Topanga Group began operations early in 2018. Inventory purchase information for the quarter ended March 31, 2018, for Topanga’s only product is provided below. The unit costs include the cost of freight. The company uses a periodic inventory system.

Sales for the quarter, all at $8 per unit, totaled 37,000 units leaving 24,000 units on hand at the end of the quarter.

Required:
1. Calculate Topanga's cost of goods sold for the first quarter using:

1. FIFO
2. LIFO
3. Average cost

2. Calculate Toponga's gross profit ratio for the first quarter using FIFO, LIFO, and Average cost.
3. Comment on the relative effect of each of the three inventory methods on the gross profit ratio.

Topanga Group began operations early in 2018. Inventory purchase information for the quarter ended March 31, 2018, for Topanga’s only product is provided below. The unit costs include the cost of freight. The company uses a periodic inventory system.

Sales for the quarter, all at $8 per unit, totaled 37,000 units leaving 24,000 units on hand at the end of the quarter.

Required:
1. Calculate Topanga's cost of goods sold for the first quarter using:

1. FIFO
2. LIFO
3. Average cost

2. Calculate Toponga's gross profit ratio for the first quarter using FIFO, LIFO, and Average cost.
3. Comment on the relative effect of each of the three inventory methods on the gross profit ratio.

The Bureau of Economic Analysis provides profit data for various industries in the United States. Go to www.bea.gov Click on Corporate Profits Click on National Income and Product Accounts Tables Choose a table from a list of Selected NIPA Tables Scroll down and find the Table 6.16D on Corporate Profits by Industry”

In your initial response to the topic you have to answer all questions:

1. Based on the most-recent figures, which of the following categories of industry classifications has the greatest profits:

•Financial or nonfinancial •Manufacturing , transportation and warehousing, wholesale trade, or retail trade •Durable goods or nondurable goods

2.During the past years, which sectors had the largest and smallest percentage increase in profit?

3. Which sectors, if any, experienced losses?

4. What are the implications of the profit changes for expansion or contraction of the particular industries?

The Bureau of Economic Analysis provides profit data for various industries in the United States. Go to www.bea.gov Click on Corporate Profits Click on National Income and Product Accounts Tables Choose a table from a list of Selected NIPA Tables Scroll down and find the Table 6.16D (pg 134 in PDF) on Corporate Profits by Industry”

In your initial response to the topic you have to answer all questions:

1. Based on the most-recent figures, which of the following categories of industry classifications has the greatest profits: •Financial or nonfinancial •Manufacturing , transportation and warehousing, wholesale trade, or retail trade •Durable goods or nondurable goods

2.During the past years, which sectors had the largest and smallest percentage increase in profit?

3. Which sectors, if any, experienced losses?

4. What are the implications of the profit changes for expansion or contraction of the particular industries?

Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 41,000 for January, 61,000 for February, and 51,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows.

  
Prepare a budgeted income statement for this first quarter. (Round your final answers to the nearest whole dollar.)

a)Explain the economic cycle concept "growth cycle". When does a product gap?

b) Use a Keynesian cross to show what happens in the case of an autonomous Planned macroeconomic spending is falling.

c) Explain how the economy is adapting to a new income-expenditure adapts weight.

Perez Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Perez’s policy is to maintain an ending inventory balance equal to 20 percent of the following month’s cost of goods sold. April’s budgeted cost of goods sold is $78,000.

Required

1. Complete the inventory purchases budget by filling in the missing amounts.

   	Inventory Purchases Budget January February March Budgeted cost of goods sold $53,000 $57,000 $63,000 Plus: Desired ending inventory 11,400 Inventory needed 64,400 Less: Beginning inventory 10,600 Required purchases (on account) $53,800

2. Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement.

3. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter.

   	b. Cost of goods sold c. Ending inventory

ABC produces high-tech storage systems. The company is in its fifth year of operations and is preparing to build its master budget for the coming year (2017). The master budget will be based upon the following information:

Fourth quarter sales for 2016 were 50,000 units.

Budget unit sales by quarter (for 2017) are as follows:

First Quarter                      48,000

Second Quarter                                50,000

Third Quarter                     47,000

Fourth Quarter                 51,000

The selling price is $320 per unit. All sales are credit sales. ABC collects 70% of credit sales in the same quarter the sales are made and the remaining 30% is collected in the following quarter.   There are no bad debts.

ABC’s finished goods ending inventory policy is to have 25% of next quarter’s sales on hand at the end of each quarter. This policy was met on January 1, 2017. First quarter sales projections for 2018 are 44,000 units.

Each finished unit uses two pieces of plastic. Each piece of plastic costs $60. At the end of each quarter ABC plans to have 30% of the direct materials needed for the next quarter’s production (production for the first quarter of 2018 is expected to be 48,000 finished units). This policy was met on January 1, 2017. ABC buys direct materials on account. Eighty percent of the purchases are paid for in the quarter of acquisition and the remaining twenty percent are paid for in the following quarter.

Each unit uses two hours of direct labor to finish. Direct laborers are paid $20 per hour and all wages are paid in the same quarter as incurred.

Fixed overhead costs total $1,000,000 each quarter. Of this total, $300,000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred. The fixed overhead rate (base is units) is computed by dividing the year’s total fixed overhead by the year’s expected actual units produced when computing the cost of a finished unit for ending finished goods inventory. Round the overhead rate to the nearest two decimal points. Remember that depreciation is not paid for.

Variable overhead is budgeted at $6 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred.

Fixed selling and administration expenses are budgeted at $500,000 per quarter, including $200,000 of depreciation. Remember again that depreciation is not paid for. The fixed selling and administration expenses other than depreciation are paid in the quarter incurred.

