Budgeted Income Statement and Supporting Budgets

The budget director of Gold Medal Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for March:

Estimated sales for March:

Estimated inventories at March 1:

Desired inventories at March 31:

Direct materials used in production:

Anticipated cost of purchases and beginning and ending inventory of direct materials:

Direct labor requirements:

Estimated factory overhead costs for March:

Estimated operating expenses for March:

Estimated other income and expense for March:

Estimated tax rate: 30%

Required:

1. Prepare a sales budget for March. Enter all amounts as positive numbers.

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

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

4. Prepare a direct labor cost budget for March. Enter all amounts as positive numbers.

5. Prepare a factory overhead cost budget for March.

6. Prepare a cost of goods sold budget for March. Work in process at the beginning of March is estimated to be $15,300, and work in process at the end of March is desired to be $14,800. 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 March.

8. Prepare a budgeted income statement for March.

1. Budgeted Income Statement and Supporting Budgets

   The budget director of Gold Medal Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for March:

   1. Estimated sales for March:

      Batting helmet	1,200 units at $40 per unit
      Football helmet	6,500 units at $160 per unit

   2. Estimated inventories at March 1:

      Direct materials:
      Plastic	90 lbs.
      Foam lining	80 lbs.
      Finished products:
      Batting helmet	40 units at $25 per unit
      Football helmet	240 units at $77 per unit

   3. Desired inventories at March 31:

      Direct materials:
      Plastic	50 lbs.
      Foam lining	65 lbs.
      Finished products:
      Batting helmet	50 units at $25 per unit
      Football helmet	220 units at $78 per unit

   4. Direct materials used in production:

      In manufacture of batting helmet:
      Plastic	1.2 lbs. per unit of product
      Foam lining	0.5 lb. per unit of product
      In manufacture of football helmet:
      Plastic	3.5 lbs. per unit of product
      Foam lining	1.5 lbs. per unit of product

   5. Anticipated cost of purchases and beginning and ending inventory of direct materials:

      Plastic	$6 per lb.
      Foam lining	$4 per lb.

   6. Direct labor requirements:

      Batting helmet:
      Molding Department	0.2 hr. at $20 per hr.
      Assembly Department	0.5 hr. at $14 per hr.
      Football helmet:
      Molding Department	0.5 hr. at $20 per hr.
      Assembly Department	1.8 hrs. at $14 per hr.

   7. Estimated factory overhead costs for March:

      Indirect factory wages	$86,000
      Depreciation of plant and equipment	12,000
      Power and light	4,000
      Insurance and property tax	2,300

   8. Estimated operating expenses for March:

      Sales salaries expense	$184,300
      Advertising expense	87,200
      Office salaries expense	32,400
      Depreciation expense—office equipment	3,800
      Telephone expense—selling	5,800
      Telephone expense—administrative	1,200
      Travel expense—selling	9,000
      Office supplies expense	1,100
      Miscellaneous administrative expense	1,000

   9. Estimated other income and expense for March:

      Interest revenue	$940
      Interest expense	872

   10. Estimated tax rate: 30%

   Required:

   1. Prepare a sales budget for March. Enter all amounts as positive numbers.

   Gold Medal Athletic Co. Sales Budget For the Month Ending March 31
   	Unit Sales Volume	Unit Selling Price			Total Sales
   Batting helmet		$			$
   Football helmet
   Total revenue from sales					$

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

   Gold Medal Athletic Co. Production Budget For the Month Ending March 31
   	Units
   	Batting helmet	Football helmet

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

   Gold Medal Athletic Co. Direct Materials Purchases Budget For the Month Ending March 31
   		Plastic		Foam Lining		Total
   Units required for production:
   Batting helmet
   Football helmet
   Desired units of inventory, March 31
   Total units available
   Estimated units of inventory, March 1
   Total units to be purchased
   Unit price	$		$
   Total direct materials to be purchased	$		$		$

   4. Prepare a direct labor cost budget for March. Enter all amounts as positive numbers.

   Gold Medal Athletic Co. Direct Labor Cost Budget For the Month Ending March 31
   		Molding Department		Assembly Department		Total
   Hours required for production:
   Batting helmet
   Football helmet
   Total
   Hourly rate	$		$
   Total direct labor cost	$		$		$

   5. Prepare a factory overhead cost budget for March.

   Gold Medal Athletic Co. Factory Overhead Cost Budget For the Month Ending March 31
   	$
   Total	$

   6. Prepare a cost of goods sold budget for March. Work in process at the beginning of March is estimated to be $15,300, and work in process at the end of March is desired to be $14,800. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

