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., i . 418 ..1 BA510 ~_c_---11------- 418 Chapter 9 EXERCISE 9-4 Direct Labor Budget [L09-5] The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour. Required: 1. 2. Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company's direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. EXERCISE 9-5 Manufacturing Overhead Budget [L09-6] The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours: The company's variable manufactming overhead rate is $3.25 per direct labor-hour and the company's fixed manufacturing overhead is $48,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $16,000 per quarter. Required: 1. Construct the company's manufacturing overhead budget for the upcoming fiscal year. 2. Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. Round off to the nearest whole cent. EXERCISE 9-6 Selling and Administrative Expense Budget [L09-7] The budgeted unit sales of Weller Company for the upcoming fiscal year are provided below: Budgeted unit sales ........... . 15,000 16,000 14,000 13,000 The company's variable selling and administrative expense per unit is $2.50. Fixed selling anc administrative expenses include advertising expenses of $8,000 per quarter, executive salaries o' $35,000 per quarter, and depreciation of $20,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, prope1tj taxes of $8,000 will be paid in the second quarter. Required: Prepare the company's selling and administrative expense budget for the upcoming fiscal year. EXERCISE 9-7 Cash Budget [L09-8] Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Managemen has prepared the following summary of its budgeted cash flows: Managerial Accounting for Managers, Fourth Edition Master Budgeting $220,000 The company's beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of $10,000 and may bOITOW any amount needed from a local bank at a qmuierly interest rate of 3%. The company may boITow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded. Required: Prepare the company's cash budget for the upcoming fiscal year. EXERCISE 9-8 Budgeted Income Statement [L09-9J Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process: Budgeted unit sales ...................................... . Selling price per unit ...................................... . Cost per unit ............................................. . Variable selling and administrative expenses (per unit) ........ . Fixed selling and administrative expenses (per year) .......... . Interest expense for the year .............................. 460 $1,950 $1,575 $75 $105,000 $14,000 Required: Prepare the company's budgeted income statement. Use the absorption costing income statement format shown in Schedule 9. EXERCISE 9-9 Budgeted Balance Sheet [L09-10] The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year: Accounts receivable ............... . Supplies inventory ................. . Equipment ........................ . Accumulated depreciation .......... . Accounts payable ................. . Common stock .................... . Retained earnings ................. . $8,100 $3,200 $34,000 $16,000 $1,800 $5,000 The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800. Required: Prepare the company's budgeted balance sheet. _EXERCISE 9-10 Production and Direct Materials Budgets [l09-3, L09-4] Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South .East Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company's products. The company is now planning raw materials needs for 419