The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.30 direct labor-hours and direct laborers are paid $12.50 per hour.

In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $86,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $26,000 per quarter.

Required:

1. Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Round "Direct labor time per unit (hours)" and "Direct labor cost per hour" answers to 2 decimal places.)

2. Prepare the company’s manufacturing overhead budget.

Managers at marc Corp. are concerned that the company’s costs of production have gone wild. The chief financial officer brings you the following historic data:

marc corp selling price is $80 per unit

Use Excel. Using the High-low method:

Estimate the company’s cost formula.

Estimate the total cost of producing 1,200 units.

Calculate the breakeven point in dollar sales.

Prepare the contribution format income statement when 1,200 units are sold.

Compute the degree of operating leverage when 1,200 units are sold. Compute Net operating income if sales increased 120 units above this level.

The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.20 direct labor-hours and direct laborers are paid $12.00 per hour.

In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $20,000 per quarter.

Required:

1. Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Round "Direct labor time per unit (hours)" and "Direct labor cost per hour" answers to 2 decimal places.)

2. Prepare the company’s manufacturing overhead budget.

The quarterly sales data (number of book sold) for Christian book over the past three years in California follow:

    Year 1               Year 2               Year 3

1.   1690              1800                  1850
2.   940                 900                   1100
3.   2625              2900                  2930
4.   2500             2360                   2615

1. Construct a time series plot. What type of pattern exists in the data? This was not shown in the WebEx example I provided. But you can simply create this graph in Excel (Go to INSERT and look for charts under INSERT Tab). Basically you need to provide a 2-dimensional graph showing the trend of book sales over the given time period. The vertical line represents sale for Christian book, while the horizontal line represents quarter.

2. Use the following dummy variables to develop an estimated regression equation to account for any seasonal effects in the data: Quarter1=1 if the sales data point is in Quarter 1, otherwise Quarter 1=0; Quarter 2=1 if the sales data point is in Quarter 2, otherwise, Quarter 2=0; Quarter 3=1 if the sales data point is in Quarter 3, otherwise Quarter 3=0.

3. Compute the quarterly forecasts for next year.

4. Let t=1 to refer to the observation in quarter 1 of year 1; t=2 to refer to the observation in quarter 2 of year 1;,,,, and t=12 to refer to the observation in quarter 4 of year 3. Using the dummy variables defined in part (2) and t, develop an estimated regression equation to account for seasonable effects and any linear trend in the time series. Based upon the seasonal effects in the data and linear trend, compute the quarterly forecasts for next year.

Esperado Furnishings are retailers who purchase and sell household furnishings, including table lamps. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. The business began the last quarter of 2018 with merchandise inventory of 10 pairs of “Italia” table lamps at a total cost of $168,200.

The following transactions, relating to the “Italia” brand were completed during the quarter: October 5 Purchased 15 pairs of lamps at a cost of $17,020 per pair. October 14 Sold 18 pairs of lamps to Muller Furnishings at $22,250 per pair October 22 Purchased 24 pairs at a cost of $18,175 per pair but the supplier gave a 4% quantity discount. November 10 Sold 15 pairs of lamps to Orion Household Ltd and 10 pairs to Brown’s Furnishings which yielded total sales revenue of $589,750. November 12 Owing to an increased demand for this product, 30 pairs of lamps were purchased on account at a cost of $17,612 per pair. In addition, Esperado paid $288 in cash on each pair of lamps to have the inventory shipped from the vendor’s warehouse to Esperado’s showroom. November 27 Sold 23 pairs of lamps to Middletown Company at a price of $25,080 per pair. November 30 An actual count of inventory was carried out which revealed that there were 15 pairs of the “Italia” brand in the warehouse. December 2 In preparation for the festive season, Esperado purchased 25 pairs of lamps at a total cost of $474,500. December 15 5 pairs of the lamps purchased on December 2 were returned to the supplier, as they were not of the brand ordered. December 30 Sold 22 pairs of lamps to two customers (Omega Traders & Middleton Furnishings) at a selling price of $26,550 per pair. All purchases were on account and received on the dates stated. Required:

1. iv) Assuming that Esperado sold 86 pairs of “Italia” brand of lamps during the quarter; determine the value of ending inventory and cost of goods sold assuming the business used the periodic system and the LIFO method? (5 m

Freese, Inc., is in the process of preparing the fourth quarter budget for 2016, and the following data have been assembled:

• The company sells a single product at a price of $70 per unit. The estimated sales volume for the next six months is as follows:

  September	10,400	units
  October	9,600	units
  November	11,200	units
  December	16,000	units
  January	7,200	units
  February	8,000	units

• All sales are on account. The company's collection experience has been that 30% of a month's sales are collected in the month of sale, 68% are collected in the month following the sale, and 2% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $495,040 on September 30, 2016.
• Management's policy is to maintain ending finished goods inventory each month at a level equal to 30% of the next month's budgeted sales. The finished goods inventory on September 30, 2016, is expected to be 2,880 units.
• To make one unit of finished product, 5 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 40% of the next month's estimated usage. The raw materials inventory is expected to be 20,160 pounds on September 30, 2016.
• The cost per pound of raw material is $6, and 70% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable for raw material purchases is expected to be $91,152 on September 30, 2016.

d. Prepare a materials purchases budget in pounds, by month and in total, for the fourth quarter of 2016.

e. Prepare a schedule of cash payments for materials, by month and in total, for the fourth quarter of 2016. (Do not round intermediate calculations.)

Summer Breeze Inc. (SBI) is a retail outlet specializing in equipment and apparel for the summer months. SBI is trying to prepare a comprehensive budget for the first quarter of 2018. SBI has accumulated the following data:

SBI sales are seasonal, growing through June and then declining through the rest of the year.

December 2017 sales were $200,000. November 2017 sales were $150,000.

Cost of goods sold is 76% of sales.

Fixed Selling, General & Administrative Expenses are $50,000 per month. Variable selling expenses (commissions) are 10% of sales. SG&A are paid in the month incurred. Commissions are paid the following month.

Depreciation is $60,000 annually.

Other Payables on the December 31, 2017 Balance Sheet includes Taxes Payable - $8,200 and Commissions Payable - $20,000.

The Income Tax rate is 40%. Taxes are paid the month after they are incurred.

SBI’s inventory policy is to maintain enough inventory to meet 20% of next month’s sales.

Sales are collected 70% in the current month, 20% in the month after sale and 10% in the second month after sale.

Purchases are paid 75% in the month of purchase and 25% in the month after purchase.

SBI has a line of credit with a local bank. The line of credit has a $200,000 limit and 6% rate. Borrowings are made on the last day of the month. Interest Expense is recognized the following month. Interest is paid the month after the expense is recognized.

SBI’s policy is to maintain a minimum cash balance of $10,000

SBI pays a $500 dividend to its shareholders each month.

Projected sales are as follows:

Use the information above to prepare SBI’s comprehensive budget for the first quarter of 2018. SBI’s budgets follow the format on the following pages. Round all balances to the nearest dollar.

What is included in calculating Investment spending?