Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 7, Problem 5E
Prepare a cost of goods sold budget for MacLaren Manufacturing Inc. for the year ended December 31, 2016, from the following estimates. Inventories of production units:
Direct materials purchased during the year, $548,000; beginning inventory of direct materials, $36,000; and ending inventory of direct materials, $23,000. Totals from other budgets included:
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shown below are the totals from 2018 period budgets.
Revenue badget P 100,000
Materials usage from production budget 15,000
Labor cost budget 20,000
Manufacturing overhead budget 20,000
General and administrative budget 30,000
Capital Expenditure budget 20,000
Work in progress inventories
Beginning of 2018 10,000
End of 2018 5,000
Finished goods inventory
Beginning of 2018 15,000
End of 2018 10,000
Tax Rate 40%
1. prepared a forecasts income statement for the year.
The followings are the budget for next financial year (1 January 2023 - 31 December 2023),
indicating the average selling price and variable costs of each product category. The common
fixed manufacturing overhead and the fixed non-manufacturing overhead costs are estimated
to be $1,250,000 and $2,778,320 respectively.
Table 1: Budget Jan - Dec 2023
Sales Quantity (in units)
In $
Unit selling price
Unit production cost
Unit selling & admin variable costs
(5% of selling price)
In $
Revenue
Variable Production Costs
Selling & Admin Variable Costs
Model 1
8,400
600
250
30
Folding Bike
Model 2
7,500
400
180
20
Model 3
3,500
480
200
24
Electric
Bike
800
2,000
850
100
Total
20,200
5,040,000 3,000,000 1,680,000 1,600,000 11,320,000
(2,100,000)| (1,350,000)| (700,000)| (680,000)| (4,830,000)
(252,000) (150,000) (84,000) (80,000) (566,000)
Q1. Based on the above budgeted information, calculate the expected breakeven units for the
Model 2 folding bikes.
Required: Compute for the following:
1. Number of units of materials needed for production in the first quarter.
2. The desired inventory of materials at the end of the budget year.
3. The number of units of materials to be purchased in the third quarter.
4. The amount of purchases in the second quarter.
5. The total amount paid for materials purchases at the end of 2023.
The production budget for the year 2023 of Mahogany Corporation per quarter is given as follows:
First quarter
26,000
Second quarter
32,000
Third quarter
34,000
Fourth quarter
44,000
For every one unit of its product, 5 units of materials are needed. Materials are purchased at P6 per unit. Materials inventory at the end of each quarter is maintained at 20% of next quarter’s production requirements. For the first quarter of the year 2024, it is estimated that production requirements will be 30,000 units of materials.
Accounts payable at the beginning of 2023 was projected to…
Chapter 7 Solutions
Principles of Cost Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Explain zero-based budgeting and how it differs...Ch. 7 - Prob. 6QCh. 7 - Which operating budget must be prepared before the...Ch. 7 - Prob. 8QCh. 7 - Why is it important to have front-line managers...Ch. 7 - If the sales forecast estimates that 50,000 units...
Ch. 7 - What are the advantages and disadvantages of each...Ch. 7 - What three operating budgets can be prepared...Ch. 7 - Prob. 13QCh. 7 - What are the three budgets that are needed in...Ch. 7 - Why might Web-based budgeting be more useful than...Ch. 7 - What is a flexible budget?Ch. 7 - Why is a flexible budget better than a master...Ch. 7 - Why is it important to distinguish between...Ch. 7 - Why is the concept of relevant range important...Ch. 7 - In comparing actual sales revenue to flexible...Ch. 7 - How would you define the following? a. Theoretical...Ch. 7 - Is it possible for a factory to operate at more...Ch. 7 - If a factory operates at 100% of capacity one...Ch. 7 - How is the standard cost per unit for factory...Ch. 7 - When allocating service department costs to...Ch. 7 - The sales department of Macro Manufacturing Co....Ch. 7 - The sales department of F. Pollard Manufacturing...Ch. 7 - Barnes Manufacturing Co. forecast October sales to...Ch. 7 - Prepare a cost of goods sold budget for the Crest...Ch. 7 - Prepare a cost of goods sold budget for MacLaren...Ch. 7 - Roman Inc. has the following totals from its...Ch. 7 - Starburst Inc. has the following items and amounts...Ch. 7 - Using the following per-unit and total amounts,...Ch. 7 - Cortez Manufacturing, Inc. has the following...Ch. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Calculating factory overhead The normal capacity...Ch. 7 - The Sales Department of Minimus Inc. has forecast...Ch. 7 - Sales, production, direct materials, direct labor,...Ch. 7 - Budgeted selling and administrative expenses for...Ch. 7 - Prob. 4PCh. 7 - Selling and administrative expense budget and...Ch. 7 - Preparing a flexible budget Use the information in...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Flexible budget for factory overhead Presented...Ch. 7 - Prob. 10PCh. 7 - Overhead application rate Creole Manufacturing...Ch. 7 - Overhead application rate Roll Tide Manufacturing...Ch. 7 - Flexible budgeting, performance measurement, and...
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