Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year

$32.00

Description

Garza and
Neely, CPAs, are preparing their service revenue (sales) budget for the coming
year (2014). The practice is divided into three departments: auditing, tax, and
consulting. Billable hours for each department, by quarter, are provided below.

Department

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Auditing

2,430

1,910

2,210

2,770

Tax

3,360

2,740

2,110

2,890

Consulting

1,630

1,630

1,630

1,630

Average hourly billing rates are auditing $85, tax $92, and consulting $105.

Prepare the service revenue (sales) budget for 2014 by listing the departments
and showing for each quarter and the year in total, billable hours, billable
rate, and total revenue.Turney
Company produces and sells automobile batteries, the heavy-duty HD-240. The
2014 sales forecast is as follows.

Quarter

HD-240

1

5,300

2

7,220

3

8,110

4

10,410

The January 1, 2014, inventory of HD-240 is 2,120 units. Management
desires an ending inventory each quarter equal to 40% of the next quarter’s
sales. Sales in the first quarter of 2015 are expected to be 25% higher than
sales in the same quarter in 2014.

Prepare quarterly production budgets for each quarter and in total for 2014.Glendo
Farm Supply Company manufactures and sells a pesticide called Snare. The
following data are available for preparing budgets for Snare for the first 2
quarters of 2014.

1.

Sales: Quarter 1, 29,000 bags; quarter
2, 43,500 bags. Selling price is $61 per bag.

2.

Direct materials: Each bag of Snare requires 4 pounds
of Gumm at a cost of $4 per pound and 7 pounds of Tarr at
$1.75 per pound.

3.

Desired inventory levels:

Type of Inventory

January 1

April 1

July 1

Snare (bags)

8,100

12,200

18,300

Gumm (pounds)

9,300

10,400

13,200

Tarr (pounds)

14,300

20,100

25,300

4.

Direct labor: Direct labor time is 15 minutes per bag at an
hourly rate of $16 per hour.

5.

Selling and administrative expenses are expected to be 15% of
sales plus $178,000 per quarter.

6.

Income taxes are expected to be 30% of income from operations.

Complete questions are available in the attachment.

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Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year

$28.00

Description

Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.
Department Quarter 1 Quarter 2 Quarter 3 Quarter 4
Auditing 2,400 1,900 2,320 2,610
Tax 3,360 2,510 2,120 2,820
Consulting 1,880 1,880 1,880 1,880

Average hourly billing rates are: auditing $84, tax $93, and consulting $103.

Prepare the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.
GARZA AND NEELY, CPAs
Sales Revenue Budget
For the Year Ending December 31, 2012
Quarter 1 Quarter 2
Dept. Billable Hours Billable Rate Total Rev. Billable Hours Billable Rate Total Rev.
Auditing
$
$

$
$

Tax

Consulting

$
$

GARZA AND NEELY, CPAs
Sales Revenue Budget
For the Year Ending December 31, 2012
Quarter 3 Quarter 4
Dept. Billable Hours Billable Rate Total Rev. Billable Hours Billable Rate Total Rev.
Auditing
$
$

$
$

Tax

Consulting

$
$

GARZA AND NEELY, CPAs
Sales Revenue Budget
For the Year Ending December 31, 2012
Year
Dept. Billable Hours Billable Rate Total Rev.
Auditing
$
$

Tax

Consulting

$

2- Stanton Company is planning to produce 1,000 units of product in 2012. Each unit requires 3.50 pounds of materials at $5.90 per pound and a half-hour of labor at $12.80 per hour. The overhead rate is 60% of direct labor.

(a) Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead.
Direct materials $

Direct labor $

Overhead $

(b) Compute the standard cost of one unit of product. (Round answer to 2 decimal places, e.g. 2.75.)
Standard cost $

3-In Harley Company it costs $30 per unit ($18 variable and $12 fixed) to make a product that normally sells for $48. A foreign wholesaler offers to buy 4,330 units at $23 each. Harley will incur special shipping costs of $2 per unit. Assuming that Harley has excess operating capacity.

Indicate the net income (loss) Harley would realize by accepting the special order. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

Reject
Order
Accept
Order Net Income
Increase
(Decrease)
Revenues $
$
$

Costs—Manufacturing

Shipping

Net income/(loss) $
$
$

The special order should be .

4-Vintech Manufacturing incurs unit costs of $8 ($5 variable and $3 fixed) in making a subassembly part for its finished product. A supplier offers to make 11,900 of the part at $5.60 per unit. If the offer is accepted, Vintech will save all variable costs but no fixed costs.

Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

Make
Buy Net Income
Increase
(Decrease)
Variable manufacturing costs $
$
$

Fixed manufacturing costs

Purchase price

Total annual cost $
$
$

The decision should be to .

5-Ridley Company has a factory machine with a book value of $94,800 and a remaining useful life of 5 years. A new machine is available at a cost of $197,300. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $604,300 to $358,800.

Prepare an analysis showing whether the old machine should be retained or replaced. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

Retain
Equipment

Replace
Equipment Net 5-Year
Income
Increase
(Decrease)
Variable manufacturing costs $
$
$

New machine cost

Total $
$
$

The old factory machine should be

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