T.O.T.E.S. CASE STUDY-TETRA OPERATING BUDGETS LAB 6 As the current year comes to a close, the accounting department, with assistance from senior management and the sales department, prepares the various budgets necessary to prepare the cash forecast (Lab 7). A monthly production budget is developed using the sales forecast in units (20XX sales forecast is presented below in Exhibit 6-A) as provided by the marketing and sales staff. EXHIBIT 6-A: Sales Forecast for 20XX January 53,000 totes February 52,000 totes July 45,000 totes August 50.000 totes March 52,500 totes September 53,000 totes 53,150 totes October 52,000 totes April May June 56,500 totes November 51,000 totes 47,000 totes December 48,000 totes Raw material needs are determined based on the production budget and the company's desired inventory levels. INVENTORY ON DECEMBER 31, PRIOR YEAR: Company employees completed an inventory count on December 31 determining the following ending inventory balances: o 5,000 finished totes o 600 yards of fabric 7,000 yards of webbing Using the sales forecast (Exhibit 6-A), the inventory requirements described in the section "Company Description and Overview", and the Standard Cost Card (Exhibit 2-B) prepare the Production Budget 37 T.O.T.E.S. CASE STUDYTETRA Calculate the standard cost for each tote for the current year's production level using information prom Exhibit 1-A and 1-8. Round all standard costs to four (1) decimal places. EXHIBIT 2-B: Standard Cost Card T.O.T.E.S. CALCULATING STANDARD COSTS Forecasted Production per year 500,000 totes Total Cost for 500.000 totes) Standard Cost [cost per totel DIRECT MATERIALS Fabric $ Webbing $ .24 $ $ Sewing $ Printing 600,000 15 1.2 555,000 Isll Total Direct Materials Cost per Tote (Round to 4 decimal places) S W2932.31 DIRECT LABOR 120.000 Cutting s varaosia 89, ove .16 $ 1575.000 ..03 Total Direct Labor Cost per Tote (Round to 4 decimal places) s .44 .43 MANUFACTURING OVERHEAD 398899 .6176 Estimated MOH Costs $ $ Round per tote to 4 decimal places) Total Product Cost per Tote (Round to 4 decimal places Yes 3.357 Costs for each job are tracked bising a Job Cost Record (Exhibit 2-C). The Job Cost Record is found after copies of the Materials Requisition form and Labor Time Records for the period. Use the information on these documents to complete the Job Cost Record for Phineas Phil's Specialty Market order of 1,000 red grocery totes with logos. 11 T.O.T.E.S. CASE STUDY TETRA COMPANY DESCRIPTION AND OVERVIEW Tonia Odenburg and Tara Evans were life-long friends. One carned a degree in accounting and the other became a nutritionist. Both were accomplished seamstresses, were concerned about the impact plastic grocery bags had on the environment and had created reusable grocery bags for their personal use. After numerous compliments on the design and strength of their bags from store clerks and customers, they developed a business plan and started TOTES They called their version of the grocery bag a tote and sold them to grocery stores and small community farms. The company has grown rapidly and is now operating near capacity. EMPLOYEES Tonia is the president and Tara is the controller. Both individuals work full time and are salaried. Other employees include: Full-Time Salaried Employees: Plant manager O Plant maintenance supervisor o Other administrative staff accountant, receptionist, finished goods warehouse manager) Hourly Employees: o 3 employee(s) in the cutting department 02 employee(s) in the sewing department o 1 Part-time employee who operates the machine that prints logos on the totes The hourly employees are all considered direct labor employees. Historically, the hourly employees carn an average of 320 per hour, including fringe benefits and payroll taxes. All hourly employees work 40 hours each week, except for the part-time employee who works 20 hours each week. TOTES. CASE STUDY - TETRA (Exhibit 6-3), the Direct Materials Budget for fabric (Exhibit 6-C), the Direct Materials Budget for webbing (Exhibit 6-D), the Raw Materials Purchases