Accounting Problems
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.
Question 2: Determine the total costs of direct materials for August purchases.
Problem 2 - Russell Company has the following projected account balances for June 30, 20X2:
|
Accounts payable
|
$40,000
|
Sales
|
$800,000
|
|
Accounts receivable
|
100,000
|
Capital stock
|
400,000
|
|
Depreciation, factory
|
24,000
|
Retained earnings
|
?
|
|
Inventories (5/31 & 6/30)
|
180,000
|
Cash
|
56,000
|
|
Direct materials used
|
200,000
|
Equipment, net
|
240,000
|
|
Office salaries
|
80,000
|
Buildings, net
|
400,000
|
|
Insurance, factory
|
4,000
|
Utilities, factory
|
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.
Question 2: Calculate the budgeted total assets as of June 30, 20X2.
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:
|
Item
|
Fixed
|
Variable
|
Cost driver
|
|
Product handling
|
$10,000
|
$1.25
|
per 100 units
|
|
Storage
|
-
|
3.00
|
per storage bin
|
|
Utilities
|
1,000
|
1.50
|
per 100 units
|
|
Shipping clerks
|
1,000
|
1.00
|
per shipment
|
|
Supplies
|
-
|
0.50
|
per shipment
|
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:
|
Item
|
Actual costs
|
|
Product handling
|
$10,900
|
|
Storage
|
465
|
|
Utilities
|
2,020
|
|
Shipping clerks
|
1,400
|
|
Supplies
|
340
|
Question 1: Determine the 20X2 static budget variances.
Question 2: Determine the 20X2 flexible budget variances.