Please complete the following 3 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
1. Comprehensive budgeting
The balance sheet of Williams Company as of December 31, 20X8, follows.
December 31, 12X8
Finished goods (575 units x $7.00)
Direct materials (2,760 units x $0.50)
Plant & equipment
Less: Accumulated depreciation
Liabilities & Stockholders’ Equity
Accounts payable to suppliers
Total liabilities &. stockholders’ equity
The following information has been extracted from the firm’s accounting records:
1. All sales are made on account at $20 per unit. Sixty percent of the sales are collected in the month of sale;
the remaining 40% are collected in the following month. Forecasted sales for the first five months of
20X9 are: January, 1,600 units,- February, 1,700 units; March, 1,900 units; April, 2,100 units; May, 2,200
2. Management wants to maintain the finished goods inventory at 30% of the following month’s sales.
3. Williams uses four units of direct material in each finished unit. The direct material price has been stable
and is expected to remain so over the next six months. Management wants to maintain the ending direct
materials inventory at 60% of the following month’s production needs.
4. Seventy percent of all purchases are paid in the month of purchase; the remaining 30% are paid in the
5. Williamsâ€™ product requires 30 minutes of direct labor time. Each hour of direct labor costs $9.
a. Rounding computations to the nearest dollar, prepare the following for January through March:
1) Sales budget
2) Schedule of cash collections
3) Production budget
4) Direct material purchases budget
5) Schedule of cash disbursements for material purchases
6) Direct labor budget
b. Determine the balances in the following accounts as of March 31:
1) Accounts Receivable
2) Direct Materials
3) Accounts Payable
2. Basic flexible budgeting
Sydney, Inc., has the following budgeted production costs:
$0.45 per unit
1.80 per unit
Variable factory overhead
2.30 per unit
Fixed factory overhead
The company normally manufactures between 20,000 and 25,000 units each quarter. Should output exceed 25,000 units,
maintenance and other fixed costs are expected to increase by $6,000 and $4,500, respectively.
During the recent quarter ended March 31, Sydney produced 25,500 units and incurred the following costs:
Variable factory overhead
Total production costs
a. Prepare a flexible budget for 21,000, 23,000, and 24,500 units of activity.
b. Was Sydneyâ€™s experience in the quarter cited better or worse than anticipated? Prepare an appropriate
performance report and explain your answer.
c. Explain the benefit of using flexible budgets (as opposed to static budgets) in the measurement of
3. Straightforward variance analysis
Andy Enterprises uses a standard costing system. The standard cost sheet for product no. 551 follows.
Direct materials: 4 units @ $6.50
Direct labor: 8 hours @ $8.50
Variable factory overhead: 8 hours
Fixed factory overhead: 8 hours
Total standard cost per unit
The following information pertains to activity for December:
1. Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were
consumed in operations.
2. Andy incurred an average wage rate of $8.75 for 51,400 hours of activity.
3. Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread
evenly throughout the year.
4. Actual production amounted to 6,500 completed units.
a. Compute Andyâ€™s direct material variances.
b. Compute Andy’s direct labor variances.
c. Compute Andy’s variances for factory overhead.