   Gold Medal Athletic Co. Cost of Goods Sold Budget For the Month Ending March 31
   			$
   		$
   Direct materials:
   	$
   Cost of direct materials available for use	$
   Cost of direct materials placed in production	$
   Total manufacturing costs
   Total work in process during period		$
   Cost of goods manufactured
   Cost of finished goods available for sale			$
   Cost of goods sold			$

   7. Prepare a selling and administrative expenses budget for March.

   Gold Medal Athletic Co. Selling and Administrative Expenses Budget For the Month Ending March 31
   Selling expenses:
   		$
   Total selling expenses			$
   Administrative expenses:
   		$
   Total administrative expenses
   Total operating expenses			$

   8. Prepare a budgeted income statement for March.

   Gold Medal Athletic Co. Budgeted Income Statement For the Month Ending March 31
   			$
   			$
   Operating expenses:
   		$
   Total operating expenses
   Income from operations			$
   Other revenue and expense:
   		$
   Income before income tax			$
   Net income			$

A Peruvian human sacrificial temple, near Lima, Peru, has three
levels, levels J, M, and H, where tourists have the only access to
the temple.
The probabilities that a tourist visiting the temple will visit the
different levels are:
Visit level J: 0.74
Visit level M: 0.70
Visit level H: 0.62
Visit levels J and M: 0.52
Visit levels J and H: 0.46
Visit levels M and H: 0.44
Visit levels J and M and H: 0.34.
Find the probabilities that a person visiting the temple will:
A. Visit level M given that he will go to level J.
B. Visit level H given that he will go to level J and level M.
C. Not visit level J given that he will visit level M and/or visit
level H.
D. Visit level H and visit level J given that he will not visit level
M.

Study Guide #2

Thirty-three small communities in Connecticut (population near 10,000 each) gave an average of x = 138.5 reported cases of larceny per year. Assume that ? is known to be 42.9 cases per year.

(a) Find a 90% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

(b) Find a 95% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

(c) Find a 99% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

(d) Compare the margins of error for parts (a) through (c).

As the confidence levels increase, do the margins of error increase?

As the confidence level increases, the margin of error increases.

As the confidence level increases, the margin of error remains the same.  

As the confidence level increases, the margin of error decreases.

(e) Compare the lengths of the confidence intervals for parts (a) through (c).

As the confidence levels increase, do the confidence intervals increase in length?

As the confidence level increases, the confidence interval increases in length.

As the confidence level increases, the confidence interval decreases in length.    

As the confidence level increases, the confidence interval remains the same length.

The Prairie Island nuclear power plant near Red Wing, Minnesota, produces about 2×10⁹watts. A watt is one Joule per second.

b. Calculate the Joules of energy produced by the Prairie Island plant in one day.

c. Recall that E = m c². Use E from part b. Calculate m, the minimum mass that was converted to energy in one day. (Because of inefficiency, the actual mass converted must be larger.)

d. During fission of U-235, 0.1% of uranium's mass is converted to energy.  What mass of U-235 is required for the mass loss you calculated in part c?

e.  Combustion of bituminous coal produces 30 kJ/g (Chemistry in Context Table 5.2). That is heat, not electrical power, but ignore inefficiency and suppose that all the heat is converted to electrical energy. What mass of coal will produce the daily energy calculated in part b?

Read the following scenario below:

Leighton Beridon owns "Jeemp Farms", located near Weimar, TX. The farm produces pecan trees and sod. He has so many orders from the Houston metropolitan area that he is able to sell all his inventory each year, but he is not netting as much as he has in past years. His daughter, Liesl Beridon, came home from college over Thanksgiving and mentioned ABC costing, which she learned about in her cost accounting class. Mr. Beridon does not really know what ABC costing is and is skeptical as to whether it would be right for his business. He has hired your company to educate him about ABC and whether or not he should use an ABC system. Over the next few weeks, you will work towards helping Mr. Beridon decide what is the best route for his company to take.

Shortly after you get started, Mr. Beridon sends you an email stating that he feels he needs to discontinue the sod portion of his business and focus on his tree sector, as he can charge more per tree than he can charge for a foot of sod. He sends you an email stating, "I can charge so much more for a tree than a foot of grass. Therefore, I am planning on discontinuing the sod portion of the business immediately as I make so much more on the trees! I am going to plant all my sod acres with trees".

Questions:

• Project potential benefits Mr. Beridon could gain from using an ABC system.
• Describe any factors that could skew your results. In other words, explain if there is one method of costing that could make a product look more favorable than it really is
• Explain ABC costing and how it is different than traditional costing.
• Explain the advantages/disadvantages of using ABC costing.