Variable selling and administration expenses are budgeted at $7 per unit sold. Also, for each quarter there is a $100 expense in which you entitle “your name expense.” For example, for each quarter I would show a Shadbolt expense of $100 on a line separate from other variable selling and administration expense. All selling and administrative expenses are paid in the quarter incurred.

The balance sheet as of December 31, 2016, is as follows:

                                                                                       Assets

                                                Cash                                                 $2,300,000

                                                Direct Materials Inventory          1,440,000

                                                Accounts Receivable                    2,880,000

                                                Finished Goods Inventory           2,700,000

                                                Plant and Equipment, net          21,500,000

                                                                Total                                 $30,820,000

                                                                                Liabilities

                                                Accounts Payable                       $2,160,000¹

                                                Capital Stock                                 15,400,000

                                                Retained Earnings                        13,260,000

                                                                Total                                $30,820,000

                                ¹For purchase of direct materials only.

ABC will pay quarterly dividends of $200,000. Each quarter ABC will purchase $700,000 of equipment – depreciation on these purchase is already included in the above noted costs.

Required:

Using Excel, prepare the following budgets for ABC for 2017. Prepare the following at the end of the calendar year only:

Ending Finished goods inventory budget (remember that this is the year-end inventory, not each quarter’s ending inventory summed) need to compute cost of goods sold.

Cost of Goods Sold budget (there is no work in process inventory).

Budgeted income statement using absorption costing.

Budgeted Balance Sheet.

The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton is planning for next year by developing a master budget by quarters. Grilton’s balance sheet for December 31, 2016 follows:

GRILTON TIRE COMPANY

Balance Sheet

December 31, 2016

Assets

Current Assets:

   Cash                                                                                            $ 39,000

   Accounts Receivable                                                                    40,000

   Raw Materials Inventory                                                               2,400

   Finished Goods Inventory                                                             8,700

   Total Current Assets                                                                                               $ 90,100

Property, Plant and Equipment:

   Equipment                                                                                  177,000

   Less: Accumulated Depreciation                                            (42,000)                135,000

Total Assets                                                                                                                $225,100

Liabilities

Current Liabilities:

   Accounts Payable                                                                                                   $ 8,000

Stockholder’s Equity

Common Stock, no par                                                            $ 130,000

Retained Earnings                                                                          87,100

   Total Stockholder’s Equity                                                                                   217,100

Total Liabilities and Stockholder’s Equity                                                          $225,100

Other data for Grilton Tire Company:

Budgeted Sales are 1,600 for the first quarter and expected to increase by 200 tires per quarter. Cash Sales are expected to be 20% of total sales, with the remaining 80% of sales on account.

Finished Goods Inventory on December 31, 2016 consists of 300 tires at $29 each.

Desired ending Finished Goods Inventory is 40% of the next quarter’s sales; first quarter sales for 2018 are expected to be 2,400 tires and second quarter sales for 2018 are expected to be 2,600. FIFO inventory costing method is used.

Direct Materials cost is $8 per tire.

Desired ending Raw Materials Inventory is 30% of the next quarter’s direct materials needed for production.

Each tire requires 0.25 hours of direct labor; direct labor costs average $16 per hour.

Variable manufacturing overhead is $3 per tire produced.

Fixed manufacturing overhead includes $4,500 per quarter in depreciation and $26,780 per quarter for other costs, such as utilities, insurance, and property taxes.

Fixed selling and administrative expenses include $8,000 per quarter for salaries; $1,800 per quarter for rent; $1,200 per quarter for insurance; and $500 per quarter for depreciation.

Variable selling and administrative expenses include supplies at 2% of sales.

Capital expenditures include $50,000 for new manufacturing equipment, to be purchased and paid in the first quarter.

Cash receipts for sales on account are 60% in the quarter of sale and 40% in the quarter following the sale; December 31, 2016, Accounts Receivable is received in the first quarter of 2017.

Direct materials purchases are paid 70% in the quarter purchased and 30% in the following quarter; December 31, 2016, Accounts Payable is paid in the first quarter of 2017.

Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred.

Income tax expense is projected at $4,500 per quarter and is paid in the quarter incurred.

Grilton desires to maintain a minimum cash balance of $39,000 and borrows from the local bank as needed in increments of $1,000 at the beginning of the quarter; principal repayments are made at the beginning of the quarter when excess funds are available and in increments of $1,000; interest is 6% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter.

REQUIREMENTS:

Prepare a sales budget in units and dollars for each quarter and in total for the year 2017.      (5 pts.)

Prepare a schedule of expected cash collections for each quarter and in total for the year 2017.   (10 pts.)

Prepare a production budget for each quarter and in total for the year 2017.    (5 pts.)

Prepare a direct materials budget for each quarter and in total for the year 2017. (10 pts.)

Blossom Inc. had sales of $2,300,000 for the first quarter of 2020. In making the sales, the company incurred the following costs and expenses.

Prepare a CVP income statement for the quarter ended March 31, 2020.

Budgeted income statement and supporting budgets for three months

Newport Inc. gathered the following data for use in developing the budgets for the first quarter (June, July, August) of its fiscal year:

a. Estimated sales at $36 per unit:

b. Estimated finished goods inventories:

c. Work in process inventories are estimated to be insignificant (zero).

d. Estimated direct materials inventories:

e. Manufacturing costs:

f. Selling expenses:

1. Prepare a sales budget for August.

2. Prepare a production budget for August. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

3. Prepare a direct materials purchases budget for August. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

4. Prepare a direct labor cost budget for August.

5. Prepare a factory overhead cost budget for August.

6. Prepare a cost of goods sold budget for August. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

7. Prepare a selling and administrative expenses budget for August. Enter all amounts as positive number.

8. Prepare a budgeted income statement with budgeted operating income for August. For those boxes in which you must enter subtracted or negative numbers use a minus sign.