please do part c,d,e,f using excel format below.

which picture?

here.

39. Make-or-Buy Decision. Ocean Products, Inc., currently manufactures its own surfboards for customers. Management is interested in outsourcing production of these surfboards to a reputable manufacturing company that can supply the surfboards for $80 per unit. Ocean Products, Inc., incurs the following annual production costs to produce 10,000 surfboards internally. Total Annual Cost at 10,000 Units Per Unit $20 10 30 $200,000 100,000 300,000 Variable production costs Direct materials Direct labor Manufacturing overhead Fixed production costs Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 $820,000 If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insurance costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc. Required: Figure 7.2. Assume making the surfboards internally is meu pruuuLLII CUSUS Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 $820,000 If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insurance costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc. Required: a. Perform differential analysis using the format presented in Figure 7.2. Assume making the surfboards internally is Alternative 1, and buying the surfboards from an outside manufacturer is Alternative 2. b. Which alternative is best? Explain. c. Summarize the result of outsourcing production using the format presented in Figure 7.3. d. Compare the format used in requirement a with that of requiremente. N P 6 9 F H 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead Sales budget Sports Bars, Inc. Sales Budget Year Ending December 31 Quarter 3 Projected sales in units 80,000 84,000 88,000 Sales price per unit $25 $25 Sales revenue $2,000,000 $2,100,000 $2,200,000 11 12 13 14 TEHA $25 4 97,000 $25 $2,425,000 Year 349,000 $25 $8,725,000 15 16 17 18 19 20 b. Production budget Sports Bars, Inc. Production Budget Year Ending December 31 Quarter 22 23 24 25 26 Sales in units (from sales budget) Add desired ending finished goods inventory Total finished goods inventory needed Deduct beginning finished goods inventory Units to be produced BE 19 P39 a. & b. P39 P39 d. 80,000 12,600 92,600 ( 12,000 80,600 84,000 13,200 97,200 12,600 84,600 3 88,000 14,550 102,550 13,200) 89,350 4 97,000 13,000 110,000 (14,550) 95,450 Year 349,000 13,000 362,000 12,000) 350,000 27 28 39 e P39 f. P40 a P40 b. &c + F H IL M 61 2 PROBLEMS (continued) 4 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) c. Direct materials purchases budget 7 Sports Bars, Inc. 8 Direct Materials Purchases Budget 9 Year Ending December 31 11 Quarter 12 2 3 13 Units to be produced (from production budget) 80,600 84,600 89,350 95,450 14 Materials required per unit (pounds) 5 5 15 Materials needed in production 403,000 423,000 446,750 477.250 16 Add desired ending inventory 42,300 44,675 47,725 43,000 17 Materials needed in inventory 445,300 467,675 494,475 520,250 18 Deduct beginning inventory 40,300 42,300) 44,675) 47,725) 19 Direct materials to be purchased (pounds) 405,000 425,375 449,800 472,525 Cost of materials per pound $3 $3 $3 $3 21 Cost of materials to be purchased $1,215,000 $1,276,125 $1,349,400 $1,417,575 22 Direct materials cost per unit X x X 5 Year 350,000 5 1,750,000 43,000 1,793,000 40,300) 1,752,700 $3 $5,258,100 $15 X X X X BE 19 P39 a. & b. P39 P39 d. P39 e. P39 f. P40 a. P40 b. & c. + D H K. PROBLEMS (continued) 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) d. Direct labor budget Sports Bars, Inc. Direct Labor Budget Year Ending December 31 Quarter 2 3 Units to be produced (from production budget) 80,600 84,600 89,350 95,450 Direct labor hours per unit 0.1 0.1 0.1 0.1 Total direct labor hours needed in production 8,060 8,460 8,935 9,545 Labor rate per hour $14 $14 $14 $14 Total direct labor cost $112,840 $118,440 $125,090 $133,630 Direct labor cost per unit X X X x X Year 350,000 0.1 35,000 $14 $490,000 $1.40 X X X BE 19 P39 a. & b. P39 C P39 d. 39 e P39 f. P40 a P40 b. &c. BIU - A - Merge & Center $ - %, 8-98 Conditional Format as Formatting Table St Styles pboard Font Alignment Number 8 X P Year 350,000 AB C D E F H M N O 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) e. Manufacturing overhead budget Sports Bars, Inc. Manufacturing Overhead Budget Year Ending December 31 Quarter 1 2 3 Units to be produced (from production budget) 80,600 84,600 89,350 95,450 Variable overhead costs: Indirect materials ($0.20 per unit) $ 16,120 $ 16,920 $ 17,870 $ 19,090 Indirect labor ($0.15 per unit) 12,090 12.690 13,403 12,318 Other ($0.10 per unit) 8,060 8,460 8,935 9,545 Total variable overhead costs $ 36,270 $ 38,070 $ 40,208 $ 42,953 Fixed overhead costs: Salaries $ 80,000 $ 80,000 $ 80,000 $ 80,000 Other 70,000 70,000 70,000 70,000 Depreciation 55,625 55,625 55.625 55,625 Total fixed overhead costs $205,625 $205,625 $205,625 S205,625 Total overhead costs $241,895 $243,695 $245,833 $248,578 Deduct depreciation (55,625 (55,625) (35,625) 55,625) Cash payments for overhead $186,270 $188,070 $190,208 $192,953 $ 70,000 52,500 35,000 $157,500 $320,000 280,000 222,500 $822,500 $980,000 55,623 $925,374 nufnahunda BE 19 P39 a. & b. 39 C P39 d. P39 e. P39 f. P40 a. P40 b. & EI 1: W Merge & Center $ - %-98 Londona formatas Formatting Table Sty Styles card Font Alignment Number X B D E F G H M N O R Quarter 2 84,600 80,600 3 89,350 4 95,450 Year 350,000 $ 16.120 12,090 8,060 $ 36,270 $ 16,920 12,690 8,460 $ 38,070 $ 17,870 13,403 8,935 $ 40,208 $ 19,090 12,318 9,545 $ 42,953 $ 70,000 52,500 35,000 $157,500 Units to be produced (from production budget) Variable overhead costs: Indirect materials ( $0.20 per unit) Indirect labor ($0.15 per unit) Other ($0.10 per unit) Total variable overhead costs Fixed overhead costs: Salaries Other Depreciation Total fixed overhead costs Total overhead costs Deduct depreciation Cash payments for overhead Manufacturing overhead per unit $ 80,000 70,000 55,625 $205,625 $241,895 55,625) $186,270 $ 80,000 70,000 55,625 $205,625 $243,695 55,625) $188,070 $ 80,000 70,000 55,625 $205,625 $245,833 55,625) $190,208 $ 80,000 70,000 55,625 $205,625 $248,578 55,625) $192,953 $320,000 280,000 222,500 $822,500 $980,000 55,623 $925,374 $2.80 B C D E F 02 2 PROBLEMS (continued) 4 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) f. The production budget shows the following trend in production from one quarter to the next: First Second Third Fourth Quarter Quarter Quarter Quarter 79,400 83,400 86,650 98,550 co 10 12 39. Make-or-Buy Decision. Ocean Products, Inc., currently manufactures its own surfboards for customers. Management is interested in outsourcing production of these surfboards to a reputable manufacturing company that can supply the surfboards for $8o per unit. Ocean Products, Inc., incurs the following annual production costs to produce 10,000 surfboards internally. Total Annual Cost at 10,000 Units Per Unit $20 10 30 $200,000 100,000 300,000 Variable production costs Direct materials Direct labor Manufacturing overhead Fixed production costs Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 $820,000 If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insurance costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc. Required: a. Perform differential analysis using the format presented in Figure 7.2. Assume making the surfboards internally is F FLASHCARDS YAZ Per Unte 10,000 Units $20 10 30 $200,000 100,000 300,000 Variable production costs Direct materials Direct labor Manufacturing overhead Fixed production costs Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 $820,000 If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insuranc costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc. Required: a. Perform differential analysis using the format presented in Figure 7.2. Assume making the surfboards internally is Alternative 1, and buying the surfboards from an outside manufacturer is Alternative 2. b. Which alternative is best? Explain. c. Summarize the result of outsourcing production using the format presented in Figure 73. d. Compare the format used in requirement a with that of requiremente. 