500 Favorable 200 Favorable $48,668 Favorable Lexi picked up the phone and called Irvin. \"Irvin, I don't get it. We beat the budgeted operating income for the month, but look at all the unfavorable variances on the operating costs. Can you help me understand what's going on?\" \"Let me look into it and I'll get back to you,\" Irvin replied. Irvin gathered the following additional information about the month's performance. Direct materials purchased: 102,000 pounds at a total of $561,000 Direct materials used: 102,000 pounds Direct labor hours worked: 26,500 at a total cost of $267,650 Machine hours used: 40,950 Irvin also found the standard cost card for a case of product. Direct materials Direct labor Variable overhead Fixed overhead Total standard cost per case Standard Price $5.5 per pound $10 per DLH $7 per MH $2.75 per MH Standard Quantity 10 pounds 2.60 DLH 4 MH 4 MH Standard Cost $55 26.00 28.00 11.00 $120.00 Don't show me this message again for the assignment (a-g) (a-b) Calculate the direct material price variance and direct material quantity variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Direct material price variance $ Direct material quantity variance (c-d) Calculate the direct labor rate variance and direct labor efficiency variance for the month. (Round answers to 0 decimal places, e.g. 1525. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Direct labor rate variance $ Direct labor efficiency variance (e-f) Calculate the variable overhead spending variance and variable overhead efficiency variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Variable overhead spending variance $ Variable overhead efficiency variance (g) Calculate the fixed overhead spending variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Fixed overhead spending variance $ 4) Sandoval Furniture builds high-end hand-made dining tables. Mackenzie Sandoval, the company's owner, has developed the following sales forecast for 2015. Forecasted sales (tables) 1st Quarter 2,519 2nd Quarter 2,785 3rd Quarter 2,975 4th Quarter 1,835 Because of the time needed to create each table, Sandoval maintains an ending Finished Goods Inventory of 20 percent of the following quarter's budgeted sales. Sandoval has been following this inventory policy for several years. The company ended 2014 with 504 tables on hand. The standard cost card for a table is as follows: American cherry wood American cherry turning square (legs) Direct labor Variable overhead Fixed overhead Standard Quantity 25 board feet Standard Price $4/board foot 4 squares Total Standard Cost $100 $8/square 32 $16/DLH $56/DLH $9/DLH 192 672 108 12 DLH 12 DLH 12 DLH $1,104 Don't show me this message again for the assignment (a) Prepare Sandoval's production budget for 2015. Assume that the desired ending inventory for 2015 is 546 tables. (Round answers to 0 decimal places, e.g. 5,250.) Production Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual Don't show me this message again for the assignment 5) Barnes Entertainment Corporation prepared a master budget for the month of November that was based on sales of 158,100 board games. The budgeted income statement for the period is as follows. Sales Revenue Variable expenses Direct materials Direct labor Variable overhead $2,371,500 $664,020 268,770 411,060 Total variable expenses Contribution margin Fixed overhead Fixed selling and administrative expenses 1,343,850 1,027,650 251,200 507,500 Total fixed expenses 758,700 Operating income $268,950 During November, Barnes produced and sold 186,500 board games. Actual results for the month are as follows. Sales Revenue Variable expenses Direct materials Direct labor Variable overhead $2,786,300 $772,300 333,750 495,700 Total variable expenses 1,601,750 Contribution margin Fixed overhead Fixed selling and administrative expenses 1,184,550 Total fixed expenses Operating income 275,500 507,500 783,000 $401,550 Don't show me this message again for the assignment (a-b) (a) Prepare a flexible budget for November. (Round unit answers to 2 decimal places, e.g. 5.25 & all other answers to 0 decimal places, e.g. 125.) Unit 186,500 games $ : $ : $ $ (b) Calculate Barnes's static budget variance for November. (Round answers to 0 decimal places, e.g. 125. Enter all variance amounts as positive values. