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##### PROBLEM 1-1. Budgets in Managerial Accounti...

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PROBLEM 1-1. Budgets in Managerial Accounting Santiago's Salsa is in the process of preparing a production cost budget for May. Actual costs in April were: Santiago's Salsa Production Costs April 2008 Production 20,000 Jars of Salsa Ingredient cost (variable) \$16,000 Labor cost (variable) 9,000 Rent (fixed) 4,000 Depreciation (fixed) 6,000 Other (fixed) 1,000 Total \$36,000 Required a. Using this information, prepare a budget for May. Assume that production will increase to 22,000 jars of salsa, reflecting an anticipated sales increase related to a new marketing campaign. b. Does the budget suggest that additional workers are needed? Suppose the wage rate is \$20 per hour. How many additional labor hours are needed in May? What would happen if management did not anticipate the need for additional labor in May? c. Calculate the actual cost per unit in April and the budgeted cost per unit in May. Explain why the cost per unit is expected to decrease.,PROBLEM 1-3. Budgets in Managerial Accounting Matthew Gabon, the sales manager of Office Furniture Solutions, prepared the following budget for 2008: Sales Department Budgeted Costs, 2008 (Assuming Sales of \$12,000,000) Salaries (fixed) \$500,000 Commissions (variable) 180,000 Advertising (fixed) 100,000 Charge for office space (fixed) 2,000 Office supplies & forms (variable) 2,400 Total \$784,400 After he submitted his budget, the president of Office Furniture Solutions reviewed it and recommended that advertising be increased to \$120,000. Further, she wanted Matthew to assume a sales level of \$13,000,000. This level of sales is to be achieved without adding to the sales force. Matthew's sales group occupies approximately 250 square feet of office space out of total administrative office space of 20,000 square feet. The \$2,000 space charge in Matthew's budget is his share (allocated based on relative square feet) of the company's total cost of rent, utilities, and janitorial costs for the administrative office building. Required Prepare a revised budget consistent with the president's recommendation.

Paper#2121 | Written in 18-Jul-2015

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