Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Let me know if there's any additional information you need. LAB 6 As the current year comes to a close, the accounting department, with assistance

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Let me know if there's any additional information you need.

LAB 6 As the current year comes to a close, the accounting department, with assistance from senior management and the sales department, prepares the various budgets necessary to prepare the cash forecast (Lab 7). A monthly production budget is developed using the sales forecast in units (20XX sales forecast is presented below in Exhibit 6-A) as provided by the marketing and sales staff. 45,000 totes EXHIBIT 6-A: Sales Forecast for 20XX January 53,000 totes February 52,000 totes March 52,500 totes April 53,150 totes July August 50,000 totes 53,000 totes September October November 52,000 totes May 56,500 totes 51,000 totes June 47,000 totes December 48,000 totes Raw material needs are determined based on the production budget and the company's desired inventory levels. INVENTORY ON DECEMBER 31, PRIOR YEAR: Company employees completed an inventory count on December 31 determining the following ending inventory balances: o 5,000 finished totes o 600 yards of fabric o 7,000 yards of webbing Using the sales forecast (Exhibit 6-A), the inventory requirements described in the section "Company Description and Overview", and the Standard Cost Card (Exhibit 2-B) prepare the Production Budget 27 (Exhibit 6-B), the Direct Materials Budget for fabric (Exhibit 6-C), the Direct Materials Budget for webbing (Exhibit 6-D), the Raw Materials Purchases Budget (Exhibit 6-E) and the Projected Costs of Goods Manufactured Schedule for the 1s Quarter of 20XX (Exhibit 6-F). April May EXHIBIT 6-B: Production Budget for 1* Quarter 20XX T.O.T.E.S. Production Budget for the 1st quarter 20XX January February March Projected Sales in units (given) Required Ending Inventory _____%) Total Less: Beginning Inventory Total Required Production EXHIBIT 6-C: Raw materials Budget 20XX - FABRIC April T.O.T.E.S. Raw Materials Budget 20XX - FABRIC January February March Projected Production Requirements in units (from Exhibit 6-B) Yards of fabric per tote Total # of yards needed (round to the yard) Required Ending Inventory (__%) Total Less: Beginning Inventory Total Required Fabric Purchases (yards) Standard Cost per yard of fabric $ Total cost of fabric (round to the dollar) $ $ $ $ $ EXHIBIT 6-D: Raw materials Budget 20XX - WEBBING April T.O.T.E.S. Raw Materials Budget 20XX - WEBBING January February March Projected Production Requirements in units Crom Exhibit 6-8)) Yards of webbing per tote Total # of yards needed Required Ending Inventory L- __%) Total Less: Beginning Inventory Total Required Webbing Purchases (yards) Standard Cost per yard of webbing $ Total cost of webbing (round to the dollar) $ $ S $ $ March EXHIBIT 6-E: Raw Materials Purchases Budget - Quarter 1, 20XX T.O.T.E.S. Raw Materials Purchases Budget - Quarter 1, 20XX January February Total Cost of Fabric (from Exhibit 6-C) $ $ Total Cost of Webbing (from Exhibit 6-D) $ $ Total Cost of Direct Materials $ $ Quarter Total $ $ $ $ $ $ March EXHIBIT 6-F: Projected Cost of Goods Manufactured Schedule - Quarter 1, 20XX T.O.T.E.S. Project Cost of Goods Manufactured Schedule - Quarter 20XX January February Required Production in units (Exhibit 6-B) Cost per unit (round to 4 Total Cost decimal points) (round to the nearest dollar Direct Materials (Cost per unit, Exhibit 2-B) $ $ $ Direct Labor (Cost per unit, Exhibir 2-B) $ $ $ $ Manufacturing Overhead (Cost per unit, Exh. 2-8) $ $ $ Total Costs $ $ $ $ $ $ COMPANY DESCRIPTION AND OVERVIEW Tonia Odenburg and Tara Evans were life-long friends. One earned a degree in accounting and the other became a nutritionist. Both were accomplished seamstresses, were concerned about the impact plastic grocery bags had on the environment and had created reusable grocery bags for their personal use. After numerous compliments on the design and strength of their bags from store clerks and customers, they developed a business plan and started T.O.T.E.S. They called their version of the grocery bag a tote and sold them to grocery stores and small community farms. The company has grown rapidly and is now operating near capacity. EMPLOYEES Tonia is the president and Tara is the controller. Both individuals work full time and are salaried. Other employees include: Full-Time Salaried Employees: o Plant manager O Plant maintenance supervisor o Other administrative staff accountant, receptionist, finished goods warehouse manager) Hourly Employees: o 3 employee(s) in the cutting department o 2 employee(s) in the sewing department o I part-time employee who operates the machine that prints logos on the totes. The hourly employees are all considered direct labor employees. Historically, the hourly employees earn an average of $20 per hour, including fringe benefits and payroll taxes. All hourly employees work 40 hours each week, except for the part-time employee who works 20 hours each