The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31:

1. The budgeted sales in units for the next four months as follows:

1. Prepare the sales budget for the third quarter of the company knowing that each unit is sold for $40. (1.5pt)

2. Past experience has shown that the ending inventory for each month should be equal to 10% of the next month's sales in units. The inventory in the beginning of July was only 600 units.

Prepare the production budget for each month of the third quarter and for the quarter in total. (3pts)

3. Each unit produced requires 0.30 direct labor-hours and direct labor-hour workers are paid $10 per hour.   

Construct the company’s direct labor budget for the quarter, assuming that the direct labor workforce is adjusted each month to match the number of hours required to produce the forecasted number of units produced.    (1.5pt)

Garrison 15e Recheck 2014-12-16

Mercury Bag Company produces cases of grocery bags. The managers at Mercury are trying to develop budgets for the upcoming quarter. The following data have been gathered.

a. Using the above information, develop Mercury's sales forecast in dollars and production schedule in units.

b. What is Mercury's budgeted variable manufacturing cost per case?

c. Prepare Mercury's manufacturing cost budget.

d. What is the projected ending value of the Inventory account?

1. Mastery Problem: Introduction to Managerial Accounting

   Able Baker Charlie Company

   Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He’s also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information.

   Managerial vs. Financial

   Select whether the following characteristics are most often associated with managerial accounting or financial accounting.

   Primarily used for internal decision making
   Generally Accepted Accounting Principles (GAAP) must be used
   Prepared statements usually pertain to the company as a whole rather than individual departments or products
   Information provided will often be subjective, such as estimated future results
   Often prepared on an as-needed basis rather than at fixed intervals

   Cost Classification

   Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.

   (Select "Yes" or "No" from the below dropdowns.)

   Cost	Product Cost	Period Cost	Direct Materials	Direct Labor	Factory Overhead	Selling Expense	Administrative Expense	Direct Cost	Indirect Cost	Prime Cost	Conversion Cost
   Eggs used to make cheesecakes
   Baker’s wages
   Delivery driver wages
   Depreciation of office computers
   Power to run the cheesecake ovens
   President’s salary
   Sales commissions
   Factory supervisor salary

   Financial Statements

   Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company.

   Income Statement A

   Sample Company A Income Statement For the Year Ended December 31, 20Y8
   Sales		$42,000
   Finished goods inventory, January 1, 20Y8	$5,250
   Cost of goods manufactured	6,400
   Cost of finished goods available for sale	$11,650
   Finished goods inventory, December 31, 20Y8	(400)
   Cost of goods sold		(11,250)
   Gross profit		$30,750
   Operating expenses:
   Selling expenses	$6,400
   Administrative expenses	5,250
   Total operating expenses		(11,650)
   Net income		$19,100

   Income Statement B

   Sample Company B Income Statement For the Year Ended December 31, 20Y8
   Sales		$42,000
   Beginning inventory	$5,250
   Net purchases	6,400
   Inventory available for sale	$11,650
   Ending inventory	(400)
   Cost of goods sold		(11,250)
   Gross profit		$30,750
   Operating expenses:
   Selling expenses	$6,400
   Administrative expenses	5,250
   Total operating expenses		(11,650)
   Net income		$19,100

   Balance Sheet C

   Sample Company C Balance Sheet December 31, 20Y8
   Assets
   Cash		$20,800
   Accounts receivable (net)		10,000
   Inventory		6,000
   Supplies		2,100
   Land		17,000
   Total assets		$55,900
   Liabilities
   Accounts payable		$17,800
   Stockholders’ Equity
   Common stock	$19,000
   Retained earnings	19,100
   Total stockholders’ equity		38,100
   Total liabilities and stockholders’ equity		$55,900

   Balance Sheet D

   Sample Company D Balance Sheet December 31, 20Y8
   Assets
   Cash		$20,800
   Accounts receivable (net)		10,000
   Inventory:
   Direct materials	$2,500
   Work in process	1,500
   Finished goods	2,000
   Total inventory		6,000
   Supplies		2,100
   Land		17,000
   Total assets		$55,900
   Liabilities
   Accounts payable		$17,800
   Stockholders’ Equity
   Common stock	$19,000
   Retained earnings	19,100
   Total stockholders’ equity		38,100
   Total liabilities and stockholders’ equity		$55,900

   Which income statement is most appropriate for a manufacturing business?

   Which balance sheet is most appropriate for a manufacturing business?

   Costs and Balances

   At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

   Data for February
   Decrease in materials inventory	$3,000
   Materials inventory on Feb. 28	50% of materials inventory on Jan. 31
   Direct materials purchased	$12,300
   Direct materials used	3 times the direct labor incurred
   Total manufacturing costs incurred in period	$29,400
   Total manufacturing costs incurred in period	70% of Cost of Goods Manufactured
   Total manufacturing costs incurred in period	$7,000 less than Cost of Goods Sold

   	Account Balances
   Account	Jan. 31	Feb. 28	Costs Incurred
   Materials Inventory	$	$	Direct Materials Used	$
   Work in Process Inventory	21,000		Direct Labor Incurred
   Finished Goods Inventory		17,000	Factory Overhead Incurred
   			Cost of Goods Sold

Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He’s also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information.

Managerial vs. Financial

Select whether the following characteristics are most often associated with managerial accounting or financial accounting.

Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.

(Select "Yes" or "No" from the below dropdowns.)

harles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company.

Income Statement A

Income Statement B

Balance Sheet C

Balance Sheet D

Which income statement is most appropriate for a manufacturing business?

Income statement A

Which balance sheet is most appropriate for a manufacturing business?

