Title: ACCY112: Accounting in Organisations Type of assessment task: Assignment 4

Due date: Week 13 in your enrolled tutorial class.

QUESTION 1

30 marks

Smooth Sounds manufactures and sells a new line of music players. Unfortunately, Smooth Sounds suffered serious fire damage at its accounting office and as a result the accounting records for March 2015 were partially destroyed. Smooth Sound has hired you to help figure out the missing pieces of the accounting information. The following accounts have been retrieved for the month of March.

Debit Credit 34,500

Finished Goods, 1 March Work in Process, 1 March Prepaid Rent

Accounts Payable

Share Capital

Retained Earnings

Work in Process, 31 March

Freight Inwards

Sales Revenue

Discount Allowed

Raw Materials, 31 March

Freight Outwards

Direct Labour

Raw Materials Purchases

Raw Materials, 1 March

Indirect Labour

Factory Supplies Expense

Gross Profit

Plant energy costs

Insurance Expense

Electricity and Gas Expense

Plant manager Salary

Sales Salaries Expenses Administrative Salaries Expenses Interest Expense

Machinery Depreciation Expense Depreciation Expense ? Sales Office

Required:

Prepare the Costs of Goods Manufactured statement for the month ended 31 March 2015

11,250 40,500

13,050 2,400

9,500 4,650 8,900

330,000 305,100 5 550 108,300 27,670

64,400 9,780 33,600 52,650 48,000 101,550 34,500 31,500

27,000 70,000 55,500

1,299,500

10,500 0

391,080

(40 marks)

QUESTION 2

30 marks

Big Foot Co. produces sport socks and sells it across different states in Australia. The company is considering expanding their product market internationally by next year. The CEO, Ray, believes that an aggressive campaign is needed next year to maintain the entity?s present growth. The financial year begins in July and ends in June. The CFO has presented Ray with the following data for the current year, 2014, for use in preparing next year?s advertising campaign.

Variable costs

Direct labour per pair Direct materials Variable overhead

Variable cost per pair

Fixed costs

Manufacturing Selling Administrative

Selling price per pair Sales, 2014

Per Unit ($)

21.00 8.00 9.00 38.00

$70,300 46,000 28,600

$144,900 $50.00 $700,000

Cost Schedules

Ray has set the sales target for the year 2015 at a level of $800,000.

Required:

1. a)What is the contribution margin per unit and ratio for 2014?
2. b)What is the break-even point in units for 2014?
3. c)How many pair of socks would have to be sold in 2014 to earn a target profit of $171,600?
4. d)Ray believes that to attain the sales target in the year 2015 additional selling expenses of
5. $34,000 for advertising will be required in 2015, with all other costs remaining constant. What will be the break-even point in dollar sales for 2015 if Big Foot Co. spends the additional $34,000 of the selling expenses?

QUESTION 3

Byron Bay Surf Company has the following budgeted sales for the next six-month period:

(6 marks) (6 marks) (9 marks) (9 marks)

40 marks

Month

Unit Sales

June

July 120,000 August 210,000 September 150,000 October 180,000 November 120,000

90,000

The company sells the product at a price of $100 per unit. There were 24,000 units of finished goods in inventory at the beginning of July. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month.

Five kilograms of materials are required for each unit produced. To make each unit of FG it needs $10 of direct labour cost and $10 of manufacturing overhead cost. Each kilogram of material costs $8 ($6 in April 2015). Ending inventory levels for materials are equal to 30% of the production needs for the next month. Material inventory at the beginning of July was $1,242,000 (207,000 kilograms). Assume company uses a FIFO inventory method for both direct materials and finished goods.

