Question 20: (4 points)
multi
32
Exercise 9-3 Direct Materials Budget [LO4]
Four grams of musk oil are required for each bottle of Mink Caress, a very popular perfume
made by a small company in western Siberia. The cost of the musk oil is 200 roubles per
kilogram. (Siberia is located in Russia, whose currency is the rouble.) Budgeted production of
Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:
Year 2
Budgeted production, in
bottles
First
Second
Third
59,000
84,000
157,000
Fourth
Year
3
First
93,000 79,000
Musk oil has become so popular as a perfume ingredient that it has become necessary to
carry large inventories as a precaution against stock-outs. For this reason, the inventory of
musk oil at the end of a quarter must be equal to 15% of the following quarter's production
needs. Some 35,400 grams of musk oil will be on hand to start the first quarter of Year 2.
Required:
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the
bottom of your budget, show the amount of purchases in roubles for each quarter and for the
year in total. (Input all amounts as positive values. Round your answers to the nearest
whole number.)
First
Second
Year 2
Third
Fourth
Year
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
Production needs—grams
string
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
: desired ending inventory—grams
Total needs—grams
string
: beginning inventory—grams
Raw materials to be purchased—
grams
Cost of raw materials to be purchased
Question 21: (4 points)
multi
50
Exercise 9-7 Cash Budget [LO8]
Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year.
Management has prepared the following summary of its budgeted cash flows:
Total cash receipts
Total cash
disbursements
1st Quarter
$ 197,000
2nd Quarter
$ 338,000
3rd Quarter
$ 216,000
4th Quarter
$ 240,000
$ 260,000
$ 230,000
$ 214,000
$ 228,000
The company's beginning cash balance for the upcoming fiscal year will be $20,000. The
company requires a minimum cash balance of $10,800 and may borrow any amount needed
from a local bank at a quarterly interest rate of 1.2%. The company may borrow any amount
at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of
any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity,
assume that interest is not compounded.
Required:
Prepare the company's cash budget for the upcoming fiscal year. (Show deficiencies,
repayments, interest, and total financing preceded by a minus sign when appropriate.
Enter all other amounts as positive values. Round interest amounts to the nearest whole
number. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$"
sign in your response.)
Garden Depot
Cash Budget
nd
2 Quarter
3rd Quarter
1st Quarter
list
Cash balance,
beginning
$
2
list
$
2
4th Quarter
list
$
2
Year
list
$
2
list
$
2
Total cash
receipts
Total cash
available
Less total cash
disbursements
Excess
(deficiency)
of cash
available over
disbursements
Financing:
Borrowings
(at
beginnings
of quarters)
Repayments
(at ends of
quarters)
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
2
2
2
2
2
1
1
1
1
1
list
list
list
list
list
Interest
Total financing
Cash balance,
ending
2
$
2
$
1
2
$
1
2
$
1
2
$
1
1
Question 22: (4 points)
multi
8
Exercise 10-1 Prepare a Flexible Budget [LO1]
Puget Sound Divers is a company that provides diving services such as underwater ship
repairs to clients in the Puget Sound area. The company's planning budget for May appears
below:
Puget Sound Divers
Planning Budget
For the Month Ended May 31
Budgeted diving-hours (q)
93
Revenue ($379 q)
$ 35,247
Expenses:
Wages and salaries ($6,500 + $125
18,125
q)
Supplies ($3 q)
279
Equipment rental ($1,640 + $16 q)
3,128
Insurance ($2,480)
2,480
Miscellaneous ($630 + $2 q)
816
Total expense
24,828
Net operating income
$ 10,419
Required:
During May, the company's activity was actually 107 diving-hours. Prepare a flexible budget
for that level of activity. (Input all amounts as positive values. Omit the "$" sign in your
response.)
