Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Moulding company has the below information to work out the budgets. work-in-process inventory is held at the end of each day. 1. Balance Sheet (Statement

Moulding company has the below information to work out the budgets.

work-in-process inventory is held at the end of each day.

1. Balance Sheet (Statement of Financial Position) as at 30 June 2020:

Cash 9,000

Accounts Receivable 85,210

Raw Materials Inventory 8,408

Finished Goods Inventory 11,450

Plant and Equipment (Net)125,000

TOTAL ASSETS 239,068

Trade Creditors8,520

Shareholders' Equity150,000

Retained Earnings 80,548

TOTAL LIABILITY & EQUITY 239,068

2. The following schedule details the recent actual monthly unit sales achieved for each product to 30 June 2020. Additionally, the sales manager has projected sales volume forecasts for each product to November 2020:

PRODUCT - APRIL TO NOVEMBER

kick board

1,900, 2,000, 2,700,2,400,2,600,2,300,2,900,3,000

Pool Buoy

1,300, 1,400, 1,300, 1,100, 1,300, 1,000, 900, 1,000

3.Kickboards sell for $28 each and pool buoys for $24 each. Due to the tight cost control practices Rice Products has been able to maintain selling prices for the last 6 months and, in the absence of policy changes, do not foresee any change in the selling prices in the next 6 month period.

4.All sales are on credit: 15% are collected in the month of sale, 45% in the month following sale and the remaining 40% is collected in the second month following sale.

5. Details of the standard costs to manufacture one unit of each product are provided below:

FACTORS OF PRODUCTION

Materials:

Resin (kickboards 2 litres at 0.45/litre) (pool buoys 3 litres at 0.45/litre)

Hardener(kkckboards 5 litres at 0.70/litre) (pool buoys 2 litres at 0.70/litre)

Labour:

Mixing Department: (kkckboards 18 minutes @$20/hour)(pool buoys 12 minutes @$20/hour)

Moulding Department:(kick boards 12 minutes @$30/hour) (pool buoys 12 minutes @$30/hour)

Factory Overhead:

Mixing Department (kickboards $7.00/direct labour hour) (pool buoys $7.00/direct labour hour)

Moulding Department (kick boards $11.00/direct labour hour) (pool buoys $11.00/direct labour hour)

6.Depreciation on factory equipment is computed to be $1.00 per labour hour for each department and is included in the factory overhead rates shown above.

7.Materials are purchased on credit. Rice pays 60% of accounts in the month of purchase and the remaining 40% in the following month. Labour costs and all overhead costs (except depreciation) are paid as they are incurred. Monthly differences between applied and actual overhead costs are expected to be negligible.

8.Rice has an inventory policy in place where purchases of raw materials are scheduled to be 60% ofthe next month's anticipated production needs. Additionally, productionis scheduled so that the number of finished units on hand at the end of each month is sufficient to support 30% of thefollowing month's forecast sales.

9.The number of inventory items held as at 30 June 2020 was as follows:

MATERIAL/PRODUCT

Resin 5040 litres

Hardener 8772 litres

Kickboards 720 units

Pool Buoys 330 units

(LITRE/UNIT)

10.Fixed selling and administration expenses are $25,000 per month (including $1,000 of depreciation on office equipment). Sales commissions are paid at 7% of total sales dollars. Selling and administration expenses are paid in the month incurred.

11.Rice's management has a policy of maintaining a cash balance of $9,000 at the end of each month. This amount represents a buffer that is maintained as a margin of safety against unforeseen events which might cause significant departures from budget estimates. If this requirement cannot be met, Rice has a standby credit arrangement in place with its bank to borrow the exact amount needed to achieve the desired cash balance. If Rice has a cash balance greater than $9,000 at the end of any month and an outstanding loan balance then the cash in excess of $9,000 is repaid to the bank.

12.The interest rate applicable to the bank loan is 12% per annum to be paid on a monthly basis on the outstanding principal at the end of the previous month.

13.Rice uses the FIFO (first in first out) method to value ending inventory.

Work out the below for the months July august and September

  • Direct Material Purchase Budget (Unites and $)
  • Direct Labour Budget (Hours and $)

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_2

Step: 3

blur-text-image_3

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

Accounting for Governmental and Nonprofit Entities

Authors: Earl R. Wilson, Jacqueline L Reck, Susan C Kattelus

15th Edition

978-0256168723, 77388720, 256168725, 9780077388720, 978-007337960

More Books

Students also viewed these Accounting questions

Question

What are dashboards mainly used for?

Answered: 1 week ago