Question 11

1. Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year (in millions of dollars):

Net sales	$39,758
Cost of goods sold	$16,447
Selling, general and administration	10,578
	$27,025
Income from operations	$12,733*
*Before special items

In addition, assume that Anheuser-Busch InBev sold 320 million barrels of beer during the year. Assume that Costs that vary in total dollar amount as the level of activity changes.variable costs were 70% of the cost of goods sold and 40% of selling, general, and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that Anheuser-Busch InBev expects pricing, variable costs per barrel, and Costs that tend to remain the same in amount, regardless of variations in the level of activity.fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $400 million.

When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to the nearest whole barrel.

a.  Compute the break-even number of barrels for the current year. barrels

b.  Compute the anticipated break-even number of barrels for the following year. barrels

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2.The Junior League of Yadkinville, California, collected recipes from members and published a cookbook entitled Food for Everyone. The book will sell for $18 per copy. The chairwoman of the cookbook development committee estimated that the club needed to sell 2,000 books to break even on its $4,000 investment.

What is the Costs that vary in total dollar amount as the level of activity changes.variable cost per unit assumed in the Junior League's analysis? $ per unit

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3.Rollins and Cohen, CPAs, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been estimated for the year ending December 31, 2016:

	Billable Hours
Audit Department:
	Staff	22,400
	Partners	7,900
Tax Department:
	Staff	13,200
	Partners	5,500
Small Business Accounting Department:
	Staff	3,000
	Partners	600

The average billing rate for staff is $150 per hour, and the average billing rate for partners is $320 per hour.

Prepare a professional fees earned budget for Rollins and Cohen, CPAs, for the year ending December 31, 2016.

Rollins and Cohen, CPAs
Professional Fees Earned Budget
For the Year Ending December 31, 2016
	Billable Hours	Hourly Rate	Total Revenue
Audit Department:
Staff		$	$
Partners
Total			$
Tax Department:
Staff		$	$
Partners
Total			$
Small Business Accounting Department:
Staff		$	$
Partners
Total			$
Total professional fees earned			$

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4.Anticipated sales for Safety Grip Company were 42,000 passenger car tires and 19,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires as follows:

	Passenger Car	Truck
Rubber	35 lbs. per unit	78 lbs. per unit
Steel belts	5 lbs. per unit	8 lbs. per unit

The purchase prices of rubber and steel are $1.20 and $0.80 per pound, respectively. The desired ending inventories of rubber and steel belts are 40,000 and 10,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 46,000 and 8,000 pounds, respectively.

1. Prepare a direct materials purchases budget for Safety Grip Company for the year ended December 31, 2016. When required, enter unit prices to the nearest cent.

Safety Grip Company
Direct Materials Purchases Budget
For the Year Ending December 31, 2016
	Rubber	Steel Belts	Total
Pounds required for production:
Passenger tires	lbs.	lbs.
Truck tires
· Less desired inventory, December 1, 2016 · Less desired inventory, December 31, 2016 · Plus desired inventory, December 1, 2016 · Plus desired inventory, December 31, 2016 · Plus estimated inventory, December 1, 2016 · Plus estimated inventory, December 31, 2016
Total	lbs.	lbs.
· Less desired inventory, January 1, 2016 · Less desired inventory, January 31, 2016 · Less estimated inventory, January 1, 2016 · Less estimated inventory, January 31, 2016 · Plus estimated inventory, January 1, 2016 · Plus estimated inventory, January 31, 2016
Total units purchased	lbs.	lbs.
Unit price	x $	x $
Total direct materials to be purchased	$	$	$

5. Ambassador Suites Inc. operates a downtown hotel property that has 300 rooms. On average, 80% of Ambassador Suites's rooms are occupied on weekdays, and 40% are occupied during the weekend. The manager has asked you to develop a direct labor budget for the housekeeping and restaurant staff for weekdays and weekends. You have determined that the housekeeping staff requires 30 minutes to clean each occupied room. The housekeeping staff is paid $14 per hour. The housekeeping labor cost is fully variable to the number of occupied rooms. The restaurant has six full-time staff (eight-hour day) on duty, regardless of occupancy. However, for every 60 occupied rooms, an additional person is brought in to work in the restaurant for the eight-hour day. The restaurant staff is paid $12 per hour.

1. Determine the estimated housekeeping, restaurant, and total direct labor cost for an average weekday and average weekend day. Enter percentages as whole numbers.