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Static Budget Variance Actual Results Static Budget Unit Sales $ $ : : $ $ $ $ Exercise 5-30 Bill Thomas, Bates & Hill's controller, has received all the budgets prepared by the various operating units and is ready to compile the proforma financial statements for the first quarter. The company's balance sheet of December 31 is as follows: Cash $ 37,200 Accounts Receivable (net) 36,270 Finished Goods Inventory 30,380 Raw Materials Inventory Property, Plant & Equipment Accumulated Depreciation 4,687 186,000 (46,500 ) Total Assets $248,037 Accounts Payable $ 11,160 Income Tax Payable Common Stock Retained Earnings Total Liabilities & Owners Equity 46,661 62,000 128,216 $248,037 Quarter Budgeted revenue Selling and administrative expense Interest expense Cash Cost of Goods Sold Accounts receivable Direct materials $874,200 165,168 2,096 19,081 622,089 84,630 3,447 Finished goods 36,589 Acounts payable 20,584 Notes payable 25,420 Additional Information: Bates & Hill plans to declare and pay dividends totaling $30,380 in January. Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $44,640. Bates & Hill plans to purchase equipment in March at a cost of $37,200. Depreciation for manufacturing overhead $18,600 per month and for selling and administrative $6,200 per month. The company expects a 19% income tax rate, and all quarterly taxes are paid in the first month of the following quarter. (a) Prepare Bates & Hill's pro-forma income statement for the first quarter. Pro-forma Income Statement $ EAT_1377237710 Sales Revenue 874200 EAT_1377237710 Cost of Goods Sold 622089 EAT_1377237853 Gross Margin 252111 EAT_1377237710 Selling & Administrative Expense 165168 EAT_1377237853 86943 Operating Income / (Loss) EAT_1377237710 2096 Interest Expense EAT_1377237710 84847 Income Before Taxes EAT_1377237710 16121 Income Tax Expense $ EAT_1377237853 Net Income / (Loss) 68726 (b) Prepare Bates & Hill's pro-forma balance sheet as of March 31. Pro-forma Balance Sheet $ $ $ Problem 5-31 (Part Level Submission) Strum Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Claire Strum, the company's sales manager, prepared the following sales forecast for 2015. The forecasted sales prices include a 5 percent increase in the acoustic guitar price and a 10 percent increase in the electric guitar price, to cover anticipated increases in raw materials prices. Sales Price Acoustic guitar sales $1,340 Electric guitar sales $2,690 1st Quarter $ 2nd Quarter 3rd Quarter 4th Quarter 400 600 340 660 250 90 110 120 (a) Prepare Strum's sales budget for 2015. Sales Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual Acoustic: 07159101_0_737 Budgeted units sold 400 $ 07159101_0_737 Budgeted sales price 1340 340 $ 1340 $ 07159101_0_737 Budgeted revenue 600 660 $ 1340 $ 2000 $ 1340 $ $ 5360 $ $ 536000 804000 455600 884400 2680000 250 90 110 120 570 Electric: 07159101_0_737 Budgeted units sold $ 07159101_0_737 Budgeted sales price 2690 2690 $ 07159101_0_737 Budgeted revenue $ 672500 $ 2690 $ 242100 $ $ 2690 $ 295900 $ $ 10760 $ 322800 $ $ 1533300 $ $ Total revenue 1208500 1046100 751500 1207200 4213300 (b) On December 31, 2014, Strum had 60 acoustic guitars in stockfewer than the desired inventory level of 80 guitars, based on the following quarter's sales. The company has budgeted for sales of 470 acoustic guitars in the first quarter of 2016. Strum wants to maintain an ending inventory equal to 20 percent of the following quarter's sales. Prepare the 2015 production budget for acoustic guitars. Production Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual Problem 6-30 (Part Level Submission) Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating income, confirming her decision to push the workers to get those last 250 cases off the production line before the end of the month. But as she glanced over the rest of numbers, Lexi couldn't