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Thompson Toy Company Balance Sheet December 31, 2018 Assets Current Assets Cash $ 15,000 Accounts Receivable 40,000 Raw Materials Inventory 600 Finished Goods Inventory 5,000 Total Current Assets Property, Plant, and Equipment: Equipment 199,000 Less: Accumulated Depreciation (42,000) Total Assets Liabilities Current Liabilities: Accounts Payable $ 60,600 (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 1,100 sets for the first quarter and expected to increase by 200 sets per quarter. Cash sales are expected to be 40% of total sales, with the remaining 60% of sales on account. Sets are budgeted to sell for $80 per set. b. Finished Goods Inventory on December 31, 2018, consists of 200 sets at $25 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected to be 1,900 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 600 pounds. Direct materials requirement is 3 pounds per set. The cost is $1 per pound. e. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019, is 600 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.20 hours of direct labor, direct labor costs average $8 per hour. g. Variable manufacturing overhead is $1.60 per set. h. Fixed manufacturing overhead includes $4,000 per quarter in depreciation $4,955 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $8,000 per quarter for salaries; $3,600 per quarter for rent; $450 per quarter for insurance, and $1,000 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 3% of sales. k. Capital expenditures include $55,000 for new manufacturing equipment, to be purchased and paid for in the first quarter. Cash receipts for sales on account are 60% in the quarter of the sale and 40% in the quarter following the sale, Accounts Receivable balance on December 31, 2018, is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 80% in the quarter purchased and 20% in the following quarter; Accounts Payable balance on December 31, 2018, is expected to be paid in the first quarter of 2019. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred o. Income tax expense is projected at $3,000 per quarter and is paid in the quarter incurred. p. Thompson desires to maintain a minimum cash balance of $40,000 and borrows from the local bank as needed in increments of $1,000 at the beginning of the quarter, principal repayments are made at the beginning of the quarter when excess funds are available and in increments of $1,000; interest is 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. 157,000 217,600 1. 9,000 Stockholders' Equity Common Stock, no par $ 170,000 Retained Earnings 38,600 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 208,600 217,600 JIULIU LUOLIITTITULUI Quantity Direct materials 3 pounds per set Direct labor 0.20 hours per set Variable manufacturing overhead 0.20 hours per set Fixed manufacturing overhead Static budget amount: $35,820 0.20 hours per set 5. What is Thompson's static budget variance for operating income? 6. Explain why the flexible budget performance report provides more useful information to Thompson's managers than the static budget performance report. What insights can Thompson's managers draw from this performance report? 7. During 2019, Thompson recorded the following cost data: (Click the icon to view the standard cost data.) (Click the icon to view the actual cost data.) Compute the cost and efficiency variances for direct materials and direct labor. Cost $$1 per pound $58 per hour $$8 per hour $$30.40 per hour Data Table 8. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. Actual Cost Information Prepare the standard cest income statement for 2010 0. Calonge Torriuson's BOLSA 2019. To calculate average total assets use the December 31, 2018 balance sheet for the beginning balance and the budgeted balance sheet for December 31, 2019, for the ending balance. Round all of your answers to four decimal places. 11. Calculate Thompson's profit.pargin ratio for 2019 aterpret your results Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead (18,300 pounds @ $$1.20 per pound) $ (1,230 hours @ $$8.10 per hour) (1,230 hours @ $$7.50 per hour) 21,960 9,963 9,225 34,320 ------------------------- Thompson Toy Company Balance Sheet December 31, 2018 Assets Current Assets Cash $ 15,000 Accounts Receivable 40,000 Raw Materials Inventory 600 Finished Goods Inventory 5,000 Total Current Assets Property, Plant, and Equipment: Equipment 199,000 Less: Accumulated Depreciation (42,000) Total Assets Liabilities Current Liabilities: Accounts Payable $ 60,600 (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 1,100 sets for the first quarter and expected to increase by 200 sets per quarter. Cash sales are expected to be 40% of total sales, with the remaining 60% of sales on account. Sets are budgeted to sell for $80 per set. b. Finished Goods Inventory on December 31, 2018, consists of 200 sets at $25 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected to be 1,900 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 600 pounds. Direct materials requirement is 3 pounds per set. The cost is $1 per pound. e. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019, is 600 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.20 hours of direct labor, direct labor costs average $8 per hour. g. Variable manufacturing overhead is $1.60 per set. h. Fixed manufacturing overhead includes $4,000 per quarter in depreciation $4,955 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $8,000 per quarter for salaries; $3,600 per quarter for rent; $450 per quarter for insurance, and $1,000 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 3% of sales. k. Capital expenditures include $55,000 for new manufacturing equipment, to be purchased and paid for in the first quarter. Cash receipts for sales on account are 60% in the quarter of the sale and 40% in the quarter following the sale, Accounts Receivable balance on December 31, 2018, is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 80% in the quarter purchased and 20% in the following quarter; Accounts Payable balance on December 31, 2018, is expected to be paid in the first quarter of 2019. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred o. Income tax expense is projected at $3,000 per quarter and is paid in the quarter incurred. p. Thompson desires to maintain a minimum cash balance of $40,000 and borrows from the local bank as needed in increments of $1,000 at the beginning of the quarter, principal repayments are made at the beginning of the quarter when excess funds are available and in increments of $1,000; interest is 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. 157,000 217,600 1. 9,000 Stockholders' Equity Common Stock, no par $ 170,000 Retained Earnings 38,600 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 208,600 217,600 JIULIU LUOLIITTITULUI Quantity Direct materials 3 pounds per set Direct labor 0.20 hours per set Variable manufacturing overhead 0.20 hours per set Fixed manufacturing overhead Static budget amount: $35,820 0.20 hours per set 5. What is Thompson's static budget variance for operating income? 6. Explain why the flexible budget performance report provides more useful information to Thompson's managers than the static budget performance report. What insights can Thompson's managers draw from this performance report? 7. During 2019, Thompson recorded the following cost data: (Click the icon to view the standard cost data.) (Click the icon to view the actual cost data.) Compute the cost and efficiency variances for direct materials and direct labor. Cost $$1 per pound $58 per hour $$8 per hour $$30.40 per hour Data Table 8. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. Actual Cost Information Prepare the standard cest income statement for 2010 0. Calonge Torriuson's BOLSA 2019. To calculate average total assets use the December 31, 2018 balance sheet for the beginning balance and the budgeted balance sheet for December 31, 2019, for the ending balance. Round all of your answers to four decimal places. 11. Calculate Thompson's profit.pargin ratio for 2019 aterpret your results Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead (18,300 pounds @ $$1.20 per pound) $ (1,230 hours @ $$8.10 per hour) (1,230 hours @ $$7.50 per hour) 21,960 9,963 9,225 34,320