40. Product Line Decision. The following monthly segmented income statement is for South Side LLC. M N TT a. 3 7 3 3 X x 97,000 $25 $2,425,000 Year 349,000 $25 $8,725,000 4 AB E H 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead Sales budget Sports Bars, Inc. Sales Budget Year Ending December 31 1 Quarter 2 1 2 3 3 Projected sales in units 80,000 84,000 88,000 4 Sales price per unit $25 $25 $25 5 Sales revenue $2,000,000 $2,100,000 $2,200,000 6 7 b. Production budget 8 Sports Bars, Inc. Production Budget Year Ending December 31 2 Quarter 3 2 3 Sales in units (from sales budget) 80.000 84,000 88,000 Add desired ending finished goods inventory 12,600 13,200 14.550 6 Total finished goods inventory needed 92,600 97,200 102,550 Deduct beginning finished goods inventory 12,000) (12,600) 13,200 Units to be produced 80,600 84.600 89,350 BE 19 P39 a. & b. P39 P39 d P391 40 b c 9 4 5 4 97,000 13,000 110,000 14.550) 95,450 Year 349,000 13,000 362,000 12.000) 350,000 8 P39. 40 a 4 D E F G H K L 4 5 B 9 PROBLEMS (continued) 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) c. Direct materials purchases budget Sports Bars, Inc. Direct Materials Purchases Budget Year Ending December 31 11 Quarter 12 1 2 3 4 13 Units to be produced (from production budget) 80,600 84.600 89,350 95,450 Materials required per unit (pounds) 5 15 Materials needed in production 403,000 423,000 446,750 477,250 Add desired ending inventory 42,300 44,675 47,725 43,000 17 Materials needed in inventory 445,300 467,675 494,475 520,250 18 Deduct beginning inventory 40,300) 42,300) 44,675) 47,725) 19 Direct materials to be purchased (pounds) 405,000 425,375 449,800 472,525 20 Cost of materials per pound X $3 X $3 $3 $3 21 Cost of materials to be purchased $1,215,000 $1,276,125 $1,349,400 $1,417,575 22 Direct materials cost per unit 23 14 X X 5 16 Year 350,000 5 1,750,000 43,000 1,793,000 40,300) 1,752,700 $3 $5,258,100 $15 X BE 19 P39. b. P39 pod P39 e 231 P40 Danh PROBLEMS (continued) 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) d. Direct labor budget Sports Bars, Inc. Direct Labor Budget Year Ending December 31 Quarter 1 2 3 4 Units to be produced (from production budget) 80,600 84,600 89 350 95,450 Direct labor hours per unit X 0.1 x 0.1 0.1 0.1 Total direct labor hours needed in production 8,060 8,460 8,935 9,545 Labor rate per hour $14 x $14 $14 $14 Total direct labor cost $112,840 $118.440 $125,090 $133,630 Direct labor cost per unit x Year 350,000 0.1 35,000 $14 X x x $490,000 $1.40 H O RS A B C D F G e Manufacturing overhead budget Sports Bars, Inc. Manufacturing Overhead Budget Year Ending December 31 Quarter 1 2 80,600 84,600 3 89 350 Year 350.000 95,450 $ 16,120 12,090 8,060 $ 36,270 $ 16,920 12,690 8,460 $ 38,070 $ 17,870 13,403 8.935 $ 40,208 $ 19,090 12,318 9.545 $ 42,953 $ 70,000 52.500 35,000 $157,500 Units to be produced (from production budget) Variable overhead costs Indirect materials ($0.20 per unit) Indirect labor ($0.15 per unit) Other (50.10 per unit) Total variable overhead costs Fixed overhead costs Salaries Other Depreciation Total fixed overhead costs Total overhead costs Deduct depreciation Cash payments for overhead Manufacturing overhead per unit $ 80,000 70,000 55.625 $205,625 $241.895 (55.625) $186,270 $ 80.000 70,000 55.625 S205,625 $243,695 35.625 $188,070 $ 80,000 70,000 55,625 $205.625 $245,833 35,625 $190,208 $ 80,000 70,000 55.625 S205,625 $248.578 55.625 $192.953 $320,000 280,000 222,500 $822,500 $980.000 55.623 $925,374 $2.80 BE 19 P39 a. & b. P39 239 d 239. P391 40 a 40 b&c 4 5 PROBLEMS (continued) 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) f. The production budget shows the following trend in production from one quarter to the next First Second Third Fourth Quarter Quarter Quarter Quarter 79,400 83,400 86,650 98,550 9 10 11 2 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead. Sports