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CPAPrepChapter6 - CHAPTER 6 MASTER BUDGET AND...

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CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY ACCOUNTING 6-22 (15–20 min.) Revenues, production, and purchases budget. 1. 900,000 motorcycles × 400,000 yen = 360,000,000,000 yen 2. Budgeted sales (motorcycles) 900,000 Add target ending finished goods inventory 80,000 Total requirements 980,000 Deduct beginning finished goods inventory 100,000 Units to be produced 880,000 3. Direct materials to be used in production, 880,000 × 2 (wheels) 1,760,000 Add target ending direct materials inventory 60,000 Total requirements 1,820,000 Deduct beginning direct materials inventory 50,000 Direct materials to be purchased (wheels) 1,770,000 Cost per wheel in yen 16,000 Direct materials purchase cost in yen 28,320,000,000 Note the relatively small inventory of wheels. In Japan, suppliers tend to be located very close to the major manufacturer. Inventories are controlled by just-in-time and similar systems. Indeed, some direct materials inventories are almost nonexistent. 6-28 (40 min.) Budget schedules for a manufacturer. 1a. Revenues Budget Executive Line Chairman Line Total Units sold 740 390 Selling price $ 1,020 $ 1,600 Budgeted revenues $754,800 $624,000 $1,378,800 b. Production Budget in Units Executive Line Chairman Line Budgeted unit sales 740 390 Add budgeted ending fin. goods inventory 30 15 Total requirements 770 405 Deduct beginning fin. goods. inventory 20 5 Budgeted production 750 400 6-1
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c. Direct Materials Usage Budget (units) Oak Red Oak Oak Legs Red Oak Legs Total Executive Line: 1. Budgeted input per f.g. unit 16 4 2. Budgeted production 750 750 3. Budgeted usage (1 × 2) 12,000 3,000 Chairman Line: 4. Budgeted input per f.g. unit 25 4 5. Budgeted production 400 400 6. Budgeted usage (4 × 5) 10,000 1,600 7. Total direct materials usage (3 + 6) 12,000 10,000 3,000 1,600 Direct Materials Cost Budget 8. Beginning inventory 320 150 100 40 9. Unit price (FIFO) $18 $23 $11 $17 10. Cost of DM used from beginning inventory (8 × 9) $5,760 $3,450 $1,100 $680 $10,990 11. Materials to be used from purchases (7 – 8) 11,680 9,850 2,900 1,560 12. Cost of DM in March $20 $25 $12 $18 13. Cost of DM purchased and used in March (11 × 12) $233,600 $246,250 $34,800 $28,080 $542,730 14. Direct materials to be used (10 + 13) $239,360 $249,700 $35,900 $28,760 $553,720 Direct Materials Purchases Budget Oak Red Oak Oak Legs Red Oak Legs Total Budgeted usage (from line 7) 12,000 10,000 3,000 1,600 Add target ending inventory 192 200 80 44 Total requirements 12,192 10,200 3,080 1,644 Deduct beginning inventory 320 150 100 40 Total DM purchases 11,872 10,050 2,980 1,604 Purchase price (March) $20 $25 $12 $18 ________ Total purchases $237,440 $251,250 $35,760 $28,872 $553,322 d. Direct Manufacturing Labor Budget Output Direct Manuf. Labor- Units Hours per Total Hourly Produced Output Unit Hours Rate Total Executive Line 750 3 2,250 $30 $ 67,500 Chairman Line 400 5 2,000 $30 60,000 4,250 $127,500 6-2
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e. Manufacturing Overhead Budget Variable manufacturing overhead costs (4,250 × $35) $148,750 Fixed manufacturing overhead costs 42,500 Total manufacturing overhead costs $191,250 Total manuf. overhead cost per hour = $191,250 4,250 = $45 per direct manufacturing labor-hour Fixed manuf. overhead cost per hour = $42,500 4,250 = $10 per direct manufacturing labor-hour f. Computation of unit costs of ending inventory of finished goods Executive Line
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