Read the following scenario below:

Leighton Beridon owns "Jeemp Farms", located near Weimar, TX. The farm produces pecan trees and sod. He has so many orders from the Houston metropolitan area that he is able to sell all his inventory each year, but he is not netting as much as he has in past years. His daughter, Liesl Beridon, came home from college over Thanksgiving and mentioned ABC costing, which she learned about in her cost accounting class. Mr. Beridon does not really know what ABC costing is and is skeptical as to whether it would be right for his business. He has hired your company to educate him about ABC and whether or not he should use an ABC system. Over the next few weeks, you will work towards helping Mr. Beridon decide what is the best route for his company to take.

Shortly after you get started, Mr. Beridon sends you an email stating that he feels he needs to discontinue the sod portion of his business and focus on his tree sector, as he can charge more per tree than he can charge for a foot of sod. He sends you an email stating, "I can charge so much more for a tree than a foot of grass. Therefore, I am planning on discontinuing the sod portion of the business immediately as I make so much more on the trees! I am going to plant all my sod acres with trees".

Questions:

• Project potential benefits Mr. Beridon could gain from using an ABC system.
• Describe any factors that could skew your results. In other words, explain if there is one method of costing that could make a product look more favorable than it really is
• Explain ABC costing and how it is different than traditional costing.
• Explain the advantages/disadvantages of using ABC costing.

Q.1. Ms. Moonmoon is going to start a new coffee shop near Sylhet Osmani International Airport. Suggest a Brand name for her coffee shop. Why do you think that your proposed brand
name is perfect for her business? 4

Q.2. Do you consider BRAND when you are going to purchase something? Why or why not? 3

Q.3. Suppose, you have started an online business recently. Your business is Sylhet metropolitan area based and you sell imported Laptops, Tabs, Mobile phones, smartwatches, and headphones. Which pricing strategy will you follow; Market penetration pricing or market skimming pricing? Why?

Problem 9-05 (Algorithmic)

Kilgore’s Deli is a small delicatessen located near a major university. Kilgore’s does a large walk-in carry-out lunch business. The deli offers two luncheon chili specials, Wimpy and Dial 911. At the beginning of the day, Kilgore needs to decide how much of each special to make (he always sells out of whatever he makes). The profit on one serving of Wimpy is $0.51, on one serving of Dial 911, $0.69. Each serving of Wimpy requires 0.21 pound of beef, 0.21 cup of onions, and 5 ounces of Kilgore’s special sauce. Each serving of Dial 911 requires 0.21 pound of beef, 0.38 cup of onions, 2 ounces of Kilgore’s special sauce, and 5 ounces of hot sauce. Today, Kilgore has 25 pounds of beef, 20 cups of onions, 75 ounces of Kilgore’s special sauce, and 53 ounces of hot sauce on hand.

1. Develop a linear programming model that will tell Kilgore how many servings of Wimpy and Dial 911 to make in order to maximize his profit today. If required, round your answers to two decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)
   

   Let	W = number of servings of Wimpy to make
   	D = number of servings of Dial 911 to make

   Max	W	+	fill in the blank 2D
   s.t.
   	W	+	D	≤		(Beef)
   	W	+	D	≤		(Onions)
   	W	+	D	≤		(Special Sauce)
   	W	+	D	≤		(Hot Sauce)
   			W, D	≥	0

2. Find an optimal solution. If required, round your answers to two decimal places.
   
   W = , D = , Profit = $
   
3. What is the shadow price for special sauce? If required, round your answers to two decimal places.
   
   
   Interpret the shadow price.
   
   The input in the box below will not be graded, but may be reviewed and considered by your instructor.
   
   
   
4. Increase the amount of special sauce available by 1 ounce and re-solve. If required, round your answers to two decimal places.
   
   W = , D =   , Profit = $
   
   Does the solution confirm the answer to part (c)?

You hear someone slurring his words and slobbering all over the people near him. You suspect that the person may have had some alcoholic beverages before you arrived. You hear him saying, "Ah, you don't need an audit. Just get some accountant to prepare a set of financial statements from your own books, photocopy them, and give them to the bank. You'll get that big loan you have been looking for." Your companion is a prospective client who has never used an outside accounting firm before, other than to have tax returns prepared. Your companion wants to know what your accounting firm can do for him and the company he runs. Required: a. What is an audit? How does an audit differ from reviews and compilations? 2 b. What are some of the benefits a company receives from getting an audit by a CPA firm?