State total budgeted cost formula, and prepare flexible budget s for 2 time periods

P10-3A State total budgeted cost formula, and prepare flexible budget s for 2 time periods Ratchet Company uses budgets in controlling costs. The August 2017 budget report for the company's As Department is as follows. Ratchet Company Budget Report Assembling Department For the Month Ended August 31, 2017 Manufacturing Cost Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable Fixed costs Rent Supervision Depreciation Total fixed Total costs Budget $ Actual 48,000 54,000 24,000 18,000 15,000 12,000 171,000 47,000 51,200 24,200 17,500 14,900 12,400 167,200 12,000 17,000 6,000 35,000 12,000 17,000 6,000 35,000 $ 206,000 $ 202,200 Difference Favorable F Unfavorable U $1,000 F 2,800 F 200 U 500 F 100 F 400 U 3,800 F 0 0 0 0 $3,800 F The monthly budget amounts in the report were based on an expected production of 60,000 units per mon or 720,000 units per year. The Assembling Department manager is pleased with the report and expects a or at least praise for a job well done. The company president, however, is unhappy with the results for Aug because only 58,000 units were produced. Instructions (a) State the total monthly budgeted cost formula. (b) Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? (c) In September, 64,000 units were produced. Prepare the budget report using flexible budget data, assu (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the sam September as in August. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with (a) State the total monthly budgeted cost formula. Fixed cost (b) Value + variable cost of Value per unit Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? RATCHET COMPANY Assembling department Flexible budget Report For the Month Ended August 31, 2017 Units Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable Fixed costs Rent Supervision Depreciation Total fixed Total costs Budget at 58,000 units Actual Costs 58,000 units Difference Favorable F Unfavorable U ? ? ? ? ? ? ? Value Value Value Value Value Value ? ? ? ? ? ? ? ? Value Value Value ? Value Value Value ? ? ? ? ? ? ? ? Response: (c) In September, 64,000 units were produced. Prepare the budget report using flexible budget data, a (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the sa September as in August. RATCHET COMPANY Assembling department Flexible budget Report For the Month Ended September 30, 2017 Units Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable Fixed costs Rent Supervision Depreciation Total fixed Total costs Budget at 64,000 units Actual Costs 64,000 units Difference Favorable F Unfavorable U ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Value Value Value ? Value Value Value ? Value Value Value ? ? ? ? Response: After you have completed P10-3A consider the following additional question. 1. Assume that the number of units produced in September changed to 68,000. Revise the flexible budget report for September assuming (1) each variable cost was 12% higher than its actual cost in August and (s) fixed costs remain the same in September as in August. me periods port for the company's Assembling n of 60,000 units per month the report and expects a raise, py with the results for August s report provide a better flexible budget data, assuming 2) fixed costs were the same in r a formula in cells with a "?" . this report provide a better ing flexible budget data, assuming (2) fixed costs were the same in 00. Revise n September P11-2A Compute variances, and prepare income statement Ayala Corporation accumulates the following data relative to jobs started and finished during the month Cost and Production Data Actual Raw materials unit cost $2.25 Raw materials units used 10,600 Direct labor payroll $120,960 Direct labor hours worked 14,400 Manufacturing overhead incurred $189,500 Manufacturing overhead applied Machine hours expected to be used at normal capacity Budgeted fixed overhead for June Variable overhead rate per machine hour Fixed overhead rate per machine hour Standard $2.10 10,000 $120,000 15,000 $189,000 42,500 $55,250 $3.00 $1.30 Overhead is applied on the basis of standard machine hours. Three hours of machine time are required for each direct labor hour. The jobs were sold for $400,000. Selling and administrative expenses were $40,000. Assume that the amount of raw materials purchased equaled the amount used. Instructions (a) Compute all of the variances for (1) direct materials and (2) direct labor. (b) Compute the total overhead variance. (c) Prepare an income statement for management. (Ignore income taxes.) NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells wi (a)(1) Total Materials Variance: ( AQ X ( Value X = ? minus AP Value ? ) ) = minus minus Value ( ( SQ Value X X Materials price variance: ( AQ X ( Value X = ? minus AP Value ? ) ) = minus minus Value ( ( AQ Value X X Materials quantity variance: ( AQ X ( Value X = ? minus SP Value ? ) ) = minus minus Value ( ( SQ Value X X AR ) minus ( SH X (a)(2) Total Labor Variance: ( AH X ( X minus Value ? ) = minus Value ( Value X Labor Price variance: ( AH X ( Value X = ? minus AR Value ? ) ) = minus minus Value ( ( AH Value X X Labor quantity variance: ( AH X ( Value X = ? minus SR Value ? ) ) = minus minus Value ( ( SH Value X X = Value = (b) Total Overhead Variance: = = (c ) Value ? Actual Overhead Value minus Overhead Applied minus Value AYALA CORPORATION Income Statement For the Month Ended June 30, 2017 Sales revenue Cost of goods sold (at standard) Gross profit (at standard) Variances Material price Materials quantity Labor price Labor quantity Overhead Total variance - favorable Gross profit (actual) Selling and administrative expenses Net income Value ? ? Value Value Value Value Value ? ? Value ? After you have completed the requirements of P11-2A, consider this additional questions. 1. Assume that the actual price for raw materials changed to $2.30 and actual quantity of raw mate Recompute total materials variance and price and quantity variances for materials. 2. Show the impact of the changes above on the income statement. hed during the month of June 2017. hine time are administrative aled the amount a formula in cells with a "?" . SP) Value ) ) SP Value ) ) SP Value ) ) SR ) Value ) SR Value ) ) SR Value ) ) quantity of raw materials used changed to 11,000 units. P13-7A Prepare a statement of cash flows - indirect method, and compute free cash flow. NOSKER COMPANY Comparative Balance Sheet December 31 2017 Assets Cash Accounts Receivable Inventory Equipment Accumulated depreciation--equipment Total $38,000 30,000 27,000 60,000 (29,000) $126,000 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total $24,000 7,000 27,000 18,000 50,000 $126,000 NOSKER COMPANY Income Statement For the Year ended December 31, 2 017 Sales revenue Cost of goods sold Gross profit Operating expenses Income from operations Interest expense Income before income taxes Income tax expense Net income $242,000 175,000 67,000 24,000 43,000 3,000 40,000 8,000 $32,000 Additional data: 1. Dividends declared and paid were $20,000. 2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense, $14,500, is in the operating expenses. 4. All sales and purchases are on account. Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute free cash flow. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with (a) NOSKER COMPANY Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense Value Increase in accounts receivable Value Increase in inventory Value Increase in accounts payable Value Decrease in income taxes payable Value Net cash provided by operating activities Cash flows from investing activities Sale of equipment Net cash provided by investing activities Cash flows from financing activities Issuance of common stock Redemption of bonds Payment of dividends Net cash used by financing activities Net increase in cash Cash at beginning of period Cash at end of period (b) Free Cash Flow: Net cash provided by operating activities Less: Capital expenditures Cash dividends Value ? ? Value Value Value Value Value ? ? Value ? Value Value Value ? ? After you have completed the requirements of P13-7A, consider the additional question. Answers are on the other tab in this file. 1. Assume that depreciation changed to $17,500 and the asset was sold for $11,500 cash. Also assume that the book value of the asset at the time of sale was also $11,500. Show the impact of these changes on the statement of cash flows and free cash flow. 2016 $20,000 14,000 20,000 78,000 (24,000) $108,000 $15,000 8,000 33,000 14,000 38,000 $108,000 er or a formula in cells with a "?" . al question. ,500 cash. Also assume that the ct of these changes on the P14-3 Perform ratio analysis and evaluate financial position and operating results Condensed balance sheet and income statement data for Landwehr Corporation appear below and on page 644. LANDWEHR CORPORATION Balance Sheets December 31 Cash Accounts receivable (net) Other current assets Investments Plant and equipment (net) Current liabilities Long-term debt Common stock, $10 par Retained earnings 2018 25,000 50,000 90,000 75,000 400,000 640,000 2017 20,000 45,000 95,000 70,000 370,000 600,000 75,000 80,000 340,000 145,000 640,000 80,000 85,000 310,000 125,000 600,000 LANDWEHR CORPORATION Income Statement For the Years Ended December 31 Sales revenue Less: Sales returns and allowances Net sales Cost of goods sold Gross profit Operating expenses (including income taxes) Net income 2018 $740,000 40,000 700,000 420,000 280,000 235,000 $45,000 Additional information: 1. The market price of Landwehr's common stock was $4.00, $5.00, and $8.00 for 2016, 2017 and 2018, respectively. 