help but wonder if there were errors in some of the line items. She was puzzled how most of the operating expenses could be higher than the budget since she had worked hard to manage the production line to improve efficiency and reduce costs. Yet the report, shown below, showed a different story. Actual Cases produced and sold Sales revenue Budget Variance 10,250 10,000 250 Favorable $77,500 Favorable $1,947,500 $1,870,000 Direct material 561,000 550,000 11,000 Unfavorabl e Direct labor 267,650 260,000 7,650 Unfavorabl e Variable manufacturing overhead 285,012 280,000 5,012 Unfavorabl e Variable selling expenses 93,130 90,000 3,130 Unfavorabl e Variable administrative expenses 41,740 40,000 1,740 Unfavorabl e Contribution margin 698,968 650,000 Fixed manufacturing overhead 111,000 110,000 Fixed selling expenses 1,000 Unfavorabl e 69,500 70,000 129,800 130,000 200 Favorable $388,668 $340,000 $48,668 Favorable Fixed administrative expenses Operating income 48,968 Favorable 500 Favorable Lexi picked up the phone and called Irvin. \"Irvin, I don't get it. We beat the budgeted operating income for the month, but look at all the unfavorable variances on the operating costs. Can you help me understand what's going on?\" \"Let me look into it and I'll get back to you,\" Irvin replied. Irvin gathered the following additional information about the month's performance. Direct materials purchased: 102,000 pounds at a total of $561,000 Direct materials used: 102,000 pounds Direct labor hours worked: 26,500 at a total cost of $267,650 Machine hours used: 40,950 Irvin also found the standard cost card for a case of product. Standard Price Standard Quantity Standard Cost Direct materials $5.5 per pound 10 pounds Direct labor $10 per DLH 2.60 DLH 26.00 Variable overhead $7 per MH 4 MH 28.00 Fixed overhead $2.75 per MH 4 MH $55 11.00 Total standard cost per case $120.00 (a-b) Calculate the direct material price variance and direct material quantity variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ EAT_1377766955 * Direct material price variance Not Applicable $ Direct material quantity variance * 2,750 EAT_1377766955 Favorable (c-d) Calculate the direct labor rate variance and direct labor efficiency variance for the month. (Round answers to 0 decimal places, e.g. 1525. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Direct labor rate variance * 2,650 EAT_1377766955 Unfavorable $ Direct labor efficiency variance EAT_1377766955 * 1,500 Favorable (e-f) Calculate the variable overhead spending variance and variable overhead efficiency variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Variable overhead spending variance * 1,638 Favorable $ Variable overhead efficiency variance EAT_1377766955 * 350 EAT_1377777124 Favorable (g) Calculate the fixed overhead spending variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Fixed overhead spending variance * 1,000 EAT_1377766955 Unfavorable (h) Prepare a performance report that will assist Lexi in evaluating her efforts to control production costs. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Price/Rate/Spending Variance Quantity/Efficiency Variance $ $ $ $ Direct materials Direct labor Variable overhead Fixed overhead Total Problem 5-32 Sandoval Furniture builds high-end hand-made dining tables. Mackenzie Sandoval, the company's owner, has developed the following sales forecast for 2015. 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Forecasted sales (tables) 2,519 2,785 2,975 1,835 Because of the time needed to create each table, Sandoval maintains an ending Finished Goods Inventory of 20 percent of the following quarter's budgeted sales. Sandoval has been following this inventory policy for several years. The company ended 2014 with 504 tables on hand. The standard cost card for a table is as follows: American cherry wood American cherry turning square (legs) Standard Quantity Standard Price 25 board feet $4/board foot 4 squares Total Standard Cost $100 $8/square 32 Direct labor 12 DLH $16/DLH 192 Variable overhead 12 DLH $56/DLH 672 Fixed overhead 12 DLH $9/DLH 108 $1,104 