The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 63 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

Fixed Cost per Month Cost per Course Cost per
Student
Instructor wages $ 2,980
Classroom supplies    $ 300
Utilities $ 1,210 $ 85
Campus rent $ 5,000
Insurance $ 2,300    
Administrative expenses $ 3,900 $ 41 $ 4

For example, administrative expenses should be $3,900 per month plus $41 per course plus $4 per student. The company’s sales should average $850 per student.

The actual operating results for September appear below:

Actual
Revenue $ 50,650
Instructor wages $ 11,200
Classroom supplies $ 18,750
Utilities $ 1,960
Campus rent $ 5,000
Insurance $ 2,440
Administrative expenses $ 3,742

Required:

1. The Gourmand Cooking School expects to run four courses with a total of 63 students in September. Complete the company’s planning budget for this level of activity.

2. The school actually ran four courses with a total of 59 students in September. Complete the company’s flexible budget for this level of activity.

3. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

he Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 61 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

For example, administrative expenses should be $3,700 per month plus $42 per course plus $5 per student. The company’s sales should average $860 per student.

The company planned to run four courses with a total of 62 students; however, it actually ran four courses with a total of only 58 students. The actual operating results for September appear below:

Required:

Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

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Question 5 of 5 Total5 of 5

rev: 08_05_2014_QC_51911, 08_28_2014_QC_51911

Direct Materials Variances

Bellingham Company produces a product that requires 9 standard pounds per unit. The standard price is $8 per pound. If 3,600 units required 31,400 pounds, which were purchased at $8.32 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) total direct materials cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Factory Overhead Controllable Variance

Bellingham Company produced 6,800 units of product that required 2 standard hours per unit. The standard variable overhead cost per unit is $3.50 per hour. The actual variable factory overhead was $48,410. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
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PART 2

Direct Labor Variances

Bellingham Company produces a product that requires 2 standard hours per unit at a standard hourly rate of $10.00 per hour. If 5,500 units required 11,200 hours at an hourly rate of $9.70 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) total direct labor cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

You are manager of a manufacturing business. Business is going very well and one production line is at full capacity. You want to double the size of the production line. Engineering has estimated the cost and time required. It can be accomplished without effecting the existing production. The timing of the cash flows for the facility is as follows.

The current cost of capital is 9% APR. What is the total cost of the project?

You pay interest on the project every year (i.e., you do not pay off the capital, only the interest.) Calculate the total project cost including interest. Use annual numbers to calculate the internal rate of return.

Sales start after the project is completed. You estimate that sales for the first year will be at 30% of capacity and increase to 60% in year 2. Sales after year 2 are estimated at 85% of capacity. The current production line generates $1,100,000 in net profit. The profit at 30% is 0. The profit above 30% will be proportional to the percent capacity utilized. The company demands a minimum 20% internal rate of return for capital projects. Does the 10-year rate of return meet the company requirements? Assume that the company pays interest on the capital for the entire ten years. (Show correct total project cost including Interest, 10 year cash flow, and IRR for project)

Please identify formulas and explain why. Thank you!

The administrative offices and manufacturing plant of Billings Tool & Die share the same building. The following information (in $000s) appears in the accounting records for last year.

Required:

1. Prepare a cost of goods sold statement.

2. Prepare an income statement.

Prepare a cost of goods sold statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)

Prepare an income statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)

1) Eagle Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters.

Which of the following production plans is better: Plan A—chase demand by hiring and layoffs; or

Plan B—produce at a constant rate of 1200 and obtain the remainder from overtime?

Finish the calculation and show all work!

Plan A:

                                               Eagle Fabrication Solution

Plan B:

                                             Eagle Fabrication Solution

Answer:

Boxer Company plans to sell 500,000 units of finished product in July 20x1. Management (1) anticipates a growth rate in sales of 10% per month thereafter and (2) desires a monthly ending finished-goods inventory (in units) of 80% of the following month's estimated sales. There are 400,000 completed units in the June 30, 20x1 inventory.
Each unit of finished product requires four pounds of direct material at a cost of $1.90 per pound. There are 2,000,000 pounds of direct material in inventory on June 30, 20x1.

Required:
Prepare a production budget for the quarter ended September 30, 20x1. Note: For both part "A" and part "B" of this problem, prepare your budget on a quarterly (not monthly) basis. Independent of your answer to part "A," assume that Boxer plans to produce 1,280,000 units of finished product for the quarter ended September 30. If the firm desires to stock direct materials at the end of this period equal to 25% of current production usage, compute the cost of direct material purchases for the quarter.

Prepare a production budget for the quarter ended September 30, 20x1. Note: Prepare your budget on a quarterly (not monthly) basis.

Independent of your answer to part "A," assume that Boxer plans to produce 1,280,000 units of finished product for the quarter ended September 30. If the firm desires to stock direct materials at the end of this period equal to 25% of current production usage, compute the cost of direct material purchases for the quarter.

Budgeted Income Statement and Supporting Budgets

The budget director of Jupiter Helmets Inc., 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 May:

a. Estimated sales for May:

b. Estimated inventories at May 1:

c. Desired inventories at May 31:

d. Direct materials used in production:

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

f. Direct labor requirements:

g. Estimated factory overhead costs for May:

h. Estimated operating expenses for May:

i. Estimated other income and expense for May:

j. Estimated tax rate: 25%

Required:

4. Prepare a direct labor cost budget for May.

5. Prepare a factory overhead cost budget for May.

6. Prepare a cost of goods sold budget for May. Work in process at the beginning of May is estimated to be $4,200, and work in process at the end of May is desired to be $3,800.

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

8. Prepare a budgeted income statement for May. If required, round your interim calculations to nearest whole value.