Budget (Exhibit 6-E) and the Projected Costs of Goods Manufactured Schedule for the 1 Quarter of 20XX (Exhibit 6-F). EXHIBIT 6-B: Production Budget for 1" Quarter 20XX T.O.T.ES Production Budget for the 1st quarter 20xx January February March April May Projected Sales in units (Biven) Required Ending Inventory %6) Total Less: Beginning Inventory Total Required Production March April EXHIBIT 6-C: Raw materials Budget 20XX - FABRIC T.O.T.ES Raw Materials Budget 20XX - FABRIC January February Projected Production Requirements in units from Exhibit 6-8 Yards of fabric per tote Total # of yards needed (round to the yard) Required Ending Inventory %) Total Less: Beginning Inventory Total Required Fabric Purchases (yards) Standard Cost per yard of fabric $ Total cost of fabric (round to the dollar) $ $ S $ $ 38 T.O.T.ES, CASE STUDY - TETRA EXHIBIT 6-D: Raw materials Budget 20xx - WEBBING T.O.T.E.S. Raw Materials Budget 20XX-WEBBING January February March Projected Production Requirements in units from Exhibit 6.6 Yards of webbing per tote April Total # of yards needed Required Ending Inventory %) Total Less: Beginning Inventory Total Required Webbing Purchases (yards) Standard Cost per yard of webbing $ Total cost of webbing (round to the dollars S $ 5 $ March Quarter Total EXHIBIT 6-E: Raw Materials Purchases Budget -- Quarter 1, 20XX T.O.T.E.S. Raw Materials Purchases Budget - Quarter 1, 20XX January February Total Cost of Fabric (from Exhibit 6-) S 5 Total Cost of Webbing (from Exhibit 6-D) $ S $ Total Cost of Direct Materials $ $ $ S S EXHIBIT 6-F: Projected Cost of Goods Manufactured Schedule - Quarter 1, 20XX T.O.T.E.S. Project Cost of Goods Manufactured Schedule - Quarter 20XX January February March Required Production in units (Exhibit 6-8) Cost per unit (round to Total Cost decimal points) round to the nearest dollar Direct Materials (Cost per unit Exhibit 2-B) $ $ $ Direct Labor (Cost per unle Edibir 2-87 $ $ $ $ Manufacturing Overhead (Cost per unit Ech. 2-8) $ $ $ $ Total Costs $ $ $ 39 T.O.T.E.S. CASE STUDY-TETRA OPERATING BUDGETS LAB 6 As the current year comes to a close, the accounting department, with assistance from senior management and the sales department, prepares the various budgets necessary to prepare the cash forecast (Lab 7). A monthly production budget is developed using the sales forecast in units (20XX sales forecast is presented below in Exhibit 6-A) as provided by the marketing and sales staff. EXHIBIT 6-A: Sales Forecast for 20XX January 53,000 totes February 52,000 totes July 45,000 totes August 50.000 totes March 52,500 totes September 53,000 totes 53,150 totes October 52,000 totes April May June 56,500 totes November 51,000 totes 47,000 totes December 48,000 totes Raw material needs are determined based on the production budget and the company's desired inventory levels. INVENTORY ON DECEMBER 31, PRIOR YEAR: Company employees completed an inventory count on December 31 determining the following ending inventory balances: o 5,000 finished totes o 600 yards of fabric 7,000 yards of webbing Using the sales forecast (Exhibit 6-A), the inventory requirements described in the section "Company Description and Overview", and the Standard Cost Card (Exhibit 2-B) prepare the Production Budget 37 T.O.T.E.S. CASE STUDYTETRA Calculate the standard cost for each tote for the current year's production level using information prom Exhibit 1-A and 1-8. Round all standard costs to four (1) decimal places. EXHIBIT 2-B: Standard Cost Card T.O.T.E.S. CALCULATING STANDARD COSTS Forecasted Production per year 500,000 totes Total Cost for 500.000 totes) Standard Cost [cost per totel DIRECT MATERIALS Fabric $ Webbing $ .24 $ $ Sewing $ Printing 600,000 15 1.2 555,000 Isll Total Direct Materials Cost per Tote (Round to 4 decimal places) S W2932.31 DIRECT LABOR 120.000 Cutting s varaosia 89, ove .16 $ 1575.000 ..03 Total Direct Labor Cost per Tote (Round to 4 decimal places) s .44 .43 MANUFACTURING OVERHEAD 398899 .6176 Estimated MOH Costs $ $ Round per tote to 4 decimal places) Total Product Cost per Tote (Round to 4 decimal places Yes 3.357 Costs for each job are tracked bising a Job Cost Record (Exhibit 2-C). The Job Cost Record is found after copies of the Materials Requisition form and Labor Time Records for the period. Use the information on these documents to complete the Job Cost Record for Phineas Phil's Specialty Market order of 1,000 red grocery totes with logos. 