Accounting 3 Questions

Problem 1 – Picture Pretty manufactures picture frames. 

Sales

for August are expected to be 10,000 units of various sizes.  Historically, the average frame requires four feet of framing, one square foot of glass, and two square feet of backing.  Beginning inventory includes 1,500 feet of framing, 500 square feet of glass, and 500 square feet of backing.  Prices are $0.30 per foot of framing, $6.00 per square foot of glass, and $2.25 per square foot of backing.  Ending inventory should be 150% of beginning inventory.  Purchases are paid for in the month acquired.

 

Question 1: Determine the quantity of framing, glass, and backing that is to be purchased during August. (five points)

 Question 2: Determine the total costs of direct materials for August purchases. (five points)
 

Problem 2 – Russell Company has the following projected account balances for June 30, 20X2:

 

 Sales

 

 

?

 

 

80,000 

400,000

4,000 

, factory

 

 

Accounts payable	$40,000	$800,000
Accounts receivable	100,000	Capital stock		400,000
Depreciation, factory	2	4,000	Retained earnings
Inventories (5/31 & 6/30)	1	80,000	Cash	56,000
Direct materials used	200,000	Equipment, net	240,000
Office salaries	Buildings, net
Insurance, factory			Utilities	16,000
Plant wages	140,000	Selling expenses	60,000
Bonds payable	160,000	Maintenance, factory	28,000

 

Question 1: Calculate the budgeted net income for June 20X2.(five points)

 

Question 2: Calculate the budgeted total assets as of June 30, 20X2. (five points)

 

Problem 3 – Tylon’s Hardware uses a flexible budget to develop planning information for its warehouse operations.  For 20X2, the company anticipated that it would have 96,000 sales units for 664 customer shipments.  Average storage bin usage for various inventories was estimated to be 200 per day.  The costs and cost drivers were determined to be as follows:

 

ItemFixedVariableCost driver

–

Utilities

per 100 units

1,000

–

per shipment

	Product handling	$10,000	$1.25		per 100 units
	Storage	3.00	per storage bin
	1,000	1.50
	Shipping clerks	1.00		per shipment
	Supplies	0.50

 

During the year, the warehouse processed 90,000 units for 600 customer shipments.  The workers used 225 storage bins on average each day to sort, store, and process goods for shipment.  The actual costs for 20X2 were:

 

ItemActual costsProduct handling

Storage

Utilities

Shipping clerks

Supplies

$10,900

465

2,020

1,400

340

 

Question 1: Determine the 20X2 static budget variances. (five points)

 

Question 2: Determine the 20X2 flexible budget variances. (five points)