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POA11e24 - CHAPTER 24Solutions THE BUDGETING PROCESS...

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Ch24 SE1 to SE3 CHAPTER 24—Solutions THE BUDGETING PROCESS Chapter 24, SE 1. Budgets and information that might be useful include: 1. Breakdown by month of last year's sales to use as a guide to build this year's monthly targets. This would include seasonal sales information. 2. Budgets by salesperson, which may indicate a need for a third salesperson. 3. Inventory and purchasing information. 4. Budgets of sales promotion and advertising. 5. Information on customer flow and the best times to sell. Chapter 24, SE 2. Andi Kures should regularly analyze all differences between budgeted and actual figures to determine if her actual results were in line with her budgeted expectations. If they were not, she needs to take corrective operating actions for unfavorable vari- ances. She should also investigate favorable variances to determine if these efficien- cies can be implemented elsewhere in the future. She should perform such an analy- sis regularly, even if the organization has experienced a profitable period. Budgetary control is an ongoing activity. Chapter 24, SE 3. The amount of estimated sales in units is the most important forecast. It is the key to an accurate master budget. The entire master budget is based on the unit sales fore- cast. Total budgeted sales, budgeted selling and administrative expenses, and bud- geted total production units are all directly related to the estimated unit sales. From these budgets and the budgeted production units come the direct materials pur- chases and direct labor budgets. The overhead budget usually results from produc- tion forecasts. Therefore, all operating budgets related to production are based on the estimated sales in units.
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Ch24 SE4 to SE5 Chapter 24, SE 4. Aberdeen Lock Company Production Budget For the Quarter Ended March 31 January February March Sales in units 5,000 4,000 6,000 Add desired units of ending finished goods inventory 2,000 3,000 3,500 Desired total units 7,000 7,000 9,500 Less desired units of beginning finished goods inventory 2,500 2,000 3,000 Total production units 4,500 5,000 6,500 Chapter 24, SE 5. Salaries, sales representatives ( 2 × $20,000 ) $ 40,000 Sales commissions ( 50,000 units × $45 × 5% ) 112,500 Sales brochures and supplies 9,000 Travel expenses ( 75,000 miles × $0.60 per mile) 45,000 Total budgeted selling expenses $206,500
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Ch24 SE6 to SE7 Chapter 24, SE 6. Net sales $450,000 Cost of goods sold Finished goods inventory, beginning $ 21,600 Cost of goods manufactured 293,800 Total cost of goods available for sale $315,400 Less finished goods inventory, ending 16,300 Cost of goods sold 299,100 Gross margin $150,900 *Cost of goods manufactured Direct materials used Materials inventory, beginning $ 23,000 Direct materials purchases 185,000 Cost of direct materials available for use $208,000 Less materials inventory, ending 18,700 Cost of direct materials used $189,300 Direct labor costs 34,000 Overhead costs 67,000 Total manufacturing costs $290,300 Add work in process inventory, beginning 64,700 Less work in process inventory, ending ( 61,200) Cost of goods manufactured $293,800 Chapter 24, SE 7.
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