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ACCT 2332 PROJECT 2 (2014)




Question;Required:1) (5 pts) Construct Harry?s cash budget for the 3 months April, May, and June, and the total for the 2nd quarter.Fixed overhead expenses requiring the use of cash may be grouped together as a single line item called ?fixed overhead?. Variable overhead items may be grouped together as a single line item called ?variable overhead?.Sales revenue in FebruarySales Revenue in MarchPurchases in March4,050,0004,150,0001,350,000CASH BUDGETAprilUnits soldCollected from February saleCollected From March saleCollected From April saleCollected From May saleCollected From June saleTotal CollectedMay180,000June200,000Total210,000PAYMENTSFor March purchasesFor April purchasesFor May purchasesFor June purchasesLabor costsVariable OverheadFixed OverheadSelling and administrativeTotal PaymentsCollections - Payments2) (5 pts) Construct Harry?s contribution margin format budgeted income statement for the 3 months April, May, and June and the total for the 2nd quarter. Fixed overhead expenses maybe grouped together as fixed overhead. Variable overhead expenses maybe grouped together as variable overhead.BUDGETEDINCOMESTATEMENTSales RevenuesVariable costsMaterialsLaborOverheadTotal variable costsContribution MarginFixed production CostFixed Selling and AdminNet IncomeAprilMayJuneTotal3) (Optional: 2 bonus pts) Explain why Harry is facing a cash flow problem in May even though his business is profitable.4) (5 pts) During April Harry actually produced and sold 175,000 widgets. Actual sales revenues were $4,342,000. Actual costs were as detailed in the table below. Complete the table by constructing a flexible budget and performance report including variances for April based on 175,000 widgets.Cost ItemActual resultsSales Revenues$4,342,000Direct Materials$1,515,625Direct Labor$881,436Supplies$166,288Electric Power$701,354Indirect Labor$339,272Salaries and Supervision$175,549Maintenance$37,336Insurance$12,000Permits and license fees$68,000Factory depreciation$70,000Other Overhead expenses$33,173Total ProductionExpensesTotal Selling &Administrative Expenses$4,000,033Total Expenses$4,329,486Operating Income$329,453$12,514Flexible Budgetfor 175,000unitsFlexible BudgetVariance5) (Optional: 2 bonus pts) Write a brief report explaining the most important reasons why Harry?s profits were different from the amount projected in the master budget.


Paper#40949 | Written in 18-Jul-2015

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