Problem 1:

Paige Company estimates that unit sales will be 10,100 in quarter 1, 12,100 in quarter 2, 14,100 in quarter 3, and 18,100 in quarter 4. Using a sales price of $81 per unit.

Prepare the sales budget by quarters for the year ending December 31, 2020.

Problem 2:

Paige Company estimates that unit sales will be 11,000 in quarter 1, 12,600 in quarter 2, 14,500 in quarter 3, and 18,800 in quarter 4. Management desires to have an ending finished goods inventory equal to 21% of the next quarter’s expected unit sales.

Prepare a production budget by quarters for the first 6 months of 2020.

Problem 3:

Perine Company has 3,784 pounds of raw materials in its December 31, 2019, ending inventory. Required production for January and February of 2020 are 4,300 and 6,100 units, respectively. 4 pounds of raw materials are needed for each unit, and the estimated cost per pound is $7. Management desires an ending inventory equal to 22% of next month’s materials requirements.

Prepare the direct materials budget for January.

Problem 4:

For Gundy Company, units to be produced are 5,500 in quarter 1 and 6,100 in quarter 2. It takes 1.5 hours to make a finished unit, and the expected hourly wage rate is $15 per hour.

Prepare a direct labor budget by quarters for the 6 months ending June 30, 2020.

Problem 5:

For Roche Inc., variable manufacturing overhead costs are expected to be $21,010 in the first quarter of 2020, with $4,160 increments in each of the remaining three quarters. Fixed overhead costs are estimated to be $35,320 in each quarter.

Prepare the manufacturing overhead budget by quarters and in total for the year.

Problem 5:

North Company has completed all of its operating budgets. The sales budget for the year shows 50,740 units and total sales of $2,166,000. The total unit cost of making one unit of sales is $24. Selling and administrative expenses are expected to be $303,000. Interest is estimated to be $12,150. Income taxes are estimated to be $202,400.

Prepare a budgeted multiple-step income statement for the year ending December 31, 2020.

Problem 6:

Kaspar Industries expects credit sales for January, February, and March to be $207,900, $264,600, and $312,700, respectively. It is expected that 75% of the sales will be collected in the month of sale, and 25% will be collected in the following month.

Compute cash collections from customers for each month.

Problem 7:

Edington Electronics Inc. produces and sells two models of pocket calculators, XQ-103 and XQ-104. The calculators sell for $15 and $25, respectively. Because of the intense competition Edington faces, management budgets sales semiannually. Its projections for the first 2 quarters of 2020 are as follows.

		Unit Sales
Product		Quarter 1		Quarter 2
XQ-103		21,610		27,340
XQ-104		14,280		17,910

No changes in selling prices are anticipated.

Prepare a sales budget for the 2 quarters ending June 30, 2020. List the products and show for each quarter and for the 6 months, units, selling price, and to guy tal sales by product and in total.

Problem 8:

Thome and Crede, CPAs, are preparing their service revenue (sales) budget for the coming year (2020). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.

Department		Quarter 1		Quarter 2		Quarter 3		Quarter 4
Auditing		2,500		1,730		2,400		2,690
Tax		3,250		2,750		2,400		2,720
Consulting		1,780		1,780		1,780		1,780

Average hourly billing rates are auditing $85, tax $94, and consulting $105.

Prepare the service revenue (sales) budget for 2020 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

Problem 9:

Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2020 sales forecast is as follows.

Quarter		HD-240
1		5,100
2		7,320
3		8,280
4		10,430

The January 1, 2020, inventory of HD-240 is 2,040 units. Management desires an ending inventory each quarter equal to 40% of the next quarter’s sales. Sales in the first quarter of 2021 are expected to be 25% higher than sales in the same quarter in 2020.

Prepare quarterly production budgets for each quarter and in total for 2020.

Problem 10:

DeWitt Industries has adopted the following production budget for the first 4 months of 2020.

Month		Units		Month		Units
January		10,100		March		5,200
February		8,400		April		4,230

Each unit requires 5 pounds of raw materials costing $4 per pound. On December 31, 2019, the ending raw materials inventory was 10,100 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month’s production requirements.

Prepare a direct materials purchases budget by month for the first quarter.

Problem 10:

Danner Company expects to have a cash balance of $52,650 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows.

Collections from customers: January $99,450, February $175,500.

Payments for direct materials: January $58,500, February $87,750.

Direct labor: January $35,100, February $52,650. Wages are paid in the month they are incurred.

Manufacturing overhead: January $24,570, February $29,250. These costs include depreciation of $1,755 per month. All other overhead costs are paid as incurred.

Selling and administrative expenses: January $17,550, February $23,400. These costs are exclusive of depreciation. They are paid as incurred.

Sales of marketable securities in January are expected to realize $14,040 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $29,250. The company wants to maintain a minimum monthly cash balance of $23,400.

Prepare a cash budget for January and February.

Problem 11:

Nieto Company’s budgeted sales and direct materials purchases are as follows.

		Budgeted Sales		Budgeted D.M. Purchases
January		$237,000		$36,500
February		251,400		39,800
March		336,600		41,500

Nieto’s sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Nieto’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.

(a)

Prepare a schedule of expected collections from customers for March.

