Question 1:
The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 9.000 7,000 7,500 8,400
Each unit requires 0.45 direct labor-hours, and direct laborers are paid $10 per hour.
Required:
1. Complete the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Round "Direct labor time per unit (hours)" answers to 2 decimal places.)
2. Complete the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead. assume that the company's direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 3,500 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 3,500 hours anyway. Any hours worked in excess of 3,500 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. (Input all amounts as positive values.)
Question 2:
Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia.
Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company's products. The company is now planning raw materials needs for the third quarter, the quarter in which peak sales of Supermix occur. To keep production and sales moving smoothly, the company has the following inventory requirements:
a. The finished goods inventory on hand at the end of each month must be equal to 3,000 units of Supermix plus 25% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 19,250 units.
b. The raw materials inventory on hand at the end of each month must be equal to one-half of the following month's production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 84,000 cc of solvent H300.
c. The company maintains no work in process inventories.
A sales budget for Supermix for the last six months of the year follows.
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Budgeted Sales
in Units
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July
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65,000
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August
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70,000
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September
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80.000
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October
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60,000
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November
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50,000
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December
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40,000
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A sales budget for Supermix for the last six months of the year follows.
Required:
1. Prepare a production budget for Supermix for the months July. August. September. and October.
2. Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August. and September. and for the quarter in total.
Question 3:
The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Budgeted direct labor-hours 9.000 8.700 9.000 8.400
The company's variable manufacturing overhead rate is $3.25 per direct labor-hour and the company's fixed manufacturing overhead is $58,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $14,500 per quarter.
Required:
1. Complete the company's manufacturing overhead budget for the upcoming fiscal year.
2. Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.
Question 4:
Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below:
The company is in the process of preparing a budget for May and has assembled the following data:
Minden Company
Balance Sheet
April 30
Assets
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Cash
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$ 9,000
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Accounts receivable
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54,000
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Inventory
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30,000
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Buildings and equipment, net of depreciation
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207,000
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Total assets
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$ 300,000
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Liabilities and Stockholders' Equity
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Accounts payable
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$ 63,000
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Note payable
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14,500
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Common stock
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180,000
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Retained earnings
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42,500
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Total liabilities and stockholders' equity
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$ 300,000
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a. Sales are budgeted at $220,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. Each month's credit sales are collected 60% in the month of sale and 40% in the month.