Question

#1

Action Company, sells mood lights for $60 each. In 2018 Action anticipates selling 15,000 lights. The company has the following costs and inventory levels per light for the year:

Direct materials $16

Direct manufacturing labor $18

Manufacturing overhead $10

Beginning inventory Ending inventory

Direct materials 200 units 300 units

Work-in-process inventory 0 units 0 units

Finished goods inventory 2,100 units 1,500 units

Calculate the following for Action in 2018.

Budgeted income statement sales.

Number of mood lights produced in 2018.

Budgeted income statement cost of goods sold.

What are the 2016 budgeted production costs for direct materials, direct manufacturing labor, and manufacturing overhead, respectively?

#2

Jonas Corporation has the following 2017 year-end information:

Sales (20,000 units) $600,000

Less: Cost of goods sold                330,000

Gross profit 270,000

Operating expenses (includes $10,000 of Depreciation) 180,000

Net income        $ 90,000

In 2018 the company expects the following:

Increase unit selling prices by 6%

increase sales volume of 3%

cost of goods sold as a percentage of sales decrease to 52%

all operating costs are variable except for depreciation

What is Jonas Corporations budgeted income statement for 2018?

#3

Tetra Company has the following:

budgeted sales of 126,000 units

targeted ending finished goods inventory of 18,000 units

beginning finished goods inventory of 12,000 units

How many units should Tetra Company produce next year?

#5

The following sales and purchases information relates to The Molly Company for the months of March through August:

Month Sales Purchases

March   $10,000 $9,000

April       12,000 8,000

May       15,000 9,000

June      16,000 11,000

July        19,000 12,000

August 25,000 18,000

The Molly Company collects cash from its customers as follows::

In the month of sale (1% cash discount) 10%

In the month after the sale 75%

Two months after sale 10%

The amount anticipated to be uncollectible         5%

?

For purchases, Molly pays cash for 60% of the purchase in the month of purchase. The balance is paid in the following month.

Prepare a summary of Molly’s cash collections and cash disbursements for June through August.

#6

Raineri Products produces skylights. Their average number of daily orders is 55. Each order is fabricated by hand and takes 7 minutes each. The fabricator works eight hours a day, five days a week.

What is the average waiting time in minutes?

What is the cycle time for an order?

Answer 1

Solution 1-

A. Budgeted Income Statedment Sales- Quantity X Price= 15000 lights * 60$ = 9,00,000$.

B. Number of mood lights produced= Sales Quantity + Ending Inventory - Beginning Inventory = 15000 + 1500 - 2100 = 14400 mood lights

C. Cost of Goods Sold = Sales Quantity * Cost per quantity = 15000 * (Direct Materials + Direct Labour + Direct Manufacturing Overhead) = 15000 * (16 + 18 + 10) = 15000* 44 = 6,60,000 Dollars

D. 1.  budgeted production costs for direct material = Direct Materials Used * Cost of direct Material =(Sales Quantity + Closing Inventory - Opening Inventory) * cost of direct material = (15000 + 300 -200 ) * 16 = $ 2,41,600

Point to be noted- While calculating cost of goods sold, we didnt take into account the opening and closing inventory of Direct materials, Reason being cost of goods sold doesnt depend on that. As you have sold 15000 quantities, direct materials used would be 15000 and its cost would be 15000 multiplied by cost of direct material. While in the last case, "Production" cost of direct material is asked, so we will only calculated for direct materials actually produced in the year.

2. Direct Manufacturing Labour = 15000 * 18 = $ 2,70,000

3. Manufacturing Overhead = 15000 * 10 = 1,50,000 Dollars

Solution 6-

Total Time in a day given by fabricator in minutes= 8*60 = 480 minutes

Time to produce 55 skylights in minutes= 55*7 = 385

Thus we can see that there is idle time in a day. Total idle/waiting time= 480-385= 95 minutes.

Therefore, average waiting time for one skylight= 95/55 = 1.73 minutes.

On the other Hand, Cycle time= (Total Time Available/ Total units produced) = 8*60/55 = 480/55 = 8.73 minutes

Thus we can see that, Average waiting time= Cycle time- time to produce 1 order.