Bars, Inc., produces energy bars and sells them by the case (1 unit - 1 case). Information to be used for the operating budget this coming year follows: . Average sales price for each case is estimated to be $25. Unit sales for this coming year, ending December 31, are expected to be as follows: First quarter 80,000 Second quarter 84,000 Third quarter 88,000 Fourth quarter 97,000 . Finished goods inventory is maintained at a level equal to 15 percent of the next quarter's sales. Finished goods inventory at the end of the fourth quarter budget period is estimated to be 13,000 units. Each unit of product requires 5 pounds of direct materials, at a cost of $3 per pound. Management prefers to maintain ending raw materials inventory equal to 10 percent of next quarter's materials needed in production. Raw materials inventory at the end of the fourth quarter budget period is estimated to be 43,000 pounds. . Each unit of product requires 0.10 direct labor hours at a cost of S14 per hour. . Variable manufacturing overhead costs are Indirect materials $0.20 per unit Indirect labor $0.15 per unit Other S0.10 per unit . Fixed manufacturing overhead costs per quarter are Salaries S80,000 Other an . . Each unit of product requires 0.10 direct labor hours at a cost of $14 per hour. Variable manufacturing overhead costs are Indirect materials S0.20 per unit Indirect labor $0.15 per unit Other So.10 per unit . Fixed manufacturing overhead costs per quarter are Salaries $80,000 Other $70,000 Depreciation $55,625 Required: a. Prepare a sales budget using the format shown in Figure 9.3. b. Prepare a production budget using the format shown in Figure 9.4. c. Prepare a direct materials purchases budget using the format shown in Figure 9.5. d. Prepare a direct labor budget using the format shown in Figure 9.6. e. Prepare a manufacturing overhead budget using the format shown in Figure 9.7. Round to the nearest dollar. f. As the production manager, what concerns, if any, do you have about production requirements for each of the four quarters? 39. Make-or-Buy Decision. Ocean Products, Inc., currently manufactures its own surfboards for customers. Management is interested in outsourcing production of these surfboards to a reputable manufacturing company that can supply the surfboards for $80 per unit. Ocean Products, Inc., incurs the following annual production costs to produce 10,000 surfboards internally. Total Annual Cost at 10,000 Units Per Unit $20 10 30 $200,000 100,000 300,000 Variable production costs Direct materials Direct labor Manufacturing overhead Fixed production costs Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 $820,000 If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insurance costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc. Required: Figure 7.2. Assume making the surfboards internally is meu pruuuLLII CUSUS Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 $820,000 If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insurance costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc. Required: a. Perform differential analysis using the format presented in Figure 7.2. Assume making the surfboards internally is Alternative 1, and buying the surfboards from an outside manufacturer is Alternative 2. b. Which alternative is best? Explain. c. Summarize the result of outsourcing production using the format presented in Figure 7.3. d. Compare the format used in requirement a with that of requiremente. N P 6 9 F H 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead Sales budget Sports Bars, Inc. Sales Budget Year Ending December 31 Quarter 3 Projected sales in units 80,000 84,000 88,000 Sales price per unit $25 $25 Sales revenue $2,000,000 $2,100,000 $2,200,000 11 12 13 14 TEHA $25 4 97,000 $25 $2,425,000 Year 349,000 $25 $8,725,000 15 16 17 18 19 20 b. Production budget Sports Bars, Inc. Production Budget Year Ending December 31 Quarter 22 23 24 25 26 Sales in units (from sales budget) Add desired ending finished goods inventory