NIETO COMPANY Expected Collections from Customers
		March
select an item February cash salesCollection of March credit salesMarch cash salesCollection of February credit salesJanuary cash salesMarch cash purchasesCollection of January credit salesPayment of March credit purchasesPayment of February credit purchases		$ enter a dollar amount
select an item Collection of February credit salesCollection of January credit salesMarch cash purchasesPayment of March credit purchasesFebruary cash salesMarch cash salesCollection of March credit salesJanuary cash salesPayment of February credit purchases		enter a dollar amount
select an item Collection of March credit salesMarch cash purchasesJanuary cash salesCollection of February credit salesCollection of January credit salesFebruary cash salesPayment of March credit purchasesPayment of February credit purchasesMarch cash sales		enter a dollar amount
select an item Collection of March credit salesMarch cash purchasesCollection of February credit salesFebruary cash salesCollection of January credit salesJanuary cash salesPayment of March credit purchasesPayment of February credit purchasesMarch cash sales		enter a dollar amount
Total collections		$ enter a total amount

(b)

Prepare a schedule of expected payments for direct materials for March.

NIETO COMPANY Expected Payments for Direct Materials
		March
select an item Payment of February credit purchasesJanuary cash salesMarch cash salesMarch cash purchasesCollection of March credit salesPayment of March credit purchasesFebruary cash salesCollection of February credit salesCollection of January credit sales		$ enter a dollar amount
select an item March cash salesFebruary cash salesCollection of March credit salesJanuary cash salesMarch cash purchasesCollection of January credit salesPayment of February credit purchasesCollection of February credit salesPayment of March credit purchases		enter a dollar amount
select an item Payment of March credit purchasesFebruary cash salesJanuary cash salesPayment of February credit purchasesCollection of February credit salesMarch cash salesCollection of January credit salesMarch cash purchasesCollection of March credit sales		enter a dollar amount
Total payments		$ enter a total amount

Problem 12:

In Rooney Company, direct labor is $17 per hour. The company expects to operate at 10,000 direct labor hours each month. In January 2020, direct labor totaling $207,000 is incurred in working 11,200 hours.

Prepare a static budget report. ROONEY COMPANY Static Direct Labor Budget Report For the Month Ended January 31, 2020 Product Line Budget Actual Difference Direct Labor $ $ $ UnfavorableFavorableNeither Favorable nor Unfavorable

ROONEY COMPANY Static Direct Labor Budget Report For the Month Ended January 31, 2020
Product Line		Budget		Actual		Difference
Direct Labor		$		$		$	UnfavorableFavorableNeither Favorable nor Unfavorable

Prepare a flexible budget report. ROONEY COMPANY Flexible Direct Labor Budget Report For the Month Ended January 31, 2020 Product Line Budget Actual Difference Direct Labor $ $ $ UnfavorableFavorableNeither Favorable nor Unfavorable Click if you would like to Show Work for this question: Open Show Work

ROONEY COMPANY Flexible Direct Labor Budget Report For the Month Ended January 31, 2020
Product Line		Budget		Actual		Difference
Direct Labor		$		$		$	UnfavorableFavorableNeither Favorable nor Unfavorable

Click if you would like to Show Work for this question:

Open Show Work

Problem 13:

Gundy Company expects to produce 1,281,600 units of Product XX in 2020. Monthly production is expected to range from 82,000 to 114,000 units. Budgeted variable manufacturing costs per unit are direct materials $4, direct labor $7, and overhead $11. Budgeted fixed manufacturing costs per unit for depreciation are $5 and for supervision are $3.

Prepare a flexible manufacturing budget for the relevant range value using 16,000 unit increments. (List variable costs before fixed costs.)

Problem 14:

In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2020 were as follows.

		Budget		Actual
Indirect materials		$14,900		$14,300
Indirect labor		20,600		21,400
Utilities		11,200		12,100
Supervision		4,600		4,600

All costs are controllable by the department manager.

Prepare a responsibility report for April for the cost center.

Problem 15:

Torres Company accumulates the following summary data for the year ending December 31, 2020, for its Water Division, which it operates as a profit center: sales—$1,924,900 budget, $2,263,100 actual; variable costs—$1,018,100 budget, $1,059,600 actual; and controllable fixed costs—$298,800 budget, $302,600 actual.

Prepare a responsibility report for the Water Division for the year ending December 31, 2020.

Problem 16:

The South Division of Wiig Company reported the following data for the current year.

Sales		$3,050,000
Variable costs		2,013,000
Controllable fixed costs		610,000
Average operating assets		5,000,000

Top management is unhappy with the investment center’s return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action.

1.		Increase sales by $300,000 with no change in the contribution margin percentage.
2.		Reduce variable costs by $150,000.
3.		Reduce average operating assets by 4%.

(a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%.)

Return on Investment

Enter the return on investments in percentages rounded to two decimal places

%

(b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%.)

		Return on investment
Action 1		Enter percentages	%
Action 2		Enter percentages	%
Action 3		Enter percentages	%

Problem 17:

Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows:

Indirect labor		$1.30
Indirect materials		0.60
Utilities		0.20

Fixed overhead costs per month are Supervision $4,000, Depreciation $1,600, and Property Taxes $700. The company believes it will normally operate in a range of 8,100–11,700 direct labor hours per month.

Prepare a monthly manufacturing overhead flexible budget for 2020 for the expected range of activity, using increments of 1,200 direct labor hours. (List variable costs before fixed costs.)