Question

In: Accounting

Waterways Continuing Problem-10 (Part Level Submission) Waterways Corporation has recently acquired a small manufacturing operation in...

Waterways Continuing Problem-10 (Part Level Submission)

Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2017.

Jordan asked the various managers to collect the following information for preparing the second-quarter budget.

Sales
Unit sales for February 2017 99,000
Unit sales for March 2017 111,000
Expected unit sales for April 2017 119,000
Expected unit sales for May 2017 124,000
Expected unit sales for June 2017 129,000
Expected unit sales for July 2017 144,000
Expected unit sales for August 2017 169,000
Average unit selling price $12


Based on the experience from the home plant, Jordan has suggested that the B.C. plant keep 10% of the next month’s unit sales in ending inventory. The plant has contracts with some of the major home hardware giants, so all sales are on account; 50% of the accounts receivable is collected in the month of sale, and the balance is collected in the month after sale. This was the same collection pattern from the previous year. The new plant has no bad debts.

Direct Materials

The combined quantity of direct materials (consisting of metal, plastic and rubber) used in each unit is 1.10 kg. Metal, plastic, and rubber together amount to $1.50 per kg. Inventory of combined direct material on March 31 consisted of 13,145 kg.

This plant likes to keep 10% of the materials needed for the next month in its ending inventory. Fifty percent of the payables is paid in the month of purchase, and 50% is paid in the month after purchase.

Accounts Payable on March 31 will total $124,800.

Direct Labour

Labour requires 15 minutes per unit for completion and is paid at an average rate of $12 per hour.

Manufacturing Overhead
Indirect materials $0.50 per labour hour
Indirect labour $0.50 per labour hour
Utilities $0.60 per labour hour
Maintenance $0.30 per labour hour
Salaries $44,800 per month
Depreciation $14,400 per month
Property taxes $2,200 per month
Insurance $1,050 per month
Janitorial $2,400 per month
Selling and Administrative
Variable selling and administrative cost per unit is $1.40.
   Advertising $12,000 a month
   Depreciation $2,600 a month
   Insurance $1,200 a month
   Other fixed costs $3,500 a month
   Salaries $60,000 a month


Other Information

The Cash balance on March 31 will be $115,000, but Waterways has decided it would like to maintain a cash balance of at least $500,000 beginning on April 30. The company has an open line of credit with its bank. The terms of the agreement require borrowing to be in $1,000 increments at 2% interest. Borrowing is considered to be on the first day of the month and repayments are on the last day of the month. Assume interest is paid at the end of the quarter.

In May, $880,000 of new equipment to update operations will be purchased.

Three months’ insurance is prepaid on the first day of the first month of the quarter.

For the second quarter of 2017, prepare a manufacturing overhead budget. (Round variable overhead rate to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 2,275.)

                                                                                                 April                     May               June               Total

Account name

Account name            _________________________________________________

Account name                                                           

Add/Less Account name                                                      ------------------------------------------------------------------------------

Account name

Add/Less Account name                                                       ___________________________________________________

Account Name                                                                       ____________________________________________________

Solutions

Expert Solution

MANUFACTURING OVERHEAD BUDGET
April May June July
A Expected unit sales 119000 124000 129000 144000
B=0.1*A Beginning inventory 11900 12400 12900
C Ending inventory 12400 12900 14400
D=A+C-B Units of Production 119500 124500 130500
E=D*0.25 Direct labor hour(Production *(15/60) 29875 31125 32625
Manufactiring overheads:
Variable manufacturing overheads:
F=0.5*E Indirect materials $       14,938 $       15,563 $       16,313
G=0.5*E Indirect labour $       14,938 $       15,563 $       16,313
H=0.6*E Utilities $       17,925 $       18,675 $       19,575
I=0.3*E Maintenance $         8,963 $         9,338 $         9,788
J=F+G+H+I Total Variable manufacturing overhead $       56,763 $       59,138 $       61,988
Fixed manufacturing overheads:
K Salaries $44,800 $44,800 $44,800
L Depreciation $14,400 $14,400 $14,400
M Property taxes $2,200 $2,200 $2,200
N Insurance $1,050 $1,050 $1,050
O Janitorial $2,400 $2,400 $2,400
P=K+L+M+N+O Total fixed manufacturing overhead $64,850 $64,850 $64,850
Q=J+P Total Manufacturing overhead $121,613 $123,988 $126,838

Related Solutions

Waterways Continuing Problem-10 (Part Level Submission) Waterways Corporation has recently acquired a small manufacturing operation in...
Waterways Continuing Problem-10 (Part Level Submission) Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2017. Jordan asked the various managers to collect the...
Waterways Continuing Problem-10 (Part Level Submission) Waterways Corporation has recently acquired a small manufacturing operation in...
Waterways Continuing Problem-10 (Part Level Submission) Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2017. Jordan asked the various managers to collect the...
Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of...
Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways' CFO, was sent to B.C. to oversee the plant's budgeting process for the second quarter of 2021. Jordan asked the various managers to collect the following information for preparing the second-quarter...
Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of...
Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2021. Jordan asked the various managers to collect the following information for preparing the second-quarter...
Waterways Problem 01 b1-b3 (Part Level Submission) Waterways Corporation is a private corporation formed for the...
Waterways Problem 01 b1-b3 (Part Level Submission) Waterways Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrigate farms, parks, commercial projects, and private lawns. It has a centrally located factory in a U.S. city that manufactures the products it markets to retail outlets across the nation. It also maintains a division that performs installation and warranty servicing in six metropolitan areas. The mission of Waterways is to manufacture quality parts...
Waterways Continuing Problem-8 (Part Level Submission) When Waterways’ management met to review the year-end financial statements,...
Waterways Continuing Problem-8 (Part Level Submission) When Waterways’ management met to review the year-end financial statements, the room was filled with excitement. Sales had been exceptional during the year and every department had exceeded the budget and last year’s sales totals. Several years ago Waterways had implemented a bonus system based on percentage of sales over budget, and the managers were expecting healthy cheques at the end of the year. Yet the plant manager, Ryan Smith, was stunned into silence...
A Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of...
A Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2017. Jordan asked the various managers to collect the following information for preparing the second-quarter...
A Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of...
A Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2017. Jordan asked the various managers to collect the following information for preparing the second-quarter...
Waterways Continuing Problem 06 a (Part 3) The section of Waterways that produces controllers for the...
Waterways Continuing Problem 06 a (Part 3) The section of Waterways that produces controllers for the company provided the following information. Sales in units for month of February 4,100 Variable manufacturing cost per unit $11.00 Sales price per unit $46.00 Fixed manufacturing overhead cost (per month for controllers) $83,000 Variable selling and administrative expenses per unit $2.80 Fixed selling and administrative expenses (per month for controllers) $11,990 Using this information for the controllers, determine the contribution margin ratio, the degree...
Waterways Continuing Problem 06 a (Part 3) The section of Waterways that produces controllers for the...
Waterways Continuing Problem 06 a (Part 3) The section of Waterways that produces controllers for the company provided the following information. Sales in units for month of February 4,200 Variable manufacturing cost per unit $10.00 Sales price per unit $43.00 Fixed manufacturing overhead cost (per month for controllers) $83,000 Variable selling and administrative expenses per unit $2.90 Fixed selling and administrative expenses (per month for controllers) $13,250 Using this information for the controllers, determine the contribution margin ratio, the degree...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT