If necessary she should take this matter up to her

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budgetary slack is unethical, and attempt to get them to rectify their forecasts. If necessary, she should take this matter up to her managers and get them to effect change in Norton. If all fails, she should be prepared to resign her position.
6-33 6-40(60 min.)Comprehensive Review of Budgeting, Cash Budgeting, ChapterAppendix. a.Schedule 1: Revenues Budget for the Year Ended December 31, 2005 Units (Lots)Selling PriceTotal SalesLemonade 1,080 $9,000 $ 9,720,000 Diet Lemonade 540 8,500 4,590,000Total $14,310,000b.Schedule 2: Production Budget in Units for the Year Ended December 31, 2005Products LemonadeDiet LemonadeBudgeted unit sales (Schedule 1) 1,080 540 Add target ending finished goods inventory 2010Total requirements 1,100 550 Deduct beginning finished goods inventory 10050Units to be produced 1,000500
6-34 c.Schedule 3A: Direct Materials Usage Budget in Units and Dollars for the Year Ended December 31, 2005Syrup- Syrup- Lemon. Diet Lem. Containers Packaging TotalUnits of direct materials to be used for production of Lemonade (1,000 lots × 1) 1,000 1,000 1,000 Units of direct materials to be used for production of Diet Lemonade (500 lots × 1) 500500500Total direct materials to be used (in units) 1,000 5001,5001,500Units of direct materials to be used from beginning inventory (under FIFO) 80 70 200 400 Multiply by cost per unit of beginning inventory $ 1,100$ 1,000$ 950$ 900Cost of direct materials to be used from beginning inventory (a) $ 88,000$ 70,000$ 190,000$ 360,000$ 708,000 Units of direct materials to be used from purchases (1,000 80; 500 70; 1,500 200; 1,500 400) 920 430 1,300 1,100 Multiply by cost per unit of purchased materials $ 1,200$ 1,100$ 1,000$ 800Cost of direct materials to be used from purchases (b) $1,104,000$473,000$1,300,000$ 880,0003,757,000Total cost of direct materials to be used (a + b) $1,192,000$543,000$1,490,000$1,240,000$4,465,000d.Schedule 3B: Direct Materials Purchases Budget in Units and Dollars for the Year Ended December 31, 2005 Syrup- Syrup- Lemon Diet Lem. Containers Packaging TotalDirect materials to be used in production (in units) from Schedule 3A 1,000 500 1,500 1,500 Add target ending direct materials inventory in units 3020100200Total requirements in units 1,030 520 1,600 1,700 Deduct beginning direct materials inventory in units 8070200400Units of direct materials to be purchased 950 450 1,400 1,300 Multiply by cost/unit of purchased materials $1,200$1,100$1,000$800Direct materials purchase costs $1,140,000$495,000$1,400,000$1,040,000$4,075,000
6-35 e. Schedule 4: Direct Manufacturing Labor Budget for the Year Ended December 31, 2005Output Direct Units Manufacturing Produced Labor Hours Total Hourly (Schedule 2) per Unit Hours Rate Total Lemonade 1,000 20 20,000 $25 $500,000 Diet Lemonade 500 20 10,00025 250,000Total 30,000$750,000f.Schedule 5: Manufacturing Overhead Costs Budget for the Year Ended December 31, 2005Variable manufacturing overhead costs: Lemonade [$600 × 2 hours per lot × 1,000 lots (Schedule 2)] $1,200,000 Diet Lemonade [$600 × 2 hours per lot × 500 lots (Schedule 2)] 600,000Variable manufacturing overhead costs 1,800,000 Fixed manufacturing overhead costs 1,200,000Total manufacturing overhead costs $3,000,000Fixed manufacturing overhead per bottling hour = $1,200,000 ÷ 3,000 = $400. Note that the total number of bottling hours is 3,000 hours: 2,000 hours for Lemonade (2 hours per lot × 1,000 lots) plus 1,000 hours for Diet Lemonade (2 hours per lot × 500 lots). g.Schedule 6A: Ending Finished Goods Inventory Budget as of December 31, 2005Cost per Units (Lots) Unit (Lot) Total Direct materials: Syrup for Lemonade 30 $1,200 $ 36,000 Syrup for Diet Lemonade 20 1,100 22,000 Containers 100 1,000 100,000 Packaging 200 800 160,000$318,000 Cost per Units Unit Finished goods: Lemonade 20 $5,500* $110,000 Diet Lemonade 10 5,400* 54,000164,000Total ending inventory $482,000*See Schedule 6B

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