Account Managerial

Harden, Incorporated, has budgeted sales in units for the next five months as follows: June 7,000 units July 5,300 units August 7,100 units September 6,800 units October 4,900 units Past experience has shown that the ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on May 31 contained 1,050 units. The company needs to prepare a production budget for the next five months. The beginning inventory for September should be:

Explanation Beginning inventory for September = Ending inventory for August = 15% of September's sales = 15% × 6,800 units = 1,020 units

The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 1,600 direct labor-hours will be required in February. The variable overhead rate is $3.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $28,320 per month, which includes depreciation of $3,680. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for February should be:

Explanation Budgeted direct labor-hours $1,600 Variable manufacturing overhead rate $3.40 Variable manufacturing overhead $5,440 Fixed manufacturing overhead $28,320 Total manufacturing overhead (a) $33,760 Budgeted direct labor-hours (b) $1,600 Predetermined overhead rate for the month (a) ÷ (b) =$ 21.10

Haylock Incorporated bases its manufacturing overhead budget on budgeted direct labor hours. The direct labor budget indicates that 5,600 direct labor hours will be required in August. The variable overhead rate is $5.40 per direct labor hour. The company's budgeted fixed manufacturing overhead is $69,440 per month, which includes depreciation of $15,680. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: 5,600*5.40= 30,240 69,440-15,680= 53,760 30,240+53760= 84,000

Explanation Manufacturing Overhead Budget August Budgeted direct labor-hours $5,600 Variable manufacturing overhead rate $5.40 Variable manufacturing overhead $30,240 Fixed manufacturing overhead $69,440 Total manufacturing overhead $99,680 Less depreciation $15,680 Cash disbursement for manufacturing overhead$ 84,000

Murie Corporation makes one product and has provided the following information: Budgeted selling price per unit $98 per unit sold Budgeted unit sales, February $11,000 units Raw materials requirement per unit of output 5 pounds Raw materials cost $3.00 per pound Direct labor requirement per unit of output 2.5 direct labor-hours Direct labor wage rate $18.00 per direct labor-hour Predetermined overhead rate (all variable) $11.00 per direct labor-hour Variable selling and administrative expense $2.70per unit sold Fixed selling and administrative expense $80,000 per month The estimated net operating income (loss) for February is closest to:

Explanation The estimated unit product cost is computed as follows: Direct materials 5 pounds $ 3.00 per pound $ 15.00 Direct labor 2.5hours $ 18.00per hour 45.00 Manufacturing overhead 2.5hours $ 11.00 per hour 27.50 Unit product cost $ 87.50 The estimated selling and administrative expense for February is computed as follows: Budgeted unit sales 11,000 Variable selling and administrative expense per unit $ 2.70 Total variable selling and administrative expense $ 29,700 Fixed selling and administrative expenses $ 80,000 Total selling and administrative expenses$ 109,700 The estimated net operating income for February is computed as follows: Total sales 11,000 units × $98 per unit $ 1,078,000 Cost of goods sold 11,000 units × $87.50 per unit 962,500 Gross margin 115,500 Selling and administrative expenses 109,700 Net operating income $ 5,800

The manufacturing overhead budget at Foshay Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 5,800 direct labor-hours will be required in May. The variable overhead rate is $9.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $104,400 per month, which includes depreciation of $8,120. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for May should be:

Manufacturing Overhead Rate May Budgeted direct labor-hours $5,800 Variable manufacturing overhead rate $9.10 Variable manufacturing overhead $52,780 Fixed manufacturing overhead $104,400 Total manufacturing overhead (a) $157,180 Budgeted direct labor-hours (b) $5,800 Predetermined overhead rate (a) ÷ (b) =$ 27.10