Total finished goods inventory needed Deduct beginning finished goods inventory Units to be produced BE 19 P39 a. & b. P39 P39 d. 80,000 12,600 92,600 ( 12,000 80,600 84,000 13,200 97,200 12,600 84,600 3 88,000 14,550 102,550 13,200) 89,350 4 97,000 13,000 110,000 (14,550) 95,450 Year 349,000 13,000 362,000 12,000) 350,000 27 28 39 e P39 f. P40 a P40 b. &c + F H IL M 61 2 PROBLEMS (continued) 4 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) c. Direct materials purchases budget 7 Sports Bars, Inc. 8 Direct Materials Purchases Budget 9 Year Ending December 31 11 Quarter 12 2 3 13 Units to be produced (from production budget) 80,600 84,600 89,350 95,450 14 Materials required per unit (pounds) 5 5 15 Materials needed in production 403,000 423,000 446,750 477.250 16 Add desired ending inventory 42,300 44,675 47,725 43,000 17 Materials needed in inventory 445,300 467,675 494,475 520,250 18 Deduct beginning inventory 40,300 42,300) 44,675) 47,725) 19 Direct materials to be purchased (pounds) 405,000 425,375 449,800 472,525 Cost of materials per pound $3 $3 $3 $3 21 Cost of materials to be purchased $1,215,000 $1,276,125 $1,349,400 $1,417,575 22 Direct materials cost per unit X x X 5 Year 350,000 5 1,750,000 43,000 1,793,000 40,300) 1,752,700 $3 $5,258,100 $15 X X X X BE 19 P39 a. & b. P39 P39 d. P39 e. P39 f. P40 a. P40 b. & c. + D H K. PROBLEMS (continued) 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) d. Direct labor budget Sports Bars, Inc. Direct Labor Budget Year Ending December 31 Quarter 2 3 Units to be produced (from production budget) 80,600 84,600 89,350 95,450 Direct labor hours per unit 0.1 0.1 0.1 0.1 Total direct labor hours needed in production 8,060 8,460 8,935 9,545 Labor rate per hour $14 $14 $14 $14 Total direct labor cost $112,840 $118,440 $125,090 $133,630 Direct labor cost per unit X X X x X Year 350,000 0.1 35,000 $14 $490,000 $1.40 X X X BE 19 P39 a. & b. P39 C P39 d. 39 e P39 f. P40 a P40 b. &c. BIU - A - Merge & Center $ - %, 8-98 Conditional Format as Formatting Table St Styles pboard Font Alignment Number 8 X P Year 350,000 AB C D E F H M N O 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) e. Manufacturing overhead budget Sports Bars, Inc. Manufacturing Overhead Budget Year Ending December 31 Quarter 1 2 3 Units to be produced (from production budget) 80,600 84,600 89,350 95,450 Variable overhead costs: Indirect materials ($0.20 per unit) $ 16,120 $ 16,920 $ 17,870 $ 19,090 Indirect labor ($0.15 per unit) 12,090 12.690 13,403 12,318 Other ($0.10 per unit) 8,060 8,460 8,935 9,545 Total variable overhead costs $ 36,270 $ 38,070 $ 40,208 $ 42,953 Fixed overhead costs: Salaries $ 80,000 $ 80,000 $ 80,000 $ 80,000 Other 70,000 70,000 70,000 70,000 Depreciation 55,625 55,625 55.625 55,625 Total fixed overhead costs $205,625 $205,625 $205,625 S205,625 Total overhead costs $241,895 $243,695 $245,833 $248,578 Deduct depreciation (55,625 (55,625) (35,625) 55,625) Cash payments for overhead $186,270 $188,070 $190,208 $192,953 $ 70,000 52,500 35,000 $157,500 $320,000 280,000 222,500 $822,500 $980,000 55,623 $925,374 nufnahunda BE 19 P39 a. & b. 39 C P39 d. P39 e. P39 f. P40 a. P40 b. & EI 1: W Merge & Center $ - %-98 Londona formatas Formatting Table Sty Styles card Font Alignment Number X B D E F G H M N O R Quarter 2 84,600 80,600 3 89,350 4 95,450 Year 350,000 $ 16.120 12,090 8,060 $ 36,270 $ 16,920 12,690 8,460 $ 38,070 $ 17,870 13,403 8,935 $ 40,208 $ 19,090 12,318 9,545 $ 42,953 $ 70,000 52,500 35,000 $157,500 Units to be produced (from production budget) Variable overhead costs: Indirect materials ( $0.20 per unit) Indirect labor ($0.15 per unit) Other ($0.10 per unit) Total variable overhead costs Fixed overhead costs: Salaries Other Depreciation Total fixed overhead costs Total overhead costs Deduct depreciation Cash payments for overhead Manufacturing overhead per unit $ 80,000 70,000 55,625 $205,625 $241,895 55,625) $186,270 $ 80,000 70,000 55,625 $205,625 $243,695 55,625) $188,070 $ 80,000 70,000 55,625 $205,625 $245,833 55,625) $190,208 $ 80,000 70,000 55,625 $205,625 $248,578 55,625) $192,953 $320,000 280,000 222,500 $822,500 $980,000 55,623 $925,374 $2.80 B C D E F 02 2 PROBLEMS (continued) 4 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) f. The production budget shows the following trend in production from one quarter to the next: First Second Third Fourth Quarter Quarter Quarter Quarter 79,400 83,400 86,650 98,550 co 10 12 39. Make-or-Buy Decision. Ocean Products, Inc., currently manufactures its own surfboards for customers. Management is interested in outsourcing production of these surfboards to a reputable manufacturing company that can supply the surfboards for $8o per unit. Ocean Products, Inc., incurs the following annual production costs to produce 10,000 surfboards internally. Total Annual Cost at 10,000 Units Per Unit $20 10 30 $200,000 100,000 300,000 Variable production costs Direct materials Direct labor Manufacturing overhead Fixed production costs Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 $820,000 If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insurance costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc. Required: a. Perform differential analysis using the format presented in Figure 7.2. Assume making the surfboards internally is F FLASHCARDS YAZ Per Unte 10,000 Units $20 10 30 $200,000 100,000 300,000 Variable production costs Direct materials Direct labor Manufacturing overhead Fixed production costs Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 $820,000 If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insuranc costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc. Required: a. Perform differential analysis using the format presented in Figure 7.2. Assume making the surfboards internally is Alternative 1, and buying the surfboards from an outside manufacturer is Alternative 2. b. Which alternative is best? Explain. c. Summarize the result of outsourcing production using the format presented in Figure 73. d. Compare the format used in requirement a with that of requiremente. 40. Product Line Decision. The following monthly segmented income statement is for South Side LLC. M N TT a. 3 7 3 3 X x 97,000 $25 $2,425,000 Year 349,000 $25 $8,725,000 4 AB E H 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead Sales budget Sports Bars, Inc. Sales Budget Year Ending December 31 1 Quarter 2 1 2 3 3 Projected sales in units 80,000 84,000 88,000 4 Sales price per unit $25 $25 $25 5 Sales revenue $2,000,000 $2,100,000 $2,200,000 6 7 b. Production budget 8 Sports Bars, Inc. Production Budget Year Ending December 31 2 Quarter 3 2 3 Sales in units (from sales budget) 80.000 84,000 88,000 Add desired ending finished goods inventory 12,600 13,200 14.550 6 Total finished goods inventory needed 92,600 97,200 102,550 Deduct beginning finished goods inventory 12,000) (12,600) 13,200 Units to be produced 80,600 84.600 89,350 BE 19 P39 a. & b. P39 P39 d P391 40 b c 9 4 5 4 97,000 13,000 110,000 14.550) 95,450 Year 349,000 13,000 362,000 12.000) 350,000 8 P39. 40 a 4 D E F G H K L 4 5 B 9 PROBLEMS (continued) 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) c. Direct materials purchases budget Sports Bars, Inc. Direct Materials Purchases Budget Year Ending December 31 11 Quarter 12 1 2 3 4 13 Units to be produced (from production budget) 80,600 84.600 89,350 95,450 Materials required per unit (pounds) 5 15 Materials needed in production 403,000 423,000 446,750 477,250 Add desired ending inventory 42,300 44,675 47,725 43,000 17 Materials needed in inventory 445,300 467,675 494,475 520,250 18 Deduct beginning inventory 40,300) 42,300) 44,675) 47,725) 19 Direct materials to be purchased (pounds) 405,000 425,375 449,800 472,525 20 Cost of materials per pound X $3 X $3 $3 $3 21 Cost of materials to be purchased $1,215,000 $1,276,125 $1,349,400 $1,417,575 22 Direct materials cost per unit 23 14 X X 5 16 Year 350,000 5 1,750,000 43,000 1,793,000 40,300) 1,752,700 $3 $5,258,100 $15 X BE 