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ACC 206 Week 4 Assignment: Chapter 6 and 7 Problems

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Question;ACC 206 Week 4;Assignment: Chapter 6 and 7 Problems;Please complete the following exercises below;in either Excel or a word document (but must be single document). You must show;your work where appropriate (leaving the calculations within Excel cells is;acceptable). Save the document, and submit it in the appropriate week using the;Assignment Submission button.;Chapter 6 Problem 3;1. Comprehensive budgeting;The balance sheet of Watson Company as of December 31;20X1, follows.;WATSON;COMPANY;Balance;Sheet;December;31, 12X1;Assets;Cash;$4,595;Accounts;receivable;10,000;Finished goods;(575 units x $7.00);4,025;Direct;materials (2,760 units x $0.50);1,380;Plant;equipment;$50,000;Less;Accumulated depreciation;10,000;40,000;Total assets;$60,000;Liabilities;Stockholders' Equity;Accounts;payable to suppliers;$14,000;Common stock;$25,000;Retained;earnings;21,000;46,000;Total;liabilities &. stockholders' equity;$60,000;The following information has been extracted from the firm's;accounting records;1. All sales are;made on account at $20 per unit. Sixty percent of the sales are collected in;the month of sale, the remaining 40% are collected in the following month.;Forecasted sales for the first five months of 20X2 are: January, 1,500 units,-;February, 1,600 units, March, 1,800 units, April, 2,000 units, May, 2,100;units.;2. Management wants;to maintain the finished goods inventory at 30% of the following month's sales.;3. Watson uses four;units of direct material in each finished unit. The direct material price has;been stable and is expected to remain so over the next six months. Management;wants to maintain the ending direct materials inventory at 60% of the following;month's production needs.;4. Seventy percent;of all purchases are paid in the month of purchase, the remaining 30% are paid;in the subsequent month.;5. Watson's product;requires 30 minutes of direct labor time. Each hour of direct labor costs $7.;Instructions;a. Rounding;computations to the nearest dollar, prepare the following for January through;March;1) Sales budget;2) Schedule of cash;collections;3) Production budget;4) Direct material purchases;budget;5) Schedule of cash;disbursements for material purchases;6) Direct labor budget;b. Determine the;balances in the following accounts as of March 31;1) Accounts Receivable;2) Direct Materials;3) Accounts Payable;Chapter 7 Problem;1;2. Basic flexible budgeting Centron, Inc., has the following budgeted production costs;Direct materials;$0.40 per unit;Direct labor;1.80 per unit;Variable factory overhead;2.20 per unit;Fixed factory overhead;Supervision;$24,000;Maintenance;18,000;Other;12,000;The company normally manufactures between 20,000 and 25,000 units;each quarter. Should output exceed 25,000 units, maintenance and other fixed;costs are expected to increase by $6,000 and $4,500, respectively.;During the recent quarter ended March 31, Centron produced 25,500;units and incurred the following costs;Direct Materials;$10,710;Direct Labor;47,175;Variable factory overhead;51,940;Fixed factory overhead;Supervision;24,500;Maintenance;23,700;Other;16,800;Total production costs;$174,825;Instructions;a.;Prepare a flexible budget for;20,000, 22,500, and 25,000 units of activity.;b.;Was Centron's experience in the;quarter cited better or worse than anticipated? Prepare an appropriate;performance report and explain your answer.;c.;Explain the benefit of using;flexible budgets (as opposed to static budgets) in the measurement of;performance.;Chapter 7 Problem;5;3. Straightforward;variance analysis;Arrow Enterprises uses a;standard costing system. The standard cost sheet for product no. 549 follows.;Direct;materials: 4 units @ $6.50;$26.00;Direct;labor: 8 hours @ $8.50;68;Variable;factory overhead: 8 hours;@ $7.00;56;Fixed;factory overhead: 8 hours;@ 2.5;20;Total;standard cost per unit;$170.00;The following information pertains to activity for;December;1.;Direct materials acquired;during the month amounted to 26,350 units at $6.40 per unit. All materials were;consumed in operations.;2.;Arrow incurred an average wage;rate of $8.75 for 51,400 hours of activity.;3.;Total overhead incurred;amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread;evenly throughout the year.;4.;Actual production amounted to;6,500 completed units.;Instructions;a.;Compute Arrow's direct material;variances.;b.;Compute Arrow's direct labor;variances.;c.;Compute Arrow's variances for;factory overhead.

 

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