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ACCT 2332 PROJECT 2 (2014)

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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 February;Sales Revenue in March;Purchases in March;4,050,000;4,150,000;1,350,000;CASH BUDGET;April;Units sold;Collected from February sale;Collected From March sale;Collected From April sale;Collected From May sale;Collected From June sale;Total Collected;May;180,000;June;200,000;Total;210,000;PAYMENTS;For March purchases;For April purchases;For May purchases;For June purchases;Labor costs;Variable Overhead;Fixed Overhead;Selling and administrative;Total Payments;Collections - Payments;2) (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.;BUDGETED;INCOME;STATEMENT;Sales Revenues;Variable costs;Materials;Labor;Overhead;Total variable costs;Contribution Margin;Fixed production Cost;Fixed Selling and Admin;Net Income;April;May;June;Total;3) (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 Item;Actual results;Sales Revenues;$4,342,000;Direct Materials;$1,515,625;Direct Labor;$881,436;Supplies;$166,288;Electric Power;$701,354;Indirect Labor;$339,272;Salaries and Supervision;$175,549;Maintenance;$37,336;Insurance;$12,000;Permits and license fees;$68,000;Factory depreciation;$70,000;Other Overhead expenses;$33,173;Total Production;Expenses;Total Selling;Administrative Expenses;$4,000,033;Total Expenses;$4,329,486;Operating Income;$329,453;$12,514;Flexible Budget;for 175,000;units;Flexible Budget;Variance;5) (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#80522 | Written in 18-Jul-2015

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