Question 1: (40 points)

School Days Furniture, Inc., manufactures a variety of desks, chairs, tables, and shelf units which are sold to public school systems throughout the mid-west. The controller of the company's Desk Division is currently preparing a budget for the third quarter of the year. The following sales forecast has been made by the division's sales manager.

July August September

10,000 desk-and-chair sets 12,000 desk-and-chair sets 15,000 desk-and-chair sets

Each desk-and-chair set requires 10 board feet of pine planks and 1.5 hours of direct labor. Each set sells for $40. Pine planks cost $.60 per board foot, and the division ends each month with enough wood to cover 10 percent of the next month's production requirements. The division incurs a cost of $21.00 per hour for direct-labor wages and fringe benefits. The division ends each month with enough finished-goods inventory to cover 20 percent of the next month's sales.

Required:Complete the following budget schedules.A. Sales budget(10 points):

Sales (in sets) ..................................................... Sales price per set ..............................................

Sales revenue.....................................................

B. Production budget (in sets)(10 points):

Sales ................................................................... Add: Desired ending inventory .......................... Total requirements ............................................ Less: Projected beginning inventory.................. Planned production ...........................................

July

10,000$40

$400,000

July

10,000 2,400 12,400 2,000 10,400

August

August

September

September

3,000

Spring 2020

2 |P a g e

C. Raw material purchases(10 points):

Planned production (sets) ............................................ Raw material required per set (board feet) ................. Raw material required for production (board feet) ..... Add: Desired ending inventory of RM (board feet) ...... Total requirements ....................................................... Less: Projected beginning inventory of RM (board feet) Planned purchases of raw material (board feet).......... Cost per board foot ...................................................... Planned purchases of raw material (dollars) ................

D. Direct-labor budget(10 points):

Planned production (sets)..................................... Direct-labor hours per set..................................... Direct-labor hours required .................................. Cost per hour ........................................................

Planned direct-labor cost......................................

July

August

September

16,000

10,400

10 104,000 12,600 116,600 10,400 106,200 $.60 $ 63,720

July

10,400

1.5

15,600$21 $327,600

August

September

3 |P a g e

Question 2: (25 points)

During April, Dryden Company's material purchases amounted to 6,500 pounds at a price of $14.8 per pound. Actual costs incurred in the production of 2,000 units were as follows:

Direct labor: $236,070 ($36.60 per hour) Direct material: $63,640 ($14.8 per pound)

The standards for one unit of Dryden Company's product are as follows:

Direct labor:

Quantity, 3 hours per unit Rate, $36.00 per hour

Direct material:

Quantity, 2 pounds per unit Price, $14.4 per pound

Required:

Compute the following variances and indicate whether each variance is favorable or unfavorable:

1. Direct-material price variance.
2. Direct-material quantity variance.
3. Direct-material purchase price variance.
4. Direct-labor rate variance.
5. Direct-labor efficiency variance.

Question 3:

Information taken from Collegiate Sporting Goods Company's records for the most recent year is as follows:

$

Direct material used

Direct labour

Variable manufacturing overhead

Fixed manufacturing overhead

Variable selling and administrative costs Fixed selling and administrative costs

Required:

624,000 430,000 170,000 456,000 228,000

86,000

1. Assuming the company uses absorption costing, compute the inventoriable costs for the year.
2. (8 points)
3. Compute the year's inventoriable costs using variable costing. (7 points)