Ch%206%20Selected%20Problem%20Solutions

Ch%206%20Selected%20Problem%20Solutions - CHAPTER 6 MASTER...

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CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY ACCOUNTING Selected Problem Solutions 6-16 (15 min.) Sales budget, service setting. 1. 2009 Volum e At 2009 Selling Prices Expected 2010 Change in Volume Expected 2010 Volume Radon Tests 11,000 $250 +5% 11,550 Lead Tests 15,200 $200 -10% 13,680 For the Year Ended December 31, 2010 Selling Price Units Sold Total Revenues Radon Tests $250 11,550 $2,887,500 Lead Tests $200 13,680 2,736,000 $5,623,500 2. 2009 Volum e Planned 2010 Selling Prices Expected 2010 Change in Volume Expected 2010 Volume Radon Tests 11,000 $250 +5% 11,550 Lead Tests 15,200 $190 -5% 14,440 For the Year Ended December 31, 2010 Selling Price Units Sold Total Revenues Radon Tests $250 11,550 $2,887,500 Lead Tests $190 14,440 2,743,600 $5,631,100 Expected revenues at the new 2010 prices are $5,631,100, which are greater than the expected 2010 revenues of $5,623,500 if the prices are unchanged. So, if the goal is to maximize sales revenue and if Jim McGrath’s forecasts are reliable, the company should lower its price for a lead test in 2010. 6-1
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6-17 (5 min.) Sales and production budget. Budgeted sales in units 200,000 Add target ending finished goods inventory 25,000 Total requirements 225,000 Deduct beginning finished goods inventory 15,000 Units to be produced 210,000 6-18 (5 min.) Direct materials purchases budget. Direct materials to be used in production (bottles) 2,500,000 Add target ending direct materials inventory (bottles) 80,000 Total requirements (bottles) 2,580,000 Deduct beginning direct materials inventory (bottles) 50,000 Direct materials to be purchased (bottles) 2,530,000 6-19 (10 min.) Budgeting material purchases. Production Budget: Finished Goods (units) Budgeted sales 45,000 Add target ending finished goods inventory 18,000 Total requirements 63,000 Deduct beginning finished goods inventory 16,000 Units to be produced 47,000 Direct Materials Purchases Budget: Direct Materials
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Ch%206%20Selected%20Problem%20Solutions - CHAPTER 6 MASTER...

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