Production Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual 07172429_0_692 2,519 Budgeted unit sales 2,785 2,975 1,835 10,114 07172429_0_692 557 595 367 546 546 3,076 3,380 3,342 2,381 10,660 Budgeted ending inventory 07172429_0_692 Total units required 07172429_0_692 * * 504 557 * 595 * 367 * 504 Beginning inventory 07172429_0_692 2,572 2,823 2,747 2,014 10,156 Budgeted Production (b) Sandoval maintains inventory of American cherry wood equal to 10 percent of the following quarter's production needs. On December 31, 2014, Sandoval's physical inventory count showed 5,551 board feet of American cherry. Due to an anticipated price increase in 2016, managers want to have 10,039 board feet of American cherry wood in inventory on December 31, 2015. Prepare Sandoval's 2015 direct materials purchases budget for American cherry wood. (Round answers to 0 decimal places, e.g. 5,275.) Direct Materials Purchases Budget 1 Quarter 2nd Quarter st 3rd Quarter 4th Quarter Annual $ $ $ $ $ $ $ $ $ $ Problem 6-27 (Part Level Submission) Barnes Entertainment Corporation prepared a master budget for the month of November that was based on sales of 158,100 board games. The budgeted income statement for the period is as follows. Sales Revenue $2,371,500 Variable expenses Direct materials Direct labor $664,020 268,770 Variable overhead 411,060 Total variable expenses 1,343,850 Contribution margin 1,027,650 Fixed overhead 251,200 Fixed selling and administrative expenses 507,500 Total fixed expenses 758,700 Operating income $268,950 During November, Barnes produced and sold 186,500 board games. Actual results for the month are as follows. Sales Revenue $2,786,300 Variable expenses Direct materials $772,300 Direct labor 333,750 Variable overhead 495,700 Total variable expenses 1,601,750 Contribution margin 1,184,550 Fixed overhead 275,500 Fixed selling and administrative expenses 507,500 Total fixed expenses 783,000 Operating income $401,550 a) Prepare a flexible budget for November. (Round unit answers to 2 decimal places, e.g. 5.25 & all other answers to 0 decimal places, e.g. 125.) Unit c01q_egrade_1_ $ 15.00 Sales revenue c01q_egrade_1_ 186,500 games $ 2,797,500 Less : c01q_egrade_1_ Variable expenses c01q_egrade_1_ * 4.20 * 783,300 Direct material c01q_egrade_1_ * 1.70 * 317,050 Direct labor c01q_egrade_1_ * 2.60 * 484,900 Variable overhead c01q_egrade_1_ * 8.50 * 1,585,250 Total variable expenses c01q_egrade_1_ $ 6.50 Contribution margin c01q_egrade_1_ : c01q_egrade_1_ Fixed expenses Less 1,212,250 c01q_egrade_1_ * 251,200 Overhead c01q_egrade_1_ * 507,500 Selling and administrative c01q_egrade_1_ * 758,700 Total fixed expenses c01q_egrade_1_ $ 453,550 Operating income (b) Calculate Barnes's static budget variance for November. (Round answers to 0 decimal places, e.g. 125. Enter all variance amounts as positive values. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Static Budget Variance Actual Results Static Budget * Unit Sales 186,500 c01q_egrade_1_ 28,400 158,100 Favorable c01q_egrade_1_ 2,786,300 Sales revenue c01q_egrade_1_ c01q_egrade_1_ $ $ $ * 414,800 Favorable 2,371,500 Less : c01q_egrade_1_ Variable expenses c01q_egrade_1_ * 772,300 * 108,280 Unfavorable c01q_egrade_1_ * 333,750 * * 495,700 268,770 * * 1,601,750 * c01q_egrade_1_ 257,900 * 1,343,850 Total variable expenses Unfavorable c01q_egrade_1_ * 1,184,550 c01q_egrade_1_ 156,900 1,027,650 Favorable Less * 411,060 Unfavorable c01q_egrade_1_ Contribution margin c01q_egrade_1_ 84,640 Variable overhead Fixed expenses * Unfavorable c01q_egrade_1_ c01q_egrade_1_ c01q_egrade_1_ 64,980 Direct labor c01q_egrade_1_ * 664,020 Direct material : c01q_egrade_1_ c01q_egrade_1_ * 275,500 * c01q_egrade_1_ * 24,300 251,200 Overhead Unfavorable c01q_egrade_1_ * * c01q_egrade_1_ * 507,500 507,500 Selling and administrative Not Applicable c01q_egrade_1_ * 783,000 * c01q_egrade_1_ * 24,300 758,700 Total fixed expenses Unfavorable c01q_egrade_1_ $ $ c01q_egrade_1_ $ * 401,550 Operating income 132,600 268,950 Favorable Based on the available information, prepare a performance report for management. