PLEASE HELP ASAP Ill rate immediately But please label every

Exam #4-Chapter 23-Additional Information Questions #19 #40 Orville Company has developed the following standards relating to the production of their finished units: Direct Materials, 7 pounds per unit @ $3.00 per pound Direct Labor, 4 hours per unit@$20 per direct labor hour Variable Overhead, 6 machine hours per unit @ $5.00 per machine hour Fixed overhead costs are estiamted at $303,000 each quarter. The expected selling price is $250 per unit. Selling and administrative costs are expected to be $2 per unit variable and $120,000 fixed each quarter. The following sales forecast is available for the year 2017: First Quarter 4,000 units; Second Quarter 6,000 units; Third Quarter 8,000 units; and Fourth Quarter 7,000 units. The expected sales in the First Quarter of the year 2018 are 5,000 units. Any beginning inventories for the year meet the same requirements that management has for inventories in the current year Additional information will be given in the questions. Prepare a production budget and a direct materials purchase budget

Solution

Step-1

Answer- A = 1.) Raw material required for 1st and 2nd quarter as per given question:-

i) As management required closing stock 10% equal to production of next quarter,but the information of production unit is missing and [opening stock is same required as current year requirement it means same as closing stock { hence we can conclude that opening & closing stock of 1st quarter is same}] hence there is equation given below:-

1st quarter == Production = Sales + Closing stock - opening stock

= 4000 + (10% of next quarter production) - (10% of next quarter production)

Production = 4000 units (Both closing & opening will deducted)

closing stock of 1st qtr. = 10% production of next quarter {as we above proof that (sales=production)}

= 10% of 6000 units

= 600 units

2nd quarter == Production = Sales + Closing stock - opening stock

= 6000 + 800 (10% of third qtr. sales) - 600 (as op. stock. 1st qtr. = cls. 1st qtr. stock)

= 6000 + 800 - 600

= 6200 units

ii) cost of direct material 1st qtr. as folows

production of 1st quarter = 4000 units

direct material = 7 pound per unitt @ $ 3 per pound

DM per unit = 7 * $ 3 = $ 21  

DM cost = 4000 units * $ 21

DM cost = $ 84000

  

Answer- B = cost of material of 2nd quarter

= as above solved in answer-a that production of second quarter is 6200 units

= and cost of raw material per unit is $ 21 i.e. (7* $ 3)

= hence, cost of Material = 6200 * $ 21 = $ 130,200

Answer- C =

1. For the first quarter what is the expected direct labor cost?

solution = DL = 4 hrs. per unit @ $ 20 per labour hrs.

= production unit = 4000 units

= hence, Hours required for production = 4000 * 4 = 16000 hrs.

= Direct labour cost = 16000 hrs. * $ 20 = $ 320,000

2. For the first quarter what is the expected variable overhead cost?

solution = per unit variable overhead is as follows

= 6 machine hrs.per unit @ $ 5 per machine hrs.

= 6* $ 5 = $ 30 per unit

= production units 1 qtr. = 4000 units

= variable overhead cost = 4000 * $ 30 = $ 120000

3. For the first quarter what is the expected fixed overhead cost?

Solution= as fixed overhead cost will remain same ir-respective of productions unit

= therefore, fixed overhead cost = $ 303,000 for first quarter

4.For the first quarter what amount of fixed over head cost will be applied to production?

solution= full amount of $ 303,000 will applied to production because as given in the question, fixed overhead cost incurred quarter basis, therefore $ 303,000 will be applied.

and per unit fixed cost = $ 303,000 / 4000 = $ 75.75

5.For the first quarter what are the budgeted total sales in dollars?

solution= selling price = $ 250 per unit

= selling units = 4000 units

= total sales = 4000 * $ 250 = $ 1000,000

6.For the first quarter what is the budgeted cost of goods sold?

solution = cost of good sold include following amounts:-

= production units * (DM + DL + Variable overhaed + selling variable overhead)

= 4000 * ( 21 + 80 + 30 + 2 )

= 4000 * $ 133 = $ 532,000

7. For the first quarter what is the budgeted TOTAL selling and administrative costs?

solution= selling and admin. cost

= fixed + variable

= $ 120000 + ( 4000 units * $ 2 )

= $ 120000 + $ 8000

= $ 128,000

8. For the first quarter what is the budgeted net income?

solution = net income = sales - cost of good sold - fixed overhead

= $1000,000 ( as solve above) - $ 532,000 (as solve above) - ($120000 + $303000)

= $ 468000 - $ 423000

= $ 45000

9. What is the expected balance in dollars of the ending raw materials inventory at the end of the first quarter?

solution = closing stock of 1st qtr. = 600 units

= 600 * (DM per unit)

= 600 * (21 )

= 600* 21

= $ 12600

10. What is the expected balance in dollars of the ending finished goods inventory at the end of the first quarter?

solution = finished inventory include all production and selling variable cost

= 600 * (DM + DL + Variable overhead + selling variable cost) per unit

= 600 * (21 + 80 + 30 + 2)

= 600* 133

= $ 79800