Prepare a revenues budget for the year, assuming that Sunshine charges customers $0.10 per square foot. Calculate the budgeted operating income. Davis believes that spending $15,000 in additional adverting will lead to a 20% increase in the number of jobs. Recalculate the budgeted revenue and operating income assuming this change is made. Calculate expenses by multiplying the existing budgeted cost par job calculated in requirement 3 by the number of jobs and adding the $15,000 advertising cost. Based on the change in budgeted operating income, would you recommend the investment? Do you see any flaw in this analysis? How could the analysis be improved? Should SWW spend $15,000 in additional advertising? What is SWW's profitability if sales should decline to 1.800 jobs annually? What actions can Davis take to improve profitability? Budgets for production and direct manufacturing labor. (CMA. adapted) Roletter Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Bob Anderson, the controller, is responsible for preparing Roletter's master budget and has accumulated the following information for 2015: In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.50 per hour, workers compensation insurance of $0.20 per hour, employee medical insurance of $0.30 per hour, and Social Security taxes. Assume that as of January 1, 2015, the Social Security tax rates are 7.5% for employers and 7.5% for employees. The cost of employee benefits paid by Roletter on its employees is treated as a direct manufacturing labor cost. Roletter has a labor contract that calls for a wage increase to $13 per hour on April 1, 2015. New labor-saving machinery has been installed and will be fully operational by March 1, 2015. Roletter expects to have 17, 500 frames on hand at December 31, 2014, and it has a policy of carrying an end-of-month inventory of 100% of the following month's sales plus 50% of the second following month's sales. Prepare a production budget and a direct manufacturing labor budget for Roletter Company by month and for the first quarter of 2015. You may combine both budgets in one schedule. The direct manufacturing labor budget should include labor-hours and show the details for each labor cost category. What actions has the budget process prompted Roletter's management to take? How might Roletter's managers use the budget developed in requirement 1 to better manage the company? Activity-based budgeting. The Jerico store of Jiffy Mart, a chain of small neighborhood convenience stores, is preparing its activity-based budget for January 2015. Jiffy Mart has three product categories: soft drinks (35% of cost of goods sold (C0GS|), fresh produce (25% of COGS), and packaged food (40% of COGS). The following table shows the four activities that consume indirect resources at the Jerico store, the cost drivers and their rates, and the cost-driver amount budgeted to be consumed by each activity in January 2015. Prepare a revenues budget for the year, assuming that Sunshine charges customers $0.10 per square foot. Calculate the budgeted operating income. Davis believes that spending $15,000 in additional adverting will lead to a 20% increase in the number of jobs. Recalculate the budgeted revenue and operating income assuming this change is made. Calculate expenses by multiplying the existing budgeted cost par job calculated in requirement 3 by the number of jobs and adding the $15,000 advertising cost. Based on the change in budgeted operating income, would you recommend the investment? Do you see any flaw in this analysis? How could the analysis be improved? Should SWW spend $15,000 in additional advertising? What is SWW's profitability if sales should decline to 1.800 jobs annually? What actions can Davis take to improve profitability? Budgets for production and direct manufacturing labor. (CMA. adapted) Roletter Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Bob Anderson, the controller, is responsible for preparing Roletter's master budget and has accumulated the following information for 2015: In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.50 per hour, workers compensation insurance of $0.20 per hour, employee medical insurance of $0.30 per hour, and Social Security taxes. Assume that as of January 1, 2015, the Social Security tax rates are 7.5% for employers and 7.5% for employees. The cost of employee benefits paid by Roletter on its employees is treated as a direct manufacturing labor cost. Roletter has a labor contract that calls for a wage increase to $13 per hour on April 1, 2015. New labor-saving machinery has been installed and will be fully operational by March 1, 2015. Roletter expects to have 17, 500 frames on hand at December 31, 2014, and it has a policy of carrying an end-of-month inventory of 100% of the following month's sales plus 50% of the second following month's sales. Prepare a production budget and a direct manufacturing labor budget for Roletter Company by month and for the first quarter of 2015. You may combine both budgets in one schedule. The direct manufacturing labor budget should include labor-hours and show the details for each labor cost category. What actions has the budget process prompted Roletter's management to take? How might Roletter's managers use the budget developed in requirement 1 to better manage the company? Activity-based budgeting. The Jerico store of Jiffy Mart, a chain of small neighborhood convenience stores, is preparing its activity-based budget for January 2015. Jiffy Mart has three product categories: soft drinks (35% of cost of goods sold (C0GS|), fresh produce (25% of COGS), and packaged food (40% of COGS). The following table shows the four activities that consume indirect resources at the Jerico store, the cost drivers and their rates, and the cost-driver amount budgeted to be consumed by each activity in January 2015