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Actual Results Flexible Budget Variance Flexible Budget $ $ Sales Volume Variance Static Budget Unit Sales $ : : $ $ $ $ $ $ $ Exercise 5-30 Bill Thomas, Bates & Hill's controller, has received all the budgets prepared by the various operating units and is ready to compile the proforma financial statements for the first quarter. The company's balance sheet of December 31 is as follows: Cash $ 37,200 Accounts Receivable (net) 36,270 Finished Goods Inventory 30,380 Raw Materials Inventory Property, Plant & Equipment Accumulated Depreciation 4,687 186,000 (46,500 ) Total Assets $248,037 Accounts Payable $ 11,160 Income Tax Payable Common Stock Retained Earnings Total Liabilities & Owners Equity 46,661 62,000 128,216 $248,037 Quarter Budgeted revenue Selling and administrative expense Interest expense Cash Cost of Goods Sold Accounts receivable Direct materials $874,200 165,168 2,096 19,081 622,089 84,630 3,447 Finished goods 36,589 Acounts payable 20,584 Notes payable 25,420 Additional Information: Bates & Hill plans to declare and pay dividends totaling $30,380 in January. Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $44,640. Bates & Hill plans to purchase equipment in March at a cost of $37,200. Depreciation for manufacturing overhead $18,600 per month and for selling and administrative $6,200 per month. The company expects a 19% income tax rate, and all quarterly taxes are paid in the first month of the following quarter. (a) Prepare Bates & Hill's pro-forma income statement for the first quarter. Pro-forma Income Statement $ EAT_1377237710 Sales Revenue 874200 EAT_1377237710 Cost of Goods Sold 622089 EAT_1377237853 Gross Margin 252111 EAT_1377237710 Selling & Administrative Expense 165168 EAT_1377237853 86943 Operating Income / (Loss) EAT_1377237710 2096 Interest Expense EAT_1377237710 84847 Income Before Taxes EAT_1377237710 16121 Income Tax Expense $ EAT_1377237853 Net Income / (Loss) 68726 (b) Prepare Bates & Hill's pro-forma balance sheet as of March 31. Pro-forma Balance Sheet $ $ $ Problem 5-31 (Part Level Submission) Strum Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Claire Strum, the company's sales manager, prepared the following sales forecast for 2015. The forecasted sales prices include a 5 percent increase in the acoustic guitar price and a 10 percent increase in the electric guitar price, to cover anticipated increases in raw materials prices. Sales Price Acoustic guitar sales $1,340 Electric guitar sales $2,690 1st Quarter $ 2nd Quarter 3rd Quarter 4th Quarter 400 600 340 660 250 90 110 120 (a) Prepare Strum's sales budget for 2015. Sales Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual Acoustic: 07159101_0_737 Budgeted units sold 400 $ 07159101_0_737 Budgeted sales price 1340 340 $ 1340 $ 07159101_0_737 Budgeted revenue 600 660 $ 1340 $ 2000 $ 1340 $ $ 5360 $ $ 536000 804000 455600 884400 2680000 250 90 110 120 570 Electric: 07159101_0_737 Budgeted units sold $ 07159101_0_737 Budgeted sales price 2690 2690 $ 07159101_0_737 Budgeted revenue $ 672500 $ 2690 $ 242100 $ $ 2690 $ 295900 $ $ 10760 $ 322800 $ $ 1533300 $ $ Total revenue 1208500 1046100 751500 1207200 4213300 (b) On December 31, 2014, Strum had 60 acoustic guitars in stockfewer than the desired inventory level of 80 guitars, based on the following quarter's sales. The company has budgeted for sales of 470 acoustic guitars in the first quarter of 2016. Strum wants to maintain an ending inventory equal to 20 percent of the following quarter's sales. Prepare the 2015 production budget for acoustic guitars. Production Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual Problem 6-30 (Part Level Submission) Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating income, confirming her decision to push the workers to get those last 250 cases off the production line before the end of the month. But as she glanced over the rest of numbers, Lexi couldn't help but wonder if there were errors in some of the line items. She was puzzled how most of the operating expenses could be higher than the budget since she had worked hard