Quiñones, Mary Angela Felicia T.

BSMA – BCE

Assignment 1

1. Blessings Manufacturers Inc., projected sales of 78,000 machines for the year. The
estimated January 1 inventory is 6,500 units and the desired December 31 inventory is
6,000 units. The budgeted production for the year is _____.

Solution:

Estimated sales units 78,000

Desired ending inventory 6,000
Total 84,000
Beginning inventory (6,500)
Budgeted Production 77,500

2. At the beginning of the period, the Cutting Department budgeted direct labor of 155,000,
direct materials of 165,000, and fixed factory overhead of 15,000 for 9,000 hours of
production. The department actually completed 10,000 hours of production. The
appropriated total budget for the department, assuming it uses flexible budgeting is
_____.

Solution:

Actual factory overhead 335,000

Foxed factory overhead 15,000
Difference 320,000
Hours of production 9,000
Total variable cost per hour 35.56

Direct Labor 155,000

Direct Materials 165,000
Fixed Factory Overhead 15,000
Total 335,000
(10,000 – 9,000) X 35.56 *35,560
Appropriated Total Budget 370,560

3. For March, sales revenue is 1, 000,000, sales commissions are 5% of sales, the sales
manager salary is 80,000, advertising expenses are 65,000, shipping expenses total 1%
of sales, and miscellaneous selling expenses are 2,100 plus 1% of sales. Total selling
expenses for the month of March is _____.

Solution:

Sales commission (1,000,000 X 5%) 50,000

Sales manager 80,000
 Advertising expenses 65,000
Shipping Expenses (1,000,000 X 1%) 10,000
Miscellaneous expenses (2,100 + 10,000) 12,100
Total Selling Expense 217,100

4. If the expected sales volume for the current period is 8,000 units, the desired ending
inventory is 1,400 units, and the beginning inventory is 1,200 units, the number of units
set forth in the production budget, representing total production for the current period, is
_____.

Solution:

Expected sales volume 8,000

Desired ending inventory 1,400
Total 9,400
Beginning inventory (1,200)
Production Budget 8,200

5. If the expected sales volume for the current period is 7,000 units, the desired ending
inventory is 400 units, and the beginning inventory is 400 units, the number of units set
forth in the production budget, representing total production for the current period, is
_____.

Solution:

Expected sales volume 7,000

Desired ending inventory 400
Total 7,400
Beginning inventory (700)
Production Budget 7,000

6. Willow Valley’s April sales forecast projects that 7,000 units will sell at a price of 10.50
per unit. The desired ending inventory is 30% higher than the beginning inventory, which
were 1,000 units. Budgeted production in April would be _____.

Solution:

Sales forecast 7,000

Desired ending inventory ((1,000 X 30%) + 1,000) 1,300
Total 8,300
Beginning inventory (1,000)
Production Budget 7,300

7. Production and sales estimates for June for Darna Co. are as follows:

Estimated inventory (units), June 1 8,000

 Desired inventory (units), June 31 9,000
Expected sales volume (units):
Territory X 4,000
Territory Y 10,000
Territory Z 6,000
Units sales price 25
The budgeted total sales for June are _____.

Solution:

Territory X 4,000
Territory Y 10,000
Territory Z 6,000
Total 20,000
Unit sales price 25
Budgeted Total Sales 500,000

8. Production and sales estimates for March for Dyesebel Co. are as follows:

Estimated inventory (units), March 1 18,000

Desired inventory (units), March 31 21,600
Expected sales volume (units):
Territory M 7,000
Territory L 8,000
Territory O 9,000
Units sales price 15
The number of units expected to be manufactured in March is ______.

Solution:

Territory M 7,000
Territory L 8,000
Territory O 9,000
Total sales volume 24,000
Desired ending inventory 21,600
Total 45,600
Estimated beginning inventory (18,000)
Expected Units to be Manufactured, Mar. 27,600

9. Cardinal Company has finished goods inventory of 55,000 units on January 1. Its
projected sales for the next four months are January, 200,000 units, February, 180,000
units, March, 210,000 units; and April, 230,000 units. Cardinal Company wishes to
maintain a desired ending finished goods inventory of 20% of the following month’s
sales. The budgeted units of production for January would be ______.

Solution:
 February projected sales 180,000
Ending finished goods inventory rate 20%
Product 36,000
January projected sales 200,000
Budgeted Units of Production, Jan. 236,000

10. The budgeted units of production for February would be ______.

Solution:

March projected sales 210,000

Ending finished goods inventory rate 20% 42,000
February projected sales 180,000
Ending finished goods inventory rate 20% 36,000
Difference 6,000
February projected sales 180,000
Budgeted Units of Production, Feb. 186,000