week. MATERIALS Each grocery bag requires 1/4 yard of 60" wide fabric and 1-1/2 yards of webbing. The fabric costs $3.60 per yard. Webbing costs $0.74 per yard. Thread is purchased in 500-yard spools and is considered an indirect material. After the totes pass quality control they are silk-screened with a customer's logo and the T.O.T.E.S. label is attached. Both the logo ink and the company labels are indirect materials. MANUFACTURING OVERHEAD T.O.T.E.S. allocates manufacturing overhead using a plantwide overhead rate based on machine hours in the cutting department. The cutting machines operate 95% of the hours worked by the cutting department employees. The plant operates 50 weeks per year. INVENTORY T.O.T.E.S. operates on a just-in-time basis in regards to both raw materials and finished goods. Work-in-process inventory is negligible at the end of each month. The company has found that it needs to have 20% of the following month's production requirements on hand at the end of each month in order to meet sales projections. They plan to have 5% of the fabric and 10% of the webbing required for the following month's production on hand at the end of each month. SALES FORECAST In the upcoming year, T.O.T.E.S. management forecasted sales of 500,000 totes. Each tote sells for $4.95. Tara estimated annual revenue and expenses based on that level of sales and production. Her estimates are shown on Exhibit 1-A. Calculate the standard cost for each tote for the current year's production level using information from Exhibit 1-A and 1-B. Round all standard costs to four (4) decimal places. EXHIBIT 2-B: Standard Cost Card T.O.T.E.S. CALCULATING STANDARD COSTS Forecasted Production per year 500,000 totes Total Cost (for 500.000 totes) Standard Cost cost per tote DIRECT MATERIALS Fabric Is 1,2 Webbing $600,000 8555,000 Isl. Total Direct Materials Cost per Tote (Round to 4 decimal places) 2.31 DIRECT LABOR Cutting $ Sewing $120,00 80,000 $ 15,000 Is 0.24 0.16 $ 0.03 15 0.43 Printing Total Direct Labor Cost per Tote (Round to 4 decimal places) MANUFACTURING OVERHEAD $ $ Estimated MOH Costs (Round per tote to 4 decimal places) 308,800 15 0.6176 Total Product Cost per Tote (Round to 4 decimal places) $ 3.3576 Costs for each job are tracked using a Job Cost Record (Exhibit 2-C). The Job Cost Record is found after copies of the Materials Requisition form and Labor Time Records for the period. Use the information on these documents to complete the Job Cost Record for Phineas Phil's Specialty Market order of 1,000 red grocery totes with logos. 11 LAB 6 As the current year comes to a close, the accounting department, with assistance from senior management and the sales department, prepares the various budgets necessary to prepare the cash forecast (Lab 7). A monthly production budget is developed using the sales forecast in units (20XX sales forecast is presented below in Exhibit 6-A) as provided by the marketing and sales staff. 45,000 totes EXHIBIT 6-A: Sales Forecast for 20XX January 53,000 totes February 52,000 totes March 52,500 totes April 53,150 totes July August 50,000 totes 53,000 totes September October November 52,000 totes May 56,500 totes 51,000 totes June 47,000 totes December 48,000 totes Raw material needs are determined based on the production budget and the company's desired inventory levels. INVENTORY ON DECEMBER 31, PRIOR YEAR: Company employees completed an inventory count on December 31 determining the following ending inventory balances: o 5,000 finished totes o 600 yards of fabric o 7,000 yards of webbing Using the sales forecast (Exhibit 6-A), the inventory requirements described in the section "Company Description and Overview", and the Standard Cost Card (Exhibit 2-B) prepare the Production Budget 27 (Exhibit 6-B), the Direct Materials Budget for fabric (Exhibit 6-C), the Direct Materials Budget for webbing (Exhibit 6-D), the Raw Materials Purchases Budget (Exhibit 6-E) and the Projected Costs of Goods Manufactured Schedule for the 1s Quarter of 20XX (Exhibit 6-F). April May EXHIBIT 6-B: Production Budget for 1* Quarter 20XX T.O.T.E.S. Production Budget for the 1st quarter 20XX January February March Projected Sales in units (given) Required Ending Inventory _____%) Total Less: Beginning Inventory Total Required Production EXHIBIT 6-C: Raw materials Budget 20XX - FABRIC April T.O.T.E.S. Raw Materials Budget 20XX - FABRIC January February March Projected Production Requirements in units (from Exhibit 6-B) Yards of fabric per tote Total # of yards needed (round to the yard) Required Ending Inventory (__%) Total Less: Beginning Inventory Total Required Fabric Purchases (yards) Standard Cost per yard of fabric $ Total cost of fabric (round to the dollar) $ $ $ $ $ EXHIBIT 6-D: Raw materials Budget 20XX - WEBBING April T.O.T.E.S. Raw Materials Budget 20XX - WEBBING January February March Projected Production Requirements in units Crom Exhibit 6-8)) Yards of webbing per tote Total # of yards needed Required Ending Inventory L- __%) Total Less: Beginning Inventory Total Required Webbing Purchases (yards) Standard Cost per yard of webbing $ Total cost of webbing (round to the dollar) $ $ S $ $ March EXHIBIT 6-E: Raw Materials Purchases Budget - Quarter 1, 20XX T.O.T.E.S. Raw Materials Purchases Budget - Quarter 1, 20XX January February Total Cost of Fabric (from Exhibit 6-C) $ $ Total Cost of Webbing (from Exhibit 6-D) $ $ Total Cost of Direct Materials $ $ Quarter Total $ $ $ $ $ $ March EXHIBIT 6-F: Projected Cost of Goods Manufactured Schedule - Quarter 1, 20XX T.O.T.E.S. Project Cost of Goods Manufactured Schedule - Quarter 20XX January February Required Production in units (Exhibit 6-B) Cost per unit (round to 4 Total Cost decimal points) (round to the nearest dollar Direct Materials (Cost per unit, Exhibit 2-B) $ $ $ Direct Labor (Cost per unit, Exhibir 2-B) $ $ $ $ Manufacturing Overhead (Cost per unit, Exh. 2-8) $ $ $ Total Costs $ $ $ $ $ $ COMPANY DESCRIPTION AND OVERVIEW Tonia Odenburg and Tara Evans were life-long friends. One earned a degree in accounting and the other became a nutritionist. Both were accomplished seamstresses, were concerned about the impact plastic grocery bags had on the environment and had created reusable grocery bags for their personal use. After numerous compliments on the design and strength of their bags from store clerks and customers, they developed a business plan and started T.O.T.E.S. They called their version of the grocery bag a tote and sold them to grocery stores and small community farms. The company has grown rapidly and is now operating near capacity. EMPLOYEES Tonia is the president and Tara is the controller. Both individuals work full time and are salaried. Other employees include: Full-Time Salaried Employees: o Plant manager O Plant maintenance supervisor o Other administrative staff accountant, receptionist, finished goods warehouse manager) Hourly Employees: o 3 employee(s) in the cutting department o 2 employee(s) in the sewing department o I part-time employee who operates the machine that prints logos on the totes. The hourly employees are all considered direct labor employees. Historically, the hourly employees earn an average of $20 per hour, including fringe benefits and payroll taxes. All hourly employees work 40 hours each week, except for the part-time employee who works 20 hours each week. MATERIALS Each grocery bag requires 1/4 yard of 60" wide fabric and 1-1/2 yards of webbing. The fabric costs $3.60 per yard. Webbing costs $0.74 per yard. Thread is purchased in 500-yard spools and is considered an indirect material. After the totes pass quality control they are silk-screened with a customer's logo and the T.O.T.E.S. label is attached. Both the logo ink and the company labels are indirect materials. MANUFACTURING OVERHEAD T.O.T.E.S. allocates manufacturing overhead using a plantwide overhead rate based on machine hours in the cutting department. The cutting machines operate 95% of the hours worked by the cutting department employees. The plant operates 50 weeks per year. INVENTORY T.O.T.E.S. operates on a just-in-time basis in regards to both raw materials and finished goods. Work-in-process inventory is negligible at the end of each month. The company has found that it needs to have 20% of the following month's production requirements on hand at the end of each month in order to meet sales projections. They plan to have 5% of the fabric and 10% of the webbing required for the following month's production on hand at the end of each month. SALES FORECAST In the upcoming year, T.O.T.E.S. management forecasted sales of 500,000 totes. Each tote sells for $4.95. Tara estimated annual revenue and expenses based on that level of sales and production. Her estimates are shown on Exhibit 1-A. Calculate the standard cost for each tote for the current year's production level using information from Exhibit 1-A and 1-B. Round all standard costs to four (4) decimal places. EXHIBIT 2-B: Standard Cost Card T.O.T.E.S. CALCULATING STANDARD COSTS Forecasted Production per year 500,000 totes Total Cost (for 500.000 totes) Standard Cost cost per tote DIRECT MATERIALS Fabric Is 1,2 Webbing $600,000 8555,000 Isl. Total Direct Materials Cost per Tote (Round to 4 decimal places) 2.31 DIRECT LABOR Cutting $ Sewing $120,00 80,000 $ 15,000 Is 0.24 0.16 $ 0.03 15 0.43 Printing Total Direct Labor Cost per Tote (Round to 4 decimal places) MANUFACTURING OVERHEAD $ $ Estimated MOH Costs (Round per tote to 4 decimal places) 308,800 15 0.6176 Total Product Cost per Tote (Round to 4 decimal places) $ 3.3576 Costs for each job are tracked using a Job Cost Record (Exhibit 2-C). The Job Cost Record is found after copies of the Materials Requisition form and Labor Time Records for the period. Use the information on these documents to complete the Job Cost Record for Phineas Phil's Specialty Market order of 1,000 red grocery totes with logos. 11

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting Ch 1-14

Authors: John Wild, Vernon Richardson, Ken Shaw

1st Edition

0073346896, 9780073346892

More Books

Students also viewed these Accounting questions

Question

Trace Greek medical thought from Aesculapius to Hippocrates.

Answered: 1 week ago