to manage the production line to improve efficiency and reduce costs. Yet the report, shown below, showed a different story. Actual Cases produced and sold Sales revenue Budget Variance 10,250 10,000 250 Favorable $77,500 Favorable $1,947,500 $1,870,000 Direct material 561,000 550,000 11,000 Unfavorabl e Direct labor 267,650 260,000 7,650 Unfavorabl e Variable manufacturing overhead 285,012 280,000 5,012 Unfavorabl e Variable selling expenses 93,130 90,000 3,130 Unfavorabl e Variable administrative expenses 41,740 40,000 1,740 Unfavorabl e Contribution margin 698,968 650,000 Fixed manufacturing overhead 111,000 110,000 Fixed selling expenses 1,000 Unfavorabl e 69,500 70,000 129,800 130,000 200 Favorable $388,668 $340,000 $48,668 Favorable Fixed administrative expenses Operating income 48,968 Favorable 500 Favorable Lexi picked up the phone and called Irvin. \"Irvin, I don't get it. We beat the budgeted operating income for the month, but look at all the unfavorable variances on the operating costs. Can you help me understand what's going on?\" \"Let me look into it and I'll get back to you,\" Irvin replied. Irvin gathered the following additional information about the month's performance. Direct materials purchased: 102,000 pounds at a total of $561,000 Direct materials used: 102,000 pounds Direct labor hours worked: 26,500 at a total cost of $267,650 Machine hours used: 40,950 Irvin also found the standard cost card for a case of product. Standard Price Standard Quantity Standard Cost Direct materials $5.5 per pound 10 pounds Direct labor $10 per DLH 2.60 DLH 26.00 Variable overhead $7 per MH 4 MH 28.00 Fixed overhead $2.75 per MH 4 MH $55 11.00 Total standard cost per case $120.00 (a-b) Calculate the direct material price variance and direct material quantity variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ EAT_1377766955 * Direct material price variance Not Applicable $ Direct material quantity variance * 2,750 EAT_1377766955 Favorable (c-d) Calculate the direct labor rate variance and direct labor efficiency variance for the month. (Round answers to 0 decimal places, e.g. 1525. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Direct labor rate variance * 2,650 EAT_1377766955 Unfavorable $ Direct labor efficiency variance EAT_1377766955 * 1,500 Favorable (e-f) Calculate the variable overhead spending variance and variable overhead efficiency variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Variable overhead spending variance * 1,638 Favorable $ Variable overhead efficiency variance EAT_1377766955 * 350 EAT_1377777124 Favorable (g) Calculate the fixed overhead spending variance for the month. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Fixed overhead spending variance * 1,000 EAT_1377766955 Unfavorable (h) Prepare a performance report that will assist Lexi in evaluating her efforts to control production costs. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Price/Rate/Spending Variance Quantity/Efficiency Variance $ $ $ $ Direct materials Direct labor Variable overhead Fixed overhead Total Problem 5-32 Sandoval Furniture builds high-end hand-made dining tables. Mackenzie Sandoval, the company's owner, has developed the following sales forecast for 2015. 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Forecasted sales (tables) 2,519 2,785 2,975 1,835 Because of the time needed to create each table, Sandoval maintains an ending Finished Goods Inventory of 20 percent of the following quarter's budgeted sales. Sandoval has been following this inventory policy for several years. The company ended 2014 with 504 tables on hand. The standard cost card for a table is as follows: American cherry wood American cherry turning square (legs) Standard Quantity Standard Price 25 board feet $4/board foot 4 squares Total Standard Cost $100 $8/square 32 Direct labor 12 DLH $16/DLH 192 Variable overhead 12 DLH $56/DLH 672 Fixed overhead 12 DLH $9/DLH 108 $1,104 Production Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual 07172429_0_692 2,519 Budgeted unit sales 2,785 2,975 1,835 10,114 07172429_0_692 557 595 367 546 546 