WE Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires seven kilograms of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter - July, August, and September. Peak sales of Playclay occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements:

2. The finished goods inventory on hand at the end of each month must be equal to 5000 units plus 40% of next month's sales. The finished goods inventory on June 30 is budgeted to be 29000 units.
4. The raw materials inventory on hand at the end of each month must be equal to 20% of the following month's production needs for raw materials. On June 30, the raw materials inventory for material A135 is budgeted to be 88,200 kilograms.
6. The company maintains no work in process inventories

A sales budget for Playclay for the last six months of the year follows:

	Budgeted Sales in Units
July	60,000
August	80,000
September	40,000
October	45,000
November	55,000
December	30,000

Required:

2. Compute a production budget for Playclay for the months July, August, September, and October.
4. Compute a budget showing the quantity of material A135 to be purchased for July, August, and September and for the quarter in total.

QUESTION 2

My Cola Company (MCC), a company that produces a number of different carbonated caffeinated beverages. The management has gathered data for one of its product lines, Twitch Cola, and wants to complete materials variances. After water, the main ingredient is sugar. For the most recent batch, My Cola Company purchased and used 7400 Kg of sugar, at a price of $4.90 per Kg. The standards call for 6300 Kg and paying $3.25 per Kg.

Using this information, compute the following

2. Materials Price Variance
4. Materials Usage Variance

In addition to the materials variances, the management at My Cola Company would like to determine labour variances for Twitch Cola. For this batch of Twitch Cola, MCC used 1600 labour hours paying a total of $20800. The Standard Hours allowed is 1750. The HR Department has determined that the Standard Labour Rate should be $13.50 per hour.

Using the above information compute the following:

2. The Labour Rate Variance
4. The Labour Efficiency Variance

Correct answers must state whether the Variance is Favorable or Unfavorable.

An answer for example "- $5500" only will not be given full credit, even if the number is correct. The same number shown as "$5500 Favorable" would receive full marks.

QUESTION 3

ABD is a software company that develops games for popular mobile devices. Selected data for two of their most successful apps (Time Wasters 4 and Dilly Dally - The Return) are listed below.

	Time Wasters 4	Dilly Dally - The Return	Total
Sales	$25,000,000	$43,000,000	$68,000,000
Operating Income	$1,200,000	$2,600,000	$3,800,000
Average Operating Assets	$3,000,000	$4,500,000	$7,500,000
Required Rate of Return	22%	22%

For both complete the following:

2. The Margin
4. The Turnover
6. The Return on Investment
8. The Residual Income

Show full working, and round the final answers to 2 decimal points correctly.