Managerial Accounting

Managerial Accounting - Study Probes - Chapters 37 - 39...

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Unformatted text preview: Study Probes - Chapters 37 - 39 Solutions Problem 1 - Gaylor, Inc.has estimatedproduction of buckets for the next 4 months as: January February March April 26,000 22,000 40,000 45,000 Two pounds ofplastic are required for each bucket. The cost of plastic is $5 per pound. OnJanuary 1, there are 14,000 pounds of plastic on hand, and 400 completedbuckets. Gaylor wants to have 20% of the next months material requirements onhand at the end of each month. Prepare a direct materials purchases budget forthe quarter in the space provided. Production for the quarter:26,000 + 22,000 + 40,000 = 88,000 units Direct Materials Budget for the quarter lst Quarter Production expected during the quarter 88,000 Pounds per bucket 2 Total pounds needed for production 176,000 Add ending inventory desired (20% x 45,000 x 2pounds) 18,000 Total pounds of material needed 194,000 Less beginning inventory on hand (14,000) Pounds to be purchased 180,000 Cost per pound $5.00 Cost of direct materials purchases $900,000 Problem 2 - Evans Recycleplans to produce 3,000 recycle bins during April. Each bin requires 2.4 poundsof plastic and .25 hours of direct labor. Plastic costs $1.80 per pound. Evanspays it employees $14.00 per hour. Manufacturing overhead is applied at a rateof 200% of direct labor costs. Evans has 500 pounds of plastic in beginninginventory and wants to have 600 pounds in ending inventory. You need not presentyour calculations in budget format, but be sure I can follow what you did to getthe answers. A.How many pounds of plastic should Evans plan to buy during April? This question isanswered by preparing the first part of the materials purchases budget. Units to beproduced 3,000 Pounds perbin 2.4 Totalneeded 7,200 Add desiredending inventory 600 Subtractbeginning inventory on hand (500) Purchases ofplastic needed in pounds 7,300 B.How much should Evans budgetfor direct labor for April? Units to beproduced 3,000 Laborrequired per unit .25 Hoursrequired 750 Cost perhour $14.00 Total laborbudgeted $10,500 C.How much manufacturing overhead will becharged to each recycle bin in April? Direct laborcosts (from part B) $10,500 Applicationrate 200% Totaloverhead to allocate $21,000 Units to beproduced 3,000 Overhead perrecycle bin $7.00 D.What is the costperunit of the bins produced in April? Directmaterials per unit (2.4 lbs. X $1.80 perpound) $4.32 Direct labor($10,500/3,000 units) 3.50 Factoryoverhead ($21,000/3,000 units) 7.00 Total costper unit $14.82 Problem 3 Gonzales, Inc. has the followingdata: Accountsreceivable, May 31 $40,000 Forecastedsalesin units May sales 450 June sales 400 July sales 500 August sales 560 Each unit will sell for $20 during May, and thenincrease 10% per month thereafter. Sales consist of 70% cash and 30%credit. All credit accounts are collectedin the month following the sales. Uncollectible accounts are 4% of sales.Prepare a sales budget schedule for June,July, and August....
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This note was uploaded on 04/21/2011 for the course BUS 102 taught by Professor Timbianco during the Spring '08 term at Ivy Tech Community College.

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Managerial Accounting - Study Probes - Chapters 37 - 39...

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