11 T.O.T.E.S. CASE STUDY TETRA COMPANY DESCRIPTION AND OVERVIEW Tonia Odenburg and Tara Evans were life-long friends. One carned a degree in accounting and the other became a nutritionist. Both were accomplished seamstresses, were concerned about the impact plastic grocery bags had on the environment and had created reusable grocery bags for their personal use. After numerous compliments on the design and strength of their bags from store clerks and customers, they developed a business plan and started TOTES They called their version of the grocery bag a tote and sold them to grocery stores and small community farms. The company has grown rapidly and is now operating near capacity. EMPLOYEES Tonia is the president and Tara is the controller. Both individuals work full time and are salaried. Other employees include: Full-Time Salaried Employees: Plant manager O Plant maintenance supervisor o Other administrative staff accountant, receptionist, finished goods warehouse manager) Hourly Employees: o 3 employee(s) in the cutting department 02 employee(s) in the sewing department o 1 Part-time employee who operates the machine that prints logos on the totes The hourly employees are all considered direct labor employees. Historically, the hourly employees carn an average of 320 per hour, including fringe benefits and payroll taxes. All hourly employees work 40 hours each week, except for the part-time employee who works 20 hours each week. TOTES. CASE STUDY - TETRA (Exhibit 6-3), the Direct Materials Budget for fabric (Exhibit 6-C), the Direct Materials Budget for webbing (Exhibit 6-D), the Raw Materials Purchases Budget (Exhibit 6-E) and the Projected Costs of Goods Manufactured Schedule for the 1 Quarter of 20XX (Exhibit 6-F). EXHIBIT 6-B: Production Budget for 1" Quarter 20XX T.O.T.ES Production Budget for the 1st quarter 20xx January February March April May Projected Sales in units (Biven) Required Ending Inventory %6) Total Less: Beginning Inventory Total Required Production March April EXHIBIT 6-C: Raw materials Budget 20XX - FABRIC T.O.T.ES Raw Materials Budget 20XX - FABRIC January February Projected Production Requirements in units from Exhibit 6-8 Yards of fabric per tote Total # of yards needed (round to the yard) Required Ending Inventory %) Total Less: Beginning Inventory Total Required Fabric Purchases (yards) Standard Cost per yard of fabric $ Total cost of fabric (round to the dollar) $ $ S $ $ 38 T.O.T.ES, CASE STUDY - TETRA EXHIBIT 6-D: Raw materials Budget 20xx - WEBBING T.O.T.E.S. Raw Materials Budget 20XX-WEBBING January February March Projected Production Requirements in units from Exhibit 6.6 Yards of webbing per tote April Total # of yards needed Required Ending Inventory %) Total Less: Beginning Inventory Total Required Webbing Purchases (yards) Standard Cost per yard of webbing $ Total cost of webbing (round to the dollars S $ 5 $ March Quarter Total EXHIBIT 6-E: Raw Materials Purchases Budget -- Quarter 1, 20XX T.O.T.E.S. Raw Materials Purchases Budget - Quarter 1, 20XX January February Total Cost of Fabric (from Exhibit 6-) S 5 Total Cost of Webbing (from Exhibit 6-D) $ S $ Total Cost of Direct Materials $ $ $ S S EXHIBIT 6-F: Projected Cost of Goods Manufactured Schedule - Quarter 1, 20XX T.O.T.E.S. Project Cost of Goods Manufactured Schedule - Quarter 20XX January February March Required Production in units (Exhibit 6-8) Cost per unit (round to Total Cost decimal points) round to the nearest dollar Direct Materials (Cost per unit Exhibit 2-B) $ $ $ Direct Labor (Cost per unle Edibir 2-87 $ $ $ $ Manufacturing Overhead (Cost per unit Ech. 2-8) $ $ $ $ Total Costs $ $ $ 39