Puget Sound Divers
Flexible Budget
For the Month Ended May 31
Revenue
$ list
2
1
Expenses:
list
2
Wages and salaries
1
list
2
Supplies
1
list
2
Equipment rental
1
list
2
Insurance
1
list
2
Miscellaneous
1
Total expense
list
2
1
list
2
Net operating income
$
1
Question 23: (4 points)
multi
18
Exercise 10-2 Prepare a Report Showing Activity Variances [LO2]
Flight Café is a company that prepares in-flight meals for airlines in its kitchen located next to
the local airport. The company's planning budget for July appears below:
Flight Café
Planning Budget
For the Month Ended July 31
Budgeted meals (q)
18,500
Revenue ($6.4 q)
$ 118,400
Expenses:
Raw materials ($1.9 q)
35,150
Wages and salaries ($3,900 + $0.1
5,750
q)
Utilities ($1,700 + $0.02 q)
2,070
Facility rent ($2,600)
2,600
Insurance ($1,850)
1,850
Miscellaneous ($570 + $0.2 q)
4,270
Total expense
51,690
Net operating income
$ 66,710
In July, 19,000 meals were actually served. The company's flexible budget for this level of
activity appears below:
Flight Café
Flexible Budget
For the Month Ended July 31
Budgeted meals (q)
19,000
Revenue ($6.4 q)
$ 121,600
Expenses:
Raw materials ($1.9 q)
36,100
Wages and salaries ($3,900 + $0.1
q)
Utilities ($1,700 + $0.02 q)
Facility rent ($2,600)
Insurance ($1,850)
Miscellaneous ($570 + $0.2 q)
Total expense
Net operating income
5,800
2,080
2,600
1,850
4,370
52,800
$ 68,800
Required:
Prepare a report showing the company's activity variances for July. (Leave no cells blank be certain to enter "0" wherever required. Input all amounts as positive values. Indicate
the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and
"None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
Flight Café
Activity Variances
For the Month Ended July 31
Activity Variances
list
2
Revenue
string
$
1
Expenses:
list
2
string
Raw materials
1
Wages and
salaries
list
string
2
1
list
2
string
Utilities
1
list
2
string
Facility rent
1
list
2
string
Insurance
1
list
2
string
Miscellaneous
1
list
2
string
Total expense
1
Net operating
income
list
$
2
string
1
Question 24: (4 points)
multi
18
Exercise 10-3 Prepare a Report Showing Revenue and Spending Variances [LO3]
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested
and sold 8,300 pounds of oysters in August. The company's flexible budget for August
appears below:
Quilcene Oysteria
Flexible Budget
For the Month Ended August 31
Actual pounds (q)
8,300
Revenue (4.3 q)
$ 35,690
Expenses:
Packing supplies (0.31 q)
2,573
Oyster bed maintenance (1,200)
1,200
Wages and salaries (2,250 +0.15 q)
3,495
Shipping (0.75 q)
6,225
Utilities (690)
690
Other (420 + 0.05 q)
835
Total expense
15,018
Net operating income
$ 20,672
The actual results for August appear below:
Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds
8,300
Revenue
$ 39,200
Expenses:
Packing supplies
4,000
Oyster bed maintenance
1,100
Wages and salaries
Shipping
Utilities
Other
Total expense
Net operating income
3,740
5,250
630
780
15,500
$ 23,700
Required:
Prepare a report showing the company's revenue and spending variances for August. (Input
all amounts as positive values. Indicate the effect of each variance by selecting "F" for
favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the
"$" sign in your response.)
Quilcene Oysteria
Revenue and Spending Variances
For the Month Ended August 31
Revenue and
Spending Variances
list
2
Revenue
string
$
1
Expenses:
list
Packing
supplies
2
string
1
Oyster bed
maintenance
list
2
string
1
list
2
Wages and
salaries
string
1
list
2
string
Shipping
1
list
2
string
Utilities
1
list
2
string
Other
1
list
2
string
Total expense
1
list
Net operating
income
string
$
2
1
Question 25: (4 points)
multi
32
Exercise 10-4 Prepare a Flexible Budget Performance Report [LO4]
Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington
State that explosively erupted in 1982. Data concerning the company's operations in July
appear below:
Vulcan Flyovers
Operating Data
For the Month Ended July 31
Planning Flexible
Budget
Budget
Flights (q)
52
51
Revenue ($327 q)
$ 17,004 $ 16,677
Expenses:
Wages and salaries ($3,100 +
6,636
6,568
$68 q)
Fuel ($21 q)
1,092
1,071
Airport fees ($635 + $36 q)
2,507
2,471
Aircraft depreciation ($5 q)
260
255
Office expenses ($177 + $1 q)
229
228
Total expense
10,724
10,593
Net operating income
$ 6,280 $ 6,084
Actual
Budget
51
$ 13,500
8,230
1,170
2,350
332
290
12,372
$ 1,128
The company measures its activity in terms of flights. Customers can buy individual tickets
for overflights or hire an entire plane for an overflight at a discount.
Required:
Prepare a flexible budget performance report for July. (Input all amounts as positive values.
Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of
each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no
effect (i.e., zero variance). Omit the "$" sign in your response.)
Vulcan Flyovers
Flexible Budget Performance Report
For the Month Ended July 31
Activity Variances
Revenue and Spending Variances
list
2
Revenue
list
string
$
2
string
$
1
1
list
list
Expenses:
Wages and
salaries
2
string
2
1
1
list
list
2
string
2
string
string
Fuel
1
1
list
list
2
string
2
string
Airport fees
Aircraft
depreciation
1
1
list
list
2
1
string
2
1
string
list
2
Office
expenses
Net operating
income
string
2
1
1
list
list
2
Total
expense
list
string
2
1
1
list
list
2
$
string
2
$
1
1
string
string
string