Problem 1 - Preparation of a Master Budget. It corner it states that the 1)Total Sales Revenue is $1,100,000.00. 3)Cost of purchases (paperboard):$97,000. 5) Total Overhead is $148,500. 7) Predetermined Overhead:$40 per hour.
FreshPak Corporation Manufacters two types of cardboard boxes used in shipping canned food, fruit and vegetables. The canned box (Type C) and the perishable food box (type P) have the following material and labor requirements.
Direct Material Per 100 Boxes: Type C Type P
Paperboard ( $.20 per pound ) 30 pounds 70 pounds
Corrugating mediaum ($.10 per pound) 20 pounds 30 pounds
Direct Labor required per 100 boxes ($12.00 per hour ) .25 hours .50 hour
The following manufacturing overhead cost are anticipated for next year. The predetermined overhead rate is based on a production volume of 495,000 units for each type of box. Manufacteing overhead is applied on the basis os direct-labor hours.
Indirect Material $10,500
Indirect Labor 50,000
Utilities 25,000
Property Taxes 18,000
Insurance 16,000
Depreciation 29,000
Total $148,500
The following selling and administrative expenses are anticipated for next year.
Salaries and fringe benefits of sales personnel $75,000
Advertising 15,000
Manager Salaries and fringe benefits 90,000
Clerical Wages and fringe benefits 26,000
Misc. Administrative Expenses 4,000
Total $210,000
The Sales forecast for next year is as follows:
Finished Goods Expected Inventory January 1 Expected Iventory December 31
Box Type C 10,000 boxes 5,000 boxes
Box Type P 20,000 boxes 15,000 boxes
Raw Material
Paperboard: 15,000 pounds 5,000pounds
Corrugating Mediaum: 5,000 pounds 10,000 pounds
Required: Prepare a Master Budget for Freshpak Corporation for the next year. Assume an income tax rate of 40 percent. Include the following schedules.
1) Sales Budget.
2) Production Budget
3) Direct-Material Budget
4) Direct-Labor Budget
5) Manufactering-Overhead Budget
6) Selling and Administrative Expense Budget
7) Budgeted Income Statement(Hint: To determine Cost of Good sold, first compute the manufacturing cost per unit for each type of box. Include applied manufacturing overhead in the cost).
Problem 2 - Straigt foward Computation of Overhead Variances
The following data are actual results for Marvelous Marshmellow Company for October.
Actual Output 9,000 cases
Actual Variable Overhead $405,000
Actaul fixed Overhead $122,000
Actual Machine Time 40,500 machine hours
Standard Cost and Budget Information for Marvelous Marshmellows.
Standard Variable Overhead Rate $9.00 per machine hour
Standard quantity of machine hours 4 hours per case of marshmellows
Budgeted Fixed Overhead $120,000 per month
Budgeted Output 10,000 cases per month
Required: Use any of the methods explained in the chapter to compute the following variances. Indicate Rather is favorable or unfavorable.
a) Variable Overhead Spending Variance
b) Variable Overhead Efficiency Variance
c) Fixed Overhead budget variance
d) Fixed Overhead Volume Variance
Construct an Excel Spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: actual out put was 91,000 cases and actual variable overhead was $395,000.
Attachment:- Assignment Files.rar