2. All dividends are paid in cash. Instructions (a) Compute the following ratios for 2017 and 2018. (1) Profit margin. (2) Asset turnover. (3) Earnings per share (Weighted-average common shares in 2018 were 32,000 and in 2017 were 31,000.) (4) Price-earnings ratio. (5) Payout ratio. (6) Debt to assets ratio. (b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2017 to 2018 of Landwehr Corporation. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells wi 2017 (a) (b) Profit margin: Net income Net sales Value Value Asset turnover: Net sales Average total assets Value Value Earnings per share: Net income - Pfd. Dividends Weighted average common shares outstanding Value Value Price-earnings ratio: Market price per share Earnings per share Value Value Payout ratio: Cash dividends declared on common Net income Value Value Debt to assets ratio: Total liabilities Total assets Value Value Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial from 2017 to 2018 of Landwehr Corporation. Response After you have completed P14-3, consider the additional question. 1. Assume that that the net income for 2017 and the weighted average common shares outstanding c Also assume that 2018 net sales and total liabilities also changed to $680,000 and $160,000 respe the ratios for 2017 and 2018. 2016 18,000 48,000 64,000 45,000 358,000 533,000 70,000 50,000 300,000 113,000 533,000 2017 $700,000 50,000 650,000 400,000 250,000 220,000 $30,000 formula in cells with a "?" . 2018 Profit margin: Net income Net sales Value Value Asset turnover: Net sales Average total assets Value Value Earnings per share: Net income - Pfd. Dividends Weighted average common shares outstanding Value Value Price-earnings ratio: Market price per share Earnings per share Value Value Payout ratio: Cash dividends declared on common Net income Value Value Debt to assets ratio: Total liabilities Total assets Value Value k thereof in financial position and operating results shares outstanding changed to $38,000 and 31,500 respectively. and $160,000 respectively. Show the impact of these changes on P14-9 Prepare a statement of comprehensive income The ledger of Jaime Corporation at December 31, 2017, contains the following summary data. Net sales Selling expenses Other revenues and gai $1,700,000 120,000 20,000 Cost of goods sold Administrative expenses Other expenses and losses Your analysis reveals the following additional information that is not included in the above data. 1. The entire Puzzles Division was discontinued on August 31. The income from operations for this division before income taxes was $20,000. The Puzzles Division was sold at a loss of $90,000 before income taxes. 2. The company had an unrealized gain on available-for-sale securities of $120,000 before income taxes for the year. 3. The income tax rate on all items is 25%. Instructions Prepare a statement of comprehensive income for the year ended December 31, 2017. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells wi JAIME CORPORATION Statement of Comprehensive Income For the Year Ended December 31, 2017 Net sales Cost of goods sold Gross Profit Selling and administrative expenses Income from operations Other revenues and gains Other expenses and losses Income before income taxes Income tax expense Income from continuing operations Discontinued operations Income from operations of discontinued division, net of $5,000 income taxes Loss from disposal of discontinued division, net of $22,500 tax savings Net income Unrealized gain on available for sale securities, net of $30,000 income tax income taxes Comprehensive income Value Value ? Value ? Value Value ? ? ? ? ? ? ? ? ? ? After you have completed P14-9, consider the additional question. 1. Assume that the Puzzles Division loss from sale of the division changed to $75,000 and the unrealized gain on available for sale securities also changed to $100,000. Show the impact of these changes on the statement of comprehensive income. ollowing summary data. $1,100,000 150,000 28,000 uded in the above data. ome from operations for n was sold at a loss of s of $120,000 before ember 31, 2017. umber or a formula in cells with a "?" . hanged to $75,000 ged to $100,000. Show the