3,076 3,380 3,342 2,381 10,660 Budgeted ending inventory 07172429_0_692 Total units required 07172429_0_692 * * 504 557 * 595 * 367 * 504 Beginning inventory 07172429_0_692 2,572 2,823 2,747 2,014 10,156 Budgeted Production (b) Sandoval maintains inventory of American cherry wood equal to 10 percent of the following quarter's production needs. On December 31, 2014, Sandoval's physical inventory count showed 5,551 board feet of American cherry. Due to an anticipated price increase in 2016, managers want to have 10,039 board feet of American cherry wood in inventory on December 31, 2015. Prepare Sandoval's 2015 direct materials purchases budget for American cherry wood. (Round answers to 0 decimal places, e.g. 5,275.) Direct Materials Purchases Budget 1 Quarter 2nd Quarter st 3rd Quarter 4th Quarter Annual $ $ $ $ $ $ $ $ $ $ Problem 6-27 (Part Level Submission) Barnes Entertainment Corporation prepared a master budget for the month of November that was based on sales of 158,100 board games. The budgeted income statement for the period is as follows. Sales Revenue $2,371,500 Variable expenses Direct materials Direct labor $664,020 268,770 Variable overhead 411,060 Total variable expenses 1,343,850 Contribution margin 1,027,650 Fixed overhead 251,200 Fixed selling and administrative expenses 507,500 Total fixed expenses 758,700 Operating income $268,950 During November, Barnes produced and sold 186,500 board games. Actual results for the month are as follows. Sales Revenue $2,786,300 Variable expenses Direct materials $772,300 Direct labor 333,750 Variable overhead 495,700 Total variable expenses 1,601,750 Contribution margin 1,184,550 Fixed overhead 275,500 Fixed selling and administrative expenses 507,500 Total fixed expenses 783,000 Operating income $401,550 a) Prepare a flexible budget for November. (Round unit answers to 2 decimal places, e.g. 5.25 & all other answers to 0 decimal places, e.g. 125.) Unit c01q_egrade_1_ $ 15.00 Sales revenue c01q_egrade_1_ 186,500 games $ 2,797,500 Less : c01q_egrade_1_ Variable expenses c01q_egrade_1_ * 4.20 * 783,300 Direct material c01q_egrade_1_ * 1.70 * 317,050 Direct labor c01q_egrade_1_ * 2.60 * 484,900 Variable overhead c01q_egrade_1_ * 8.50 * 1,585,250 Total variable expenses c01q_egrade_1_ $ 6.50 Contribution margin c01q_egrade_1_ : c01q_egrade_1_ Fixed expenses Less 1,212,250 c01q_egrade_1_ * 251,200 Overhead c01q_egrade_1_ * 507,500 Selling and administrative c01q_egrade_1_ * 758,700 Total fixed expenses c01q_egrade_1_ $ 453,550 Operating income (b) Calculate Barnes's static budget variance for November. (Round answers to 0 decimal places, e.g. 125. Enter all variance amounts as positive values. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Static Budget Variance Actual Results Static Budget * Unit Sales 186,500 c01q_egrade_1_ 28,400 158,100 Favorable c01q_egrade_1_ 2,786,300 Sales revenue c01q_egrade_1_ c01q_egrade_1_ $ $ $ * 414,800 Favorable 2,371,500 Less : c01q_egrade_1_ Variable expenses c01q_egrade_1_ * 772,300 * 108,280 Unfavorable c01q_egrade_1_ * 333,750 * * 495,700 268,770 * * 1,601,750 * c01q_egrade_1_ 257,900 * 1,343,850 Total variable expenses Unfavorable c01q_egrade_1_ * 1,184,550 c01q_egrade_1_ 156,900 1,027,650 Favorable Less * 411,060 Unfavorable c01q_egrade_1_ Contribution margin c01q_egrade_1_ 84,640 Variable overhead Fixed expenses * Unfavorable c01q_egrade_1_ c01q_egrade_1_ c01q_egrade_1_ 64,980 Direct labor c01q_egrade_1_ * 664,020 Direct material : c01q_egrade_1_ c01q_egrade_1_ * 275,500 * c01q_egrade_1_ * 24,300 251,200 Overhead Unfavorable c01q_egrade_1_ * * c01q_egrade_1_ * 507,500 507,500 Selling and administrative Not Applicable c01q_egrade_1_ * 783,000 * c01q_egrade_1_ * 24,300 758,700 Total fixed expenses Unfavorable c01q_egrade_1_ $ $ c01q_egrade_1_ $ * 401,550 Operating income 132,600 268,950 Favorable Based on the available information, prepare a performance report for management. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Actual Results Flexible Budget Variance Flexible Budget $ $ Sales Volume Variance Static Budget Unit Sales $ : : $ $ $ $ $ $ $