Accounting Assignment 2
Q1 Price, Inc., bottles and distributes mineral water from the company’s natural springs in northern Oregon. Price markets two products: 12-ounce disposable plastic bottles and 1-gallon reusable plastic containers.

Required:

1. For 2015, Price marketing managers project monthly sales of 420,000 12-ounce bottles and 170,000 1-gallon containers. Average selling prices are estimated at $0.20 per 12-ounce bottle and $1.50 per 1-gallon container. Prepare a revenues budget for Price, Inc., for the year ending December 31, 2015.

2. Price begins 2015 with 890,000 12-ounce bottles in inventory. The vice president of operations requests that 12-ounce bottles ending inventory on December 31, 2015, be no less than 680,000 bottles. Based on sales projections as budgeted previously, what is the minimum number of 12-ounce bottles Price must produce during 2015?

3. The VP of operations requests that ending inventory of 1-gallon containers on December 31, 2015, be 240,000 units. If the production budget calls for Price to produce 1,900,000 1-gallon containers during 2015, what is the beginning inventory of 1-gallon containers on January 1, 2015?

Comprehensive operating budget. Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a single model, the Pipex. In late 2017, Skulas’s management accountant gathered the following data to prepare budgets for January 2018:

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Q2 Skulas’s CEO expects to sell 2,900 snowboards during January 2018 at an estimated retail price of $650 per board. Further, the CEO expects 2018 beginning inventory of 500 snowboards and would like to end January 2018 with 200 snowboards in stock.

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Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $81,000 in fixed manufacturing overhead costs budgeted for January 2018. Skulas combines both variable and fixed manufacturing overhead into a single rate based on direct manufacturing labor-hours. Variable marketing costs are allocated at the rate of $250 per sales visit. The marketing plan calls for 38 sales visits during January 2018. Finally, there are $35,000 in fixed nonmanufacturing costs budgeted for January 2018.

Other data include:

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The inventoriable unit cost for ending finished-goods inventory on December 31, 2017, is $374.80. Assume Skulas uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.

Required:

1. Prepare the January 2018 revenues budget (in dollars).

2. Prepare the January 2018 production budget (in units).

3. Prepare the direct material usage and purchases budgets for January 2018.

4. Prepare a direct manufacturing labor costs budget for January 2018.

5. Prepare a manufacturing overhead costs budget for January 2018.

6. What is the budgeted manufacturing overhead rate for January 2018?

7. What is the budgeted manufacturing overhead cost per output unit in January 2018?

8. Calculate the cost of a snowboard manufactured in January 2018.

9. Prepare an ending inventory budget for both direct materials and finished goods for January 2018.

10. Prepare a cost of goods sold budget for January 2018.

11. Prepare the budgeted income statement for Skulas, Inc., for January 2018.

Q3 Omega Animal Health, Inc. produces a generic medication used to treat cats with feline diabetes. The liquid medication is sold in 100 ml vials. Omega employs a team of sales representatives who are paid varying amounts of commission.

Given the narrow margins in the generic veterinary drugs industry, Omega relies on tight standards and cost controls to manage its operations. Omega has the following budgeted standards for the month of April 2017:

Average selling price per vial

$ 9.40

Total direct materials cost per vial

$ 3.90

Direct manufacturing labor cost per hour

$ 17.00

Average labor productivity rate (vials per hour)

100

Sales commission cost per unit

$ 0.76

Fixed administrative and manufacturing overhead

$ 800,000

Omega budgeted sales of 800,000 vials for April. At the end of the month, the controller revealed that actual results for April had deviated from the budget in several ways:

· Unit sales and production were 80% of plan.

· Actual average selling price increased to $9.50.

· Productivity dropped to 80 vials per hour.

· Actual direct manufacturing labor cost was $17.30 per hour.

· Actual total direct material cost per unit increased to $4.20.

· Actual sales commissions were $0.74 per unit.

· Fixed overhead costs were $30,000 above budget.

Calculate the following amounts for Omega for April 2017:

Required:

1. Static-budget and actual operating income

2. Static-budget variance for operating income

3. Flexible-budget operating income

4. Flexible-budget variance for operating income

5. Sales-volume variance for operating income

6. Price and efficiency variances for direct manufacturing labor

7. Flexible-budget variance for direct manufacturing labor