Assignment
1. What is a budget? What is the purpose of a general budget? What is the purpose of a cash budget? Describe a cash budget. Who should be involved in budgeting? Who uses a budget?
2. Why do companies need to plan for production? What needs to be considered when preparing a production budget?
3. Why do companies need to plan for a finished goods budget? What needs to be considered when preparing a finished goods budget?
4. What are materials and labor variances? Why are they important? What does variance mean?
1. Scheduling anticipated cash collections
2. Planning for production
3. Planning for materials purchases
4. Scheduling anticipated cash payments
5. Budgeting of finished goods
I-22.03 Material and labor variances with entries
"Scalia Systems manufactures rugged handheld computers for use in adverse working environments. Scalia tries to maintain inventory at 40% of the following month's expected unit sales. Scalia began the year with 8,000 units in stock, based on the following unit sales projections prepared by the sales manager:
January 20,000
February 25,000
March 25,000
April 22,000
Prepare a schedule of planned unit production for January through March.
"Prepare a direct materials purchasing plan for January, February, and March, based on the following facts:
Lana Gonzales owns a business that assembles ceiling fan units. Each fan requires one motor system and four blades. Motors cost $40 each, and blades are $3.50 each. Lana is able to reliably obtain motors as needed, and does not maintain them in inventory. However, blades are stocked in inventory sufficient to produce 30% of the following month's expected production. Planned production is as follows:
January 10,000
February 12,000
March 15,000
April 11,000
In accordance with the stocking plan, January's beginning inventory included 12,000 blades.
"Nolan Johnson is CFO for a newly formed furniture manufacturing company. Below is the anticipated monthly production for the first year of operation, and beyond. Nolan is interested in learning which of the first twelve months will require cash outlays of more than $100,000 toward the purchase of lumber. Each unit requires 20 board feet of lumber at $5.80 per board foot. All lumber is purchased in the month prior to its expected use. Lumber purchases are paid for 10% in the month of purchase, 40% in the month following the month of purchase, and 50% in the second month following the month of purchase.
| Month |
Units |
| January |
0 |
| February |
800 |
| March |
500 |
| April |
1,200 |
| May |
700 |
| June |
900 |
| July |
300 |
| August |
600 |
| September |
800 |
| October |
1,300 |
| November |
400 |
| December |
400 |
| January |
600 |
Which months will require cash outlays in excess of the $100,000 amount? Does the production in any given month necessarily correspond to the cash flow for that same month? What are the business implications of your observation?
Attachment:- Acct-Assignment.rar