Required:

1. (a)Prepare sales budgets in units and dollars for July and August
2. (b)Prepare production budgets in units for July and August
3. (c)Prepare direct materials purchases budgets (in kilograms and dollars) for July
4. (d)Calculate the amount budgeted cost of goods sold for July

(6 marks) (12 marks) (12 marks) (10 marks)

Title: ACCY112: Accounting in Organisations Type of assessment task: Assignment 4 Due date: Week 13 in your enrolled tutorial class. 30 marks QUESTION 1 Smooth Sounds manufactures and sells a new line of music players. Unfortunately, Smooth Sounds suffered serious fire damage at its accounting office and as a result the accounting records for March 2015 were partially destroyed. Smooth Sound has hired you to help figure out the missing pieces of the accounting information. The following accounts have been retrieved for the month of March. Debit Finished Goods, 1 March 34,500 Work in Process, 1 March 11,250 Prepaid Rent 40,500 Credit Accounts Payable 27,000 Share Capital 70,000 Retained Earnings 55,500 Work in Process, 31 March Freight Inwards 13,050 2,400 Sales Revenue 1,299,500 Discount Allowed 9,500 Raw Materials, 31 March 4,650 Freight Outwards 8,900 Direct Labour 330,000 Raw Materials Purchases 305,100 Raw Materials, 1 March Indirect Labour Factory Supplies Expense 5 550 108,300 27,670 Gross Profit 391,080 Plant energy costs 64,400 Insurance Expense 9,780 Electricity and Gas Expense 33,600 Plant manager Salary 52,650 Sales Salaries Expenses 48,000 Administrative Salaries Expenses 101,550 Interest Expense 34,500 Machinery Depreciation Expense 31,500 Depreciation Expense - Sales Office 10,500 0 Required: Prepare the Costs of Goods Manufactured statement for the month ended 31 March 2015 (40 marks) 30 marks QUESTION 2 Big Foot Co. produces sport socks and sells it across different states in Australia. The company is considering expanding their product market internationally by next year. The CEO, Ray, believes that an aggressive campaign is needed next year to maintain the entity's present growth. The financial year begins in July and ends in June. The CFO has presented Ray with the following data for the current year, 2014, for use in preparing next year's advertising campaign. Cost Schedules Variable costs Direct labour per pair Direct materials Variable overhead Variable cost per pair Fixed costs Manufacturing Selling Administrative Per Unit ($) 21.00 8.00 9.00 38.00 $70,300 46,000 28,600 $144,900 $50.00 $700,000 Selling price per pair Sales, 2014 Ray has set the sales target for the year 2015 at a level of $800,000. Required: a) b) c) d) What is the contribution margin per unit and ratio for 2014? What is the break-even point in units for 2014? How many pair of socks would have to be sold in 2014 to earn a target profit of $171,600? Ray believes that to attain the sales target in the year 2015 additional selling expenses of $34,000 for advertising will be required in 2015, with all other costs remaining constant. What will be the break-even point in dollar sales for 2015 if Big Foot Co. spends the additional $34,000 of the selling expenses? (6 marks) (6 marks) (9 marks) (9 marks) 40 marks QUESTION 3 Byron Bay Surf Company has the following budgeted sales for the next six-month period: Month June July August September October November Unit Sales 90,000 120,000 210,000 150,000 180,000 120,000 The company sells the product at a price of $100 per unit. There were 24,000 units of finished goods in inventory at the beginning of July. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five kilograms of materials are required for each unit produced. To make each unit of FG it needs $10 of direct labour cost and $10 of manufacturing overhead cost. Each kilogram of material costs $8 ($6 in April 2015). Ending inventory levels for materials are equal to 30% of the production needs for the next month. Material inventory at the beginning of July was $1,242,000 (207,000 kilograms). Assume company uses a FIFO inventory method for both direct materials and finished goods. Required: (a) Prepare sales budgets in units and dollars for July and August (b) Prepare production budgets in units for July and August (c) Prepare direct materials purchases budgets (in kilograms and dollars) for July (d) Calculate the amount budgeted cost of goods sold for July (6 marks) (12 marks) (12 marks) (10 marks)