Mike Corporation has 100,000 units in beginning inventory and expects to sell 600,000 units over the year. Mike wants to have 150,000 units at the end of the year to be ready for the additional sales in the following year. 

How many units should Mike Corporation produce to make this happen?

 

Marsha Corporation expects $2,000,000 in cash receipts this year and has $2,500,000 budgeted in cash disbursements. Marsha begins the year with $500,000 in cash and has a policy of keeping 10% of next years sales in the ending cash balance for the year. Next year's sales are budgeted at $7,500,000.  

Will Marsha Corporations have to borrow money and if so, how much?

 

Martin Corporation expects sales to be $1,000,000 next year and for sales to grow at 10% for two years.  Additionally, Martin expect variable costs to be 40% of sales and fixed cost to be $200,000 for each of the next three years. Taxes will be 25% of operating profit. Produce a  budgeted income statement for the next three years. 

 

At the beginning of the year Myles Corporations assembled a budget calling for sales of 10,000 units. After the year is over, Myles Corporation closed the books and recorded sales of 9,000 units. Using the data below, assemble a static budget and flexible budget for Myles using the projected and actual sales units.

Selling prices per unit are budgeted at $50 

Variable material costs are budgeted at $5.00 per unit

Variable labor costs are budgeted at $7.00 per unit

Variable factory overhead costs are budgeted at $2.00 per unit

Fixed selling expense is budgeted at $50,000

Fixed administrative costs are budgeted at $100,000

Taxes are budgeted at 25% of operating profit. 

 

Continuing with the prior problem assume that the year has ended, and Myles Corporation experienced the following revenues and total costs: 

·       Total revenue                                       $450,000 

·       Total variable material costs                   $49,000

·       Total variable labor costs                        $60,000

·       Total factory overhead costs                   $17,000

·       Total fixed selling expense                     $52,000

·       Total fixed administrative costs               $95,000

 

Assemble a performance report comparing the flexible budget cost numbers from problem with the actual cost numbers given above for the year. Ignore taxes because this variable is beyond management's control and does not belong on the performance.

Calculate the difference and indicate if this is a favorable or unfavorable variance?