Chef Whiz manufactures premium food processors. The following are some manufacturing overhead data for Chef Whiz for the year ended December 31, 2014:

$$\begin{array}{lccc} \textbf { Manufacturing Overhead } & \textbf { Actual Results } & \textbf { Flexible Budget } & \textbf { Allocated Amount } \\ \hline \text { Variable } & \$ 51,480 & \$ 79,950 & \$ 79,950 \\ \text { Fixed } & 350,210 & 343,980 & 380,250 \end{array}$$

Budgeted number of output units: 588

Planned allocation rate: 3 machine-hours per unit

Actual number of machine-hours used: 1,170

Static-budget variable manufacturing overhead costs: $72,324

Compute the following quantities (you should be able to do so in the prescribed order):

1. Budgeted number of machine-hours planned

2. Budgeted fixed manufacturing overhead costs per machine-hour

3. Budgeted variable manufacturing overhead costs per machine-hour

4. Budgeted number of machine-hours allowed for actual output produced

5. Actual number of output units

6. Actual number of machine-hours used per output unit

Michael Roberts is a cost accountant and business analyst for Darby Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct cost categories: direct materials and direct manufacturing labor. Roberts feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used.

At the beginning of 2014, DDC budgeted annual production of 410,000 doorknobs and adopted the following standards for each doorknob:

$$\begin{array}{lcr} & \textbf { Input } & \textbf { Cost/Doorknob } \\ \hline \text { Direct materials (brass) } & 0.3 \mathrm{lb} . @ \$ 9 / \mathrm{lb} . & \$~~2.70 \\ \text { Direct manufacturing labor } & 1.2 \text { hours @ } \$ 16 / \mathrm{hour} & 19.20 \\ \text { Manufacturing overhead: } & & \\ \quad \text { Variable } & \$ 4 / \mathrm{lb} . \times 0.3 \mathrm{lb} . & 1.20 \\ \quad \text { Fixed } & \$ 14 / \mathrm{lb} . \times 0.3 \mathrm{lb} . & \underline{~~~~4.20}\\ \text{Standard cost per doorknob}&&\underline{\underline{\$27.30}} \end{array}$$

Actual results for April 2014 were as follows:

1. For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U):

a. Direct materials price variance (based on purchases)

b. Direct materials efficiency variance

c. Direct manufacturing labor price variance

d. Direct manufacturing labor efficiency variance

e. Variable manufacturing overhead spending variance

f. Variable manufacturing overhead efficiency variance

g. Production-volume variance

h. Fixed manufacturing overhead spending variance

2. Can Roberts use any of the variances to help explain any of the other variances? Give examples.

What is the difference between a contribution format income statement and a traditional format income statement?

Bowman Company reported the following information for the month of November. The standard cost of labor for the month was $38,000, but actual wages paid were$ 40,000. Bowman has calculated its direct labor rate and efficiency variances to be $2,500 unfavorable and$ 500 favorable, respectively. Prepare the necessary journal entry to record Bowman's direct labor cost for the month assuming that standard labor costs are recorded directly to Cost of Good Sold.

A company assigns overhead cost to completed jobs on the basis of 125% of direct labor cost. The job cost sheet for Job 313 shows that $10,000 in direct materials has been used on the job and that$12,000 in direct labor cost has been incurred. A total of 1,000 units were produced in Job 313.

Required:

What is the total manufacturing cost assigned to Job 313? What is the unit product cost for Job 313?

A company assigns overhead cost to completed jobs on the basis of 120% of direct labor cost. The job cost sheet for Job 413 shows that $12,000 in direct materials has been used on the job and that$8,000 in direct labor cost has been incurred. A total of 200 units were produced in Job 413. What is the total manufacturing cost assigned to Job 413? What is the unit product cost for Job 413?

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:

The company’s beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of$10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.

Required:

Prepare the company’s cash budget for the upcoming fiscal year.

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:

The company’s beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of$10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.

Required:

Prepare the company’s cash budget for the upcoming fiscal year.

How does standard costing differ from actual costing?

Two types of tickets are to be sold for a concert. One type costs $30 per ticket and the other type costs$40 per ticket. The promoter of the concert must sell at least 15,000 tickets, including at least 8000 of the $30 tickets and at least 4000 of the$40 tickets. Moreover, the gross receipts must total at least $500,000 in order for the concert to be held. (a) Find a system of inequalities describing the different numbers of tickets that must be sold, and (b) sketch the graph of the system.

You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company’s operations:

a. The cash balance on December 1 is $40,000.

b. Actual sales for October and November and expected sales for December are as follows:

Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

c. Purchases of inventory will total$280,000 for December. Thirty percent of a month’s inventory purchases are paid during the month of purchase. The accounts payable remaining from November’s inventory purchases total $161,000, all of which will be paid in December.

d. Selling and administrative expenses are budgeted at$430,000 for December. Of this amount, $50,000 is for depreciation.

e. A new web server for the Marketing Department costing$76,000 will be purchased for cash during December, and dividends totaling $9,000 will be paid during the month.

f. The company maintains a minimum cash balance of$20,000. An open line of credit is available from the company’s bank to bolster the cash position as needed.

Required:

1. Prepare a schedule of expected cash collections for December.

2. Prepare a schedule of expected cash disbursements for merchandise purchases for December.

3. Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.

Refer to the data for Garden Sales, Inc. The company's president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:

1. Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages.

2. The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $84,000 and accounts payable for inventory purchases at March 31 remains$126,000.

All other information that is not referred to above remains the same.

Required:

1. Using the president's new assumptions in (1) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total.

2. Using the president's new assumptions in (2) above, prepare the following for merchandise inventory:

$\quad\quad$ a. A merchandise purchases budget for April, May, and June.

$\quad\quad$ b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total.

3. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total.

4. Prepare a brief memorandum for the president explaining how his revised assumptions affect the cash budget.

The president of the retailer Prime Products has just approached the company’s bank with a request for a $30,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used:

a. On April 1, the start of the loan period, the cash balance will be$24,000. Accounts receivable on April 1 will total $140,000, of which$120,000 will be collected during April and $16,000 will be collected during May. The remainder will be uncollectible.

b. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% represents bad debts that are never collected. Budgeted sales and expenses for the three-month period follow:

c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid during April, total $140,000.

d. In preparing the cash budget, assume that the$30,000 loan will be made in April and repaid in June. Interest on the loan will total $1,200.

Required:

1. Prepare a schedule of expected cash collections for April, May, and June, and for the three months in total.
2. Prepare a cash budget, by month and in total, for the three-month period.
3. If the company needs a minimum cash balance of$20,000 to start each month, can the loan be repaid as planned? Explain.

Purdue, Inc., manufactures tires for large auto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours. For each independent scenario given, indicate whether each of the manufacturing variances will be favorable or unfavorable or, in case of insufficient information, indicate “CBD” (cannot be determined).