19 P39. b. P39 pod P39 e 231 P40 Danh PROBLEMS (continued) 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) d. Direct labor budget Sports Bars, Inc. Direct Labor Budget Year Ending December 31 Quarter 1 2 3 4 Units to be produced (from production budget) 80,600 84,600 89 350 95,450 Direct labor hours per unit X 0.1 x 0.1 0.1 0.1 Total direct labor hours needed in production 8,060 8,460 8,935 9,545 Labor rate per hour $14 x $14 $14 $14 Total direct labor cost $112,840 $118.440 $125,090 $133,630 Direct labor cost per unit x Year 350,000 0.1 35,000 $14 X x x $490,000 $1.40 H O RS A B C D F G e Manufacturing overhead budget Sports Bars, Inc. Manufacturing Overhead Budget Year Ending December 31 Quarter 1 2 80,600 84,600 3 89 350 Year 350.000 95,450 $ 16,120 12,090 8,060 $ 36,270 $ 16,920 12,690 8,460 $ 38,070 $ 17,870 13,403 8.935 $ 40,208 $ 19,090 12,318 9.545 $ 42,953 $ 70,000 52.500 35,000 $157,500 Units to be produced (from production budget) Variable overhead costs Indirect materials ($0.20 per unit) Indirect labor ($0.15 per unit) Other (50.10 per unit) Total variable overhead costs Fixed overhead costs Salaries Other Depreciation Total fixed overhead costs Total overhead costs Deduct depreciation Cash payments for overhead Manufacturing overhead per unit $ 80,000 70,000 55.625 $205,625 $241.895 (55.625) $186,270 $ 80.000 70,000 55.625 S205,625 $243,695 35.625 $188,070 $ 80,000 70,000 55,625 $205.625 $245,833 35,625 $190,208 $ 80,000 70,000 55.625 S205,625 $248.578 55.625 $192.953 $320,000 280,000 222,500 $822,500 $980.000 55.623 $925,374 $2.80 BE 19 P39 a. & b. P39 239 d 239. P391 40 a 40 b&c 4 5 PROBLEMS (continued) 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) f. The production budget shows the following trend in production from one quarter to the next First Second Third Fourth Quarter Quarter Quarter Quarter 79,400 83,400 86,650 98,550 9 10 11 2 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead. Sports Bars, Inc., produces energy bars and sells them by the case (1 unit - 1 case). Information to be used for the operating budget this coming year follows: . Average sales price for each case is estimated to be $25. Unit sales for this coming year, ending December 31, are expected to be as follows: First quarter 80,000 Second quarter 84,000 Third quarter 88,000 Fourth quarter 97,000 . Finished goods inventory is maintained at a level equal to 15 percent of the next quarter's sales. Finished goods inventory at the end of the fourth quarter budget period is estimated to be 13,000 units. Each unit of product requires 5 pounds of direct materials, at a cost of $3 per pound. Management prefers to maintain ending raw materials inventory equal to 10 percent of next quarter's materials needed in production. Raw materials inventory at the end of the fourth quarter budget period is estimated to be 43,000 pounds. . Each unit of product requires 0.10 direct labor hours at a cost of S14 per hour. . Variable manufacturing overhead costs are Indirect materials $0.20 per unit Indirect labor $0.15 per unit Other S0.10 per unit . Fixed manufacturing overhead costs per quarter are Salaries S80,000 Other an . . Each unit of product requires 0.10 direct labor hours at a cost of $14 per hour. Variable manufacturing overhead costs are Indirect materials S0.20 per unit Indirect labor $0.15 per unit Other So.10 per unit . Fixed manufacturing overhead costs per quarter are Salaries $80,000 Other $70,000 Depreciation $55,625 Required: a. Prepare a sales budget using the format shown in Figure 9.3. b. Prepare a production budget using the format shown in Figure 9.4. c. Prepare a direct materials purchases budget using the format shown in Figure 9.5. d. Prepare a direct labor budget using the format shown in Figure 9.6. e. Prepare a manufacturing overhead budget using the format shown in Figure 9.7. Round to the nearest dollar. f. As the production manager, what concerns, if any, do you have about production requirements for each of the four quarters