Question
Jones Corporation has the following budgeted sales for the selected four-month period: Month Unit Sales July 20,000 August 35,000 September 25,000 October 30,000 Sales price
Jones Corporation has the following budgeted sales for the selected four-month period:
| Month | Unit Sales |
| July | 20,000 |
| August | 35,000 |
| September | 25,000 |
| October | 30,000 |
|
| Sales price per unit is $180 |
|
| Plans are to have an inventory of finished product equal to 20% of the unit sales for the next month. There was 4,000 units in beginning inventory on July 1st. |
|
| Three pounds of materials are required for each unit produced. Each pound of material costs $20. Inventory levels for materials equal 30% of the needs for the next month. |
|
| Desired ending inventory for September is 25,200 pounds of material. Beginning inventory for July was 20,700 pounds of material. |
|
| Each unit requires 0.6 hours of direct labor and the average wage rate is $16 per hour. |
|
| Variable overhead rate is $3.50 per direct labor hour. There is also fixed overhead of $22,000 per month. |
|
| The company pays a 3% commission on sales. |
|
| Company has fixed selling and administrative expenses as follows: Rent $6,000/month Utilities $1,200/month Advertising $400/month Office Salaries $35,000/month |
Required:
| A. | Prepare a sales budget for July, August, and September and in total for the quarter. |
| B. | Prepare production budgets for July, August, and September and in total for the quarter. |
| C. | Prepare a direct materials purchases budget in pounds and dollars for July, August, and September and in total for the quarter. |
| D. | Prepare a direct labor budget in hours and total cost for July, August and September and in total for the quarter. |
| E. | Prepare an overhead budget for July, August and September and in total for the quarter. |
| F. | Prepare a selling and administrative expenses budget for July, August and September and in total for the quarter. |
| G. | Prepare an ending finished goods inventory budget for the quarter (Hint: You have already calculated the desired ending finished goods inventory amount. Assume a stable per unit rate and round the per unit fixed factory overhead rate to two decimal places.) |
| H. | Prepare a cost of goods sold budget for the quarter |
| I. | Prepare a budged income statement for the quarter-the company falls into the 35% tax bracket for income taxes. |
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Managerial Accounting
Authors: John J. Wild, Ken W. Shaw
2010 Edition
978-0073379586