Ambassador Suites Inc.
Direct Labor Cost Budget
For a Weekday or a Weekend Day
	Weekday	Weekend Day
Room occupancy
Room capacity
Occupied percent	x%	x%
Rooms occupied
Housekeeping
Number of minutes to clean a room	x	x
Total minutes
Total hours
Labor rate per hour	x $	x $
Housekeeping daily labor budget	$	$
Restaurant staff
Base restaurant staff
Incremental 60 room blocks	+	+
Total staff
Hours per day	x	x
Total hours
Labor rate per hour	x $	x $
Restaurant staff daily labor budget	$	$
Total daily labor budget	$	$

6.Levi Strauss & Co. manufactures slacks and jeans under a variety of brand names, such as Dockers® and 501 Jeans®. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.sales budget for Dockers and 501 Jeans shows estimated sales of 23,600 and 53,100 pairs, respectively, for May 2016. The finished goods inventory is assumed as follows:

	Dockers	501 Jeans
May 1 estimated inventory	670		1,660
May 31 desired inventory	420		1,860

Assume the following direct labor data per 10 pairs of Dockers and 501 Jeans for four different sewing operations:

	Direct Labor per 10 Pairs
	Dockers	501 Jeans
Inseam	18	minutes	9	minutes
Outerseam	20		14
Pockets	6		9
Zipper	12		6
Total	56	minutes	38	minutes

a.  Prepare a production budget for May.

Levi Strauss and Co.
Production Budget
May 2016 (assumed data)
	Dockers	501 Jeans
Expected units to be sold
· Less May 1 desired inventory · Less May 31 desired inventory · Plus May 1 desired inventory · Plus May 31 desired inventory · Plus May 1 estimated inventory · Plus May 31 estimated inventory
Total units
· Less May 1 desired inventory · Less May 31 desired inventory · Less May 1 estimated inventory · Less May 31 estimated inventory · Plus May 1 estimated inventory · Plus May 31 estimated inventory
Total units to be produced

b.  Prepare the May direct labor cost budget for the four sewing operations, assuming a $13 wage per hour for the inseam and outerseam sewing operations and a $15 wage per hour for the pocket and zipper sewing operations.

Levi Strauss and Co.
Direct Labor Cost Budget
May 2016 (assumed data)
	Inseam	Outerseam	Pockets	Zipper	Total
Dockers
501 Jeans
Total minutes
Total direct labor hours
Direct labor rate	x $	x $	x $	x $
Total direct labor cost	$	$	$	$	$

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7.Horizon Financial Inc. was organized on February 28, 2016. Projected selling and administrative expenses for each of the first three months of operations are as follows:

March	$52,400
April	64,200
May	68,900

Depreciation, insurance, and property taxes represent $9,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. Seventy percent of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.

Prepare a schedule indicating cash payments for selling and administrative expenses for March, April, and May. Enter all amounts as positive numbers.

Horizon Financial Inc.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31, 2016
	March	April	May
March expenses:
Paid in March	$
Paid in April		$
April expenses:
Paid in April
Paid in May			$
May expenses:
Paid in May
Total cash payments	$	$	$

_____________________________________________________________________________________

	January	February	March
Salaries	$56,900		$ 68,100		$ 72,200
Utilities	2,400		2,600		2,500
Other operating expenses	32,300		41,500		44,700
Total	$91,600		$112,200		$119,400

7.EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January–March), 2017. The Accrued Expenses Payable balance on January 1 is $15,000. The An accounting device used to plan and control resources of operational departments and divisions.budgeted expenses for the next three months are as follows:

Other operating expenses include $3,000 of monthly depreciation expense and $500 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 70% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on January 1 relates to the expenses incurred in December.

Prepare a schedule of cash payments for operations for January, February, and March.

EastGate Physical Therapy Inc.
Schedule of Cash Payments for Operations
For the Three Months Ending March 31, 2017
	January	February	March
Payments of prior month's expense	$	$	$
Payments of current month's expense
Total payment	$	$	$

_____________________________________________________________________________________

8.Raphael Frame Company prepared the following sales budget for 2016:

Raphael Frame Company Sales Budget For the Year Ending December 31, 2016
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
8" × 10" Frame:
East	8,500		$16		$136,000
Central	6,200		16		99,200
West	12,600		16		201,600
Total	27,300			$436,800
12" × 16" Frame:
East	3,800		$30		$114,000
Central	3,000		30		90,000
West	5,400		30		162,000
Total	12,200			$366,000
Total revenue from sales			$802,800

At the end of December 2016, the following unit sales data were reported for the year:

	Unit Sales
	8" × 10" Frame	12" × 16" Frame
East	8,755		3,686
Central	6,510		3,090
West	12,348		5,616

For the year ending December 31, 2017, unit sales are expected to follow the patterns established during the year ending December 31, 2016. The unit selling price for the 8" × 10" frame is expected to increase to $17 and the unit selling price for the 12" × 16" frame is expected to increase to $32, effective January 1, 2017.

Required:

1.  Compute the increase or decrease of actual unit sales for the year ended December 31, 2016, over An accounting device used to plan and control resources of operational departments and divisions.budget.

	Unit Sales, Year Ended 2016	Increase (Decrease) Actual Over Budget
	Budget	Actual Sales	Difference	Percent
8" × 10" Frame:
	East				%
	Central				%
	West				%
12" × 16" Frame:
	East				%
	Central				%
	West				%

2.  Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 2017, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 2017. Round budgeted units to the nearest whole unit.

	2016 Actual Units	Percentage Increase (Decrease)	2017 Budgeted Units (rounded)
8" × 10" Frame:
	East		%
	Central		%
	West		%
12" × 16" Frame:
	East		%
	Central		%
	West		%

3.  Prepare a sales budget for the year ending December 31, 2017.

Raphael Frame Company
Sales Budget
For the Year Ending December 31, 2017
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
8" × 10" Frame:
East		$	$
Central
West
Total			$
12" × 16" Frame:
East		$	$
Central
West
Total			$
Total revenue from sales			$

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9.The An accounting device used to plan and control resources of operational departments and divisions.budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July 2016 is summarized as follows:

a. Estimated sales for July by sales territory:

Maine:
Backyard Chef	310 units at $700 per unit
Master Chef	150 units at $1,200 per unit
Vermont:
Backyard Chef	240 units at $750 per unit
Master Chef	110 units at $1,300 per unit
New Hampshire:
Backyard Chef	360 units at $750 per unit
Master Chef	180 units at $1,400 per unit

b. Estimated inventories at July 1:

Direct materials:
Grates	290 units
Stainless steel	1,500 lbs.
Burner subassemblies	170 units
Shelves	340 units
Finished products:
Backyard Chef	30 units
Master Chef	32 units

c. Desired inventories at July 31:

Direct materials:
Grates	340 units
Stainless steel	1,800 lbs.
Burner subassemblies	155 units
Shelves	315 units
Finished products:
Backyard Chef	40 units
Master Chef	22 units

d. Direct materials used in production:

In manufacture of Backyard Chef:
Grates	3 units per unit of product
Stainless steel	24 lbs. per unit of product
Burner subassemblies	2 units per unit of product
Shelves	4 units per unit of product
In manufacture of Master Chef:
Grates	6 units per unit of product
Stainless steel	42 lbs. per unit of product
Burner subassemblies	4 units per unit of product
Shelves	5 units per unit of product

e. Anticipated purchase price for direct materials:

Grates	$15 per unit
Stainless steel	$6 per lb.
Burner subassemblies	110 per unit
Shelves	$10 per unit

f. Direct labor requirements:

Backyard Chef:
Stamping Department	0.50 hr. at $17 per hr.
Forming Department	0.60 hr. at $15 per hr.
Assembly Department	1.0 hr. at $14 per hr.
Master Chef:
Stamping Department	0.60 hr. at $17 per hr.
Forming Department	0.80 hr. at $15 per hr.
Assembly Department	1.50 hrs. at $14 per hr.

Required:

1.  Prepare a One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.sales budget for July.

Gourmet Grill Company Sales Budget For the Month Ending July 31, 2016
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
Backyard Chef:
	Maine
	Vermont
	New Hampshire
	Total
Master Chef:
	Maine
	Vermont
	New Hampshire
	Total
Total revenue from sales

2.  Prepare a A budget of estimated unit production.production budget for July.

Gourmet Grill Company Production Budget For the Month Ending July 31, 2016
	Units
	Backyard Chef	Master Chef
Expected units to be sold
Plus desired inventory, July 31, 2016
Total
Less estimated inventory, July 1, 2016
Total units to be produced

3.  Prepare a A budget that uses the production budget as a starting point to budget materials purchases.direct materials purchases budget for July.

Gourmet Grill Company Direct Materials Purchases Budget For the Month Ending July 31, 2016
	Grates (units)	Stainless Steel (lbs.)	Burner Sub- assemblies (units)	Shelves (units)	Total
Required units for production:
Backyard Chef
Master Chef
Plus desired inventory, July 31, 2016
Total
Less estimated inventory, July 1, 2016
Total units to be purchased
Unit price
Total direct materials to be purchased

4.  Prepare a Budget that estimates direct labor hours and related costs needed to support budgeted production.direct labor cost budget for July.

Gourmet Grill Company Direct Labor Cost Budget For the Month Ending July 31, 2016
		Stamping Department		Forming Department		Assembly Department	Total
Hours required for production:
	Backyard Chef
	Master Chef
	Total
Hourly rate
Total direct labor cost