Part 1: Budget estimations The Wayne Enterprises Toys company has an industrial activity. It manufactures in its workshops two types of finished products (electric vehicles for children: batmobiles and batwings) from two raw materials (plastic and lithium). In September N, Director Bruce Wayne hires you as a management controller and asks you to build the budget for year N + 1. It provides you with the following forecast information. A. Sales The sales goals (in quantities) for years Y, Y+1 and Y+2 are the following: Y 50,000 15,000 Y+1 55,000 Batmobile Batwing Y+2 60,000 17,000 16,000 Unit sales prices, identical to those of year Y, are estimated at: Y+1 Batmobile Batwing 75 105 Based on previous years, it can be assumed that at the end of year Y+1, 25% of turnover will not be collected given the payment period granted to customers. There are no stocks of finished products. B. Production a. Direct Production Costs The production department estimated that, for Y + 1, the quantities of raw materials needed for the production of toys would be: Y+1 Plastic Lithium Batmobile 1.2 kg 0.1 kg Batwing 1.5 kg 0.15 kg Forecasts for the unit purchase cost of raw materials are as follows: Y+1 Plastic 2 per kilo Lithium 38 per kilo For the Y + 1 budget, for the plastic we buy from supplier The Joker, it is estimated that 20% of the amount of raw material purchases over the year will not yet be paid to suppliers at the end of December, due to the payment period granted by this supplier. For lithium, it is estimated that 10% of the raw material purchases to the supplier Scarecrow will not yet be paid to the supplier due to payment terms obtained. In addition, Wayne Industries Toys holds stocks of plastic and lithium (the unit price of these two raw materials has not changed between Y and Y + 1). We want to have in stock the quantity of plastic and lithium necessary to produce 10% of the sales forecast for the following year. Production labor is considered a direct variable production cost. Based on the operating schedule, reviewed by production manager, Alfred Pennyworth, the unit manufacturing times for each of the two products are as follows: Y+1 Batmobile 1 hour Batwing 1h30 Direct Labour per toy produced According to the director, the average hourly cost of production labor should be in Y + 1 of 32 euros (social charges included). Salaries are paid within the month, so there are no payment delays on these salaries. b. Manufacturing overhead costs The cost of machines used in production is considered an indirect charge as they are used for the production of both finished products. In addition, this cost is considered fixed and corresponds to the depreciation allowance for production equipment. The depreciation of this equipment, which was acquired and put into operation on January 1 of year Y for a value of 2,000,000 euros, will be done on a straight-line basis over 10 years, with no residual value at the end of the amortization period. The annual salary cost of the production manager, Alfred Pennyworth, is also considered as an indirect fixed cost of production and has been estimated at 72,000 for year Y + 1. These indirect fixed costs are distributed in proportion to the overall labor time spent on each product. Disbursable charges are settled within the month. C. Non-manufacturing overhead costs Variable transport costs are distributed according to the number of products delivered and sold (unit of work). The variable transport costs per product delivered should be 5 in Y + 1. Other costs are fixed, mainly vehicles (Transport Material) used to deliver toys. These fixed assets will be acquired during year N + 1 for a value of 200,000 euros. The purchase will be made and paid for on April 1st, Y + 1. They will be amortized over 6 years (no residual value is taken into account) Your predecessor had already prepared an estimate of the balance sheet at year y, December 31 (in Euros). Amounts Amounts ASSETS Cash at bank and in hand Customer receivables Stocks : Finished products Stocks : Raw materials Total Current Assets Machines Accumulated depreciation Total Fixed Assets TOTAL LIABILITIES 2 000,00 Suppliers payable Plastic 1 331 250,00 Supplier payable Lithium 0,00 Total Current Liabilities 48 020,00 Financial Debts 1 381 270,00 Stockholders' equity 2 000 000,00 Retained earnings 200 000,00 Result 1 800 000,00 Total LT Liabilities 3 181 270,00 TOTAL 33 000,00 27 550,00 60 550,00 0,00 1 000 000,00 10 000,00 2 110 720,00 3 120 720,00 3 181 270,00 Part 2. Variance analyses A year later, the Wayne Industries Toys recorded the following accomplishments for year Y + 1: Batmobile Batwing Actual quantity produced (units) 50,000 18,000 Actual unit cost Plastic (/kg) 2.2 2.2 Actual Unit Cost Lithium (/kg) 45 45 30 30 Actual cost per hour of direct production labour Actual total quantities consumed Batmobile Batwing Total Plastic raw material 60,000 kg 24,000 kg Total Lithium raw material 4,500 kg 2,400 kg Total direct production labour 50,000 h 30,000 h In addition, the sales data actually recorded for Y+1 are as follows: Actual quantities sold (units) Actual unit sales price Batmobile 75 50,000 Batwing 100 18,000 Finally, the market size that had been anticipated was 900,000 units. In reality, it was for Y + 1 of 850,000 units. Questions Each question is scored on 2 points. All questions relate to year Y +1. Each time, we recommend that you detail your calculations: a correct result without calculation details will be considered false. On the other hand, a false result due to a calculation error but with a correct reasoning can bring you one part of the points. Enter your answers directly following the questions below. You can choose to insert tables or rather detail the calculations without using a table, the main thing being to make the calculations and the reasoning clear. Part 1. Budget estimations (10 points) Q1. What will be the total amount of fixed assets (Net Booking Value) to be entered in the end of year Y + 1 in the balance sheet? Q2. What will be the value of the stock of raw materials at the end of year Y +1? Q3. What is the amount of customer receivables to be included in the end of year Y + 1 in the balance sheet? Q4. What is the total cost of raw materials consumed for Batwings? Q5. What is the total amount of indirect production costs for Batmobiles? Part 2. Variance analyses (10 points) Q6. For Batmobiles, calculate the direct cost variances on level 2 (flexible-budget and sales- volume variances). Interpret the results obtained Q7. For Batwings, calculate the direct cost variances on level 2 (flexible-budget and sales-volume variances). Interpret the results obtained. Q8. Calculate the direct cost variances on level 3 for Batwings (price and efficiency variances). Interpret the results obtained. 29. Calculate the revenue variances on level 2 (price and sales volume variances) for the two finished products. Interpret the results obtained. Q10. Calculate the revenue variances on level 4 (market-size and market share variances). Interpret the results obtained. Part 1: Budget estimations The Wayne Enterprises Toys company has an industrial activity. It manufactures in its workshops two types of finished products (electric vehicles for children: batmobiles and batwings) from two raw materials (plastic and lithium). In September N, Director Bruce Wayne hires you as a management controller and asks you to build the budget for year N + 1. It provides you with the following forecast information. A. Sales The sales goals (in quantities) for years Y, Y+1 and Y+2 are the following: Y 50,000 15,000 Y+1 55,000 Batmobile Batwing Y+2 60,000 17,000 16,000 Unit sales prices, identical to those of year Y, are estimated at: Y+1 Batmobile Batwing 75 105 Based on previous years, it can be assumed that at the end of year Y+1, 25% of turnover will not be collected given the payment period granted to customers. There are no stocks of finished products. B. Production a. Direct Production Costs The production department estimated that, for Y + 1, the quantities of raw materials needed for the production of toys would be: Y+1 Plastic Lithium Batmobile 1.2 kg 0.1 kg Batwing 1.5 kg 0.15 kg Forecasts for the unit purchase cost of raw materials are as follows: Y+1 Plastic 2 per kilo Lithium 38 per kilo For the Y + 1 budget, for the plastic we buy from supplier The Joker, it is estimated that 20% of the amount of raw material purchases over the year will not yet be paid to suppliers at the end of December, due to the payment period granted by this supplier. For lithium, it is estimated that 10% of the raw material purchases to the supplier Scarecrow will not yet be paid to the supplier due to payment terms obtained. In addition, Wayne Industries Toys holds stocks of plastic and lithium (the unit price of these two raw materials has not changed between Y and Y + 1). We want to have in stock the quantity of plastic and lithium necessary to produce 10% of the sales forecast for the following year. Production labor is considered a direct variable production cost. Based on the operating schedule, reviewed by production manager, Alfred Pennyworth, the unit manufacturing times for each of the two products are as follows: Y+1 Batmobile 1 hour Batwing 1h30 Direct Labour per toy produced According to the director, the average hourly cost of production labor should be in Y + 1 of 32 euros (social charges included). Salaries