Balance sheet D

At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

1. Mastery Problem: Introduction to Managerial Accounting

   Able Baker Charlie Company

   Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He’s also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information.

   Managerial vs. Financial

   Select whether the following characteristics are most often associated with managerial accounting or financial accounting.

   Primarily used for internal decision making
   Generally Accepted Accounting Principles (GAAP) must be used
   Prepared statements usually pertain to the company as a whole rather than individual departments or products
   Information provided will often be subjective, such as estimated future results
   Often prepared on an as-needed basis rather than at fixed intervals

   Cost Classification

   Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.

   (Select "Yes" or "No" from the below dropdowns.)

   Cost	Product Cost	Period Cost	Direct Materials	Direct Labor	Factory Overhead	Selling Expense	Administrative Expense	Direct Cost	Indirect Cost	Prime Cost	Conversion Cost
   Eggs used to make cheesecakes
   Baker’s wages
   Delivery driver wages
   Depreciation of office computers
   Power to run the cheesecake ovens
   President’s salary
   Sales commissions
   Factory supervisor salary

   Financial Statements

   Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company.

   Income Statement A

   Sample Company A Income Statement For the Year Ended December 31, 20Y8
   Sales		$42,000
   Finished goods inventory, January 1, 20Y8	$5,250
   Cost of goods manufactured	6,400
   Cost of finished goods available for sale	$11,650
   Finished goods inventory, December 31, 20Y8	(400)
   Cost of goods sold		(11,250)
   Gross profit		$30,750
   Operating expenses:
   Selling expenses	$6,400
   Administrative expenses	5,250
   Total operating expenses		(11,650)
   Net income		$19,100

   Income Statement B

   Sample Company B Income Statement For the Year Ended December 31, 20Y8
   Sales		$42,000
   Beginning inventory	$5,250
   Net purchases	6,400
   Inventory available for sale	$11,650
   Ending inventory	(400)
   Cost of goods sold		(11,250)
   Gross profit		$30,750
   Operating expenses:
   Selling expenses	$6,400
   Administrative expenses	5,250
   Total operating expenses		(11,650)
   Net income		$19,100

   Balance Sheet C

   Sample Company C Balance Sheet December 31, 20Y8
   Assets
   Cash		$20,800
   Accounts receivable (net)		10,000
   Inventory		6,000
   Supplies		2,100
   Land		17,000
   Total assets		$55,900
   Liabilities
   Accounts payable		$17,800
   Stockholders’ Equity
   Common stock	$19,000
   Retained earnings	19,100
   Total stockholders’ equity		38,100
   Total liabilities and stockholders’ equity		$55,900

   Balance Sheet D

   Sample Company D Balance Sheet December 31, 20Y8
   Assets
   Cash		$20,800
   Accounts receivable (net)		10,000
   Inventory:
   Direct materials	$2,500
   Work in process	1,500
   Finished goods	2,000
   Total inventory		6,000
   Supplies		2,100
   Land		17,000
   Total assets		$55,900
   Liabilities
   Accounts payable		$17,800
   Stockholders’ Equity
   Common stock	$19,000
   Retained earnings	19,100
   Total stockholders’ equity		38,100
   Total liabilities and stockholders’ equity		$55,900

   Which income statement is most appropriate for a manufacturing business?

   Which balance sheet is most appropriate for a manufacturing business?

   Costs and Balances

   At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

   Data for February
   Decrease in materials inventory	$2,700
   Materials inventory on Feb. 28	50% of materials inventory on Jan. 31
   Direct materials purchased	$12,300
   Direct materials used	3 times the direct labor incurred
   Total manufacturing costs incurred in period	$28,000
   Total manufacturing costs incurred in period	70% of Cost of Goods Manufactured
   Total manufacturing costs incurred in period	$7,000 less than Cost of Goods Sold

   	Account Balances
   Account	Jan. 31	Feb. 28	Costs Incurred
   Materials Inventory	$	$	Direct Materials Used	$
   Work in Process Inventory	27,000		Direct Labor Incurred
   Finished Goods Inventory		16,000	Factory Overhead Incurred
   			Cost of Goods Sold

Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He’s also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information.

Managerial vs. Financial

Select whether the following characteristics are most often associated with managerial accounting or financial accounting.

Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.

(Select "Yes" or "No" from the below dropdowns.)

harles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company.

Income Statement A

Income Statement B

Balance Sheet C

Balance Sheet D

Which income statement is most appropriate for a manufacturing business?

Income statement A

Which balance sheet is most appropriate for a manufacturing business?

Balance sheet D

At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he’s collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow of the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured.

Suppose that U.S. consumption spending is ​$13.5 ​trillion, gross private domestic investment is ​$2.3 ​trillion, government spending is ​$3.3 ​trillion, and net exports are −$0.3 trillion. If interest income is ​$1.2 ​trillion, depreciation is ​$0.6 ​trillion, wages are ​$12.6 trillion, and rental income is ​$0.7 ​trillion, what is the net​ investment?

The net investment is? ​(Enter your response rounded to one decimal​ place.)

Use the information in the table below to calculate Net Exports (NX) and gross domestic product (GDP), in billions of dollars.

            Consumption Spending. . . . . .. . . . . . . . . .    $12,000 billion

            Gross Investment Spending . . . . . . . . . . . .   $3,100 billion

            Government Purchases. . . . . .  . . . . . . . . .   $3,400 billion

            Exports            . . . . . . . . . . . . . . . . . . . . . .    $2,200 billion

            Imports            . . . . . . . . . . . . . . . . . . . . . .    $2,700 billion

a)    Net Exports = $

b)    Is this economy experiencing a trade surplus or a trade deficit?

c)   Gross Domestic Product (GDP) = $