Cost Accounting Chap 6 Solution

Only available on StudyMode
  • Download(s) : 953
  • Published : December 27, 2012
Open Document
Text Preview
CHAPTER 6
MASTER BUDGET AND RESPONSIBILITY ACCOUNTING

6-16 (15 min.) Sales budget, service setting.

1.
|McGrath & Sons |2009 Volume |At 2009 |Expected 2010 |Expected 2010 Volume | | | |Selling Prices |Change in Volume | | |Radon Tests |11,000 |$250 |+5% |11,550 | |Lead Tests |15,200 |$200 |-10% |13,680 |

|McGrath & Sons Sales Budget | |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.
|McGrath & Sons |2009 Volume |Planned 2010 Selling |Expected 2010 |Expected 2010 | | | |Prices |Change in Volume |Volume | |Radon Tests |11,000 |$250 |+5% |11,550 | |Lead Tests |15,200 |$190 |-5% |14,440 |

|McGrath & Sons Sales Budget | |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.

6-17(5 min.) Sales and production budget.

Budgeted sales in units200,000
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 sales45,000
Add target ending finished goods inventory18,000
Total requirements63,000
Deduct beginning finished goods inventory16,000
Units to be produced47,000

Direct Materials Purchases Budget:
Direct Materials
(in gallons)
Direct materials needed for production (47,000 ( 3)141,000
Add target ending direct materials inventory50,000
Total requirements191,000
Deduct beginning direct materials inventory 60,000
Direct materials to be purchased 131,000

6-20(30 min.)Revenues and production budget.

1.
| |Selling |Units |Total | | |Price...
tracking img