are paid within the month, so there are no payment delays on these salaries. b. Manufacturing overhead costs The cost of machines used in production is considered an indirect charge as they are used for the production of both finished products. In addition, this cost is considered fixed and corresponds to the depreciation allowance for production equipment. The depreciation of this equipment, which was acquired and put into operation on January 1 of year Y for a value of 2,000,000 euros, will be done on a straight-line basis over 10 years, with no residual value at the end of the amortization period. The annual salary cost of the production manager, Alfred Pennyworth, is also considered as an indirect fixed cost of production and has been estimated at 72,000 for year Y + 1. These indirect fixed costs are distributed in proportion to the overall labor time spent on each product. Disbursable charges are settled within the month. C. Non-manufacturing overhead costs Variable transport costs are distributed according to the number of products delivered and sold (unit of work). The variable transport costs per product delivered should be 5 in Y + 1. Other costs are fixed, mainly vehicles (Transport Material) used to deliver toys. These fixed assets will be acquired during year N + 1 for a value of 200,000 euros. The purchase will be made and paid for on April 1st, Y + 1. They will be amortized over 6 years (no residual value is taken into account) Your predecessor had already prepared an estimate of the balance sheet at year y, December 31 (in Euros). Amounts Amounts ASSETS Cash at bank and in hand Customer receivables Stocks : Finished products Stocks : Raw materials Total Current Assets Machines Accumulated depreciation Total Fixed Assets TOTAL LIABILITIES 2 000,00 Suppliers payable Plastic 1 331 250,00 Supplier payable Lithium 0,00 Total Current Liabilities 48 020,00 Financial Debts 1 381 270,00 Stockholders' equity 2 000 000,00 Retained earnings 200 000,00 Result 1 800 000,00 Total LT Liabilities 3 181 270,00 TOTAL 33 000,00 27 550,00 60 550,00 0,00 1 000 000,00 10 000,00 2 110 720,00 3 120 720,00 3 181 270,00 Part 2. Variance analyses A year later, the Wayne Industries Toys recorded the following accomplishments for year Y + 1: Batmobile Batwing Actual quantity produced (units) 50,000 18,000 Actual unit cost Plastic (/kg) 2.2 2.2 Actual Unit Cost Lithium (/kg) 45 45 30 30 Actual cost per hour of direct production labour Actual total quantities consumed Batmobile Batwing Total Plastic raw material 60,000 kg 24,000 kg Total Lithium raw material 4,500 kg 2,400 kg Total direct production labour 50,000 h 30,000 h In addition, the sales data actually recorded for Y+1 are as follows: Actual quantities sold (units) Actual unit sales price Batmobile 75 50,000 Batwing 100 18,000 Finally, the market size that had been anticipated was 900,000 units. In reality, it was for Y + 1 of 850,000 units. Questions Each question is scored on 2 points. All questions relate to year Y +1. Each time, we recommend that you detail your calculations: a correct result without calculation details will be considered false. On the other hand, a false result due to a calculation error but with a correct reasoning can bring you one part of the points. Enter your answers directly following the questions below. You can choose to insert tables or rather detail the calculations without using a table, the main thing being to make the calculations and the reasoning clear. Part 1. Budget estimations (10 points) Q1. What will be the total amount of fixed assets (Net Booking Value) to be entered in the end of year Y + 1 in the balance sheet? Q2. What will be the value of the stock of raw materials at the end of year Y +1? Q3. What is the amount of customer receivables to be included in the end of year Y + 1 in the balance sheet? Q4. What is the total cost of raw materials consumed for Batwings? Q5. What is the total amount of indirect production costs for Batmobiles? Part 2. Variance analyses (10 points) Q6. For Batmobiles, calculate the direct cost variances on level 2 (flexible-budget and sales- volume variances). Interpret the results obtained Q7. For Batwings, calculate the direct cost variances on level 2 (flexible-budget and sales-volume variances). Interpret the results obtained. Q8. Calculate the direct cost variances on level 3 for Batwings (price and efficiency variances). Interpret the results obtained. 29. Calculate the revenue variances on level 2 (price and sales volume variances) for the two finished products. Interpret the results obtained. Q10. Calculate the revenue variances on level 4 (market-size and market share variances). Interpret the results obtained