Acct 405 and 415

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Problem P9-1A

Name:
Course:
Date:
P9-1A – Prepare budgeted income statement and supporting budgets
Managerial Accounting, 6th Edition, by Weygandt, Kieso, and Kimmel
Pimer on Using Microsoft Excel in Accounting by Rex A Schildhouse
Problem P9-1A Glendo Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2014.
1. Sales: Quarter 1 30,000 bags; Quarter 2 42,000 bags. Selling price is $60.00
per bag.
2. Direct materials: Each bag of Snare requires 4 pounds of Gumm at a cost of $3.80
per pound and 6 pounds of Tarr at $1.50 per pound.
3. Desired inventory levels:
Type of inventory January 1 April 1 July 1
Snare (bags) 8,000 15,000 18,000
Gumm (pounds) 9,000 10,000 13,000
Tarr (pounds) 14,000 20,000 25,000
4. Direct labor: Direct labor time is 0.25 hours (15 minutes) per bag at an hourly rate of $16.00
per hour.
5. Selling and administrative expenses are expected to be 15% of sales plus $175,000 per
quarter.
6. Income taxes are expected to be 30% of income from operations.
Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be
150% of direct labor cost. (2) The direct materials budget for Tarr shows that cost of Tarr purchases to be
$297,000 in quarter 1 and $439,500 in quarter 2.
Instructions:
Prepare the budgeted income statement for the first 6 months and all required operating budgets by quarters. (Note: Use variable and fixed in the selling and administrative expense budget.) Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.
GLENDO FARM SUPPLY COMPANY
Sales Budget
For the Six Months Ending June 30, 2014
Quarter 6 Months
1 2
Title Number Number Formula
Title Amount Amount Amount
Title Formula Formula Formula
GLENDO FARM SUPPLY COMPANY
Production Budget
For the Six Months Ending June 30, 2014
Quarter 6 Months
1 2
Title Amount Amount Formula
Title Amount Amount Formula
Title Formula Formula Formula
Title Amount Amount Formula
Title Formula Formula Formula
GLENDO FARM SUPPLY COMPANY
Direct Materials Budget - Gumm
For the Six Months Ending June 30, 2014
Quarter 6 Months
1 2
Title Amount Amount Amount
Title Amount Amount Amount
Title Formula Formula Formula
Title Amount Amount Amount
Title Formula Formula Formula
Title Formula Formula Formula
Title Formula Formula Formula
Title Amount Amount Amount
Title Formula Formula Formula
GLENDO FARM SUPPLY COMPANY
Direct Labor Budget
For the Six Months Ending June 30, 2014
Quarter 6 Months
1 2
Units to be produced Amount Amount Amount
Title Amount Amount Amount
Title Formula Formula Formula
Title Amount Amount Amount
Title Formula Formula Formula
GLENDO FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
For the Six Months Ending June 30, 2014
Quarter 6 Months
1 2
Budgeted sales in units Amount Amount Formula
Title Formula Formula Formula
Title Amount Amount Amount
Total Formula Formula Formula
GLENDO FARM SUPPLY COMPANY
Budgeted Income Statement
For the Six Months Ending June 30, 2014
6 Months
Title Formula
Title Formula
Title Formula
Title Amount
Title Formula
Title Formula
Title Formula
Cost element Quantity Unit Cost Total
Direct materials
Title Number Amount Formula
Title Number Amount Formula
Title Number Amount Formula
Title Formula
Title Formula

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Problem P10-1A

Name:
Course:
Date:
P10-1A – Prepare flexible budget and budget report for manufacturing overhead
Managerial Accounting, 6th Edition, by Weygandt, Kieso, and Kimmel
Primer on Using Microsoft Excel in Accounting by Rex A Schildhouse
Problem P10-1A Cook Company estimates that 300,000 direct labor hours will be worked
during the coming year, 2014, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year.
Fixed Overhead Costs Variable Overhead Costs
Supervision $96,000 Indirect labor $126,000
Depreciation 72,000 Indirect materials 90,000
Insurance 30,000 Repairs 54,000
Rent 24,000 Utilities 72,000
Property taxes 18,000 Lubricants 18,000
$240,000 $360,000
It is estimated that direct labor hours worked each month will range from 27,000 to 36,000
hours.
During October, 27,000 direct labor hours were worked and the following overhead costs were incurred.
Fixed Overhead Costs Variable Overhead Costs
Supervision $8,000 Indirect labor $12,432
Depreciation 6,000 Indirect materials 7,680
Insurance 2,460 Repairs 4,800
Rent 2,000 Utilities 6,840
Property taxes 1,500 Lubricants 1,920
Instructions:
(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct
labor hours over the relevant range for the year ending December 31, 2014.
COOK COMPANY
Packaging Department
Monthly Manufacturing Overhead Flexible Budget
For the Year 2014
Activity level
Direct labor hours Number Number Number Number
Variable costs
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Total variable costs ($1.20) Formula Formula Formula Formula
Fixed costs
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Total fixed costs Formula Formula Formula Formula
Total costs Formula Formula Formula Formula
(b) Prepare a flexible budget report for October.
COOK COMPANY
Packaging Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended October 31, 2014
Budgeted at Actual Costs Difference
Direct labor hours (DLH) Amount Amount Favorable - Fav Unfavorable - Unf
Variable costs DLH DLH
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Total variable costs ($1.20) Formula Formula Formula Fav / Unf
Fixed costs
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Total fixed costs Formula Formula Formula Fav / Unf
Total costs Formula Formula Formula Fav / Unf
(c) Comment on management's efficiency in controlling manufacturing overhead costs in October.
Enter text answer here.