Grace Sells Miniature Digital Cameras For $250 Each ✓ Solved

Grace Sells Miniature Digital Cameras For 250 Each 1000 Units We

Cleaned Assignment Instructions:

1. Grace sells miniature digital cameras for $250 each. 1,000 units were sold in May, and it forecasts 4% growth in unit sales each month. (a) Determine the number of camera sales for the month of June. (b) Determine the dollar amount of camera sales for the month of June.

2. Electro Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending finished goods inventory for the first quarter will be 138,300 units. The following unit sales of the transmissions are expected during the rest of the year: second quarter, 461,000 units; third quarter, 339,000 units; and fourth quarter, 448,500 units. Company policy calls for the ending finished goods inventory of a quarter to equal 30% of the next quarter's budgeted sales. (Ending inventory for the first quarter does not comply with company policy.) Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture.

3. Hospitable Co. provides the following sales forecast for the next four months: April, May, June, July. The company wants to end each month with ending finished goods inventory equal to 20% of next month’s sales. Finished goods inventory on April 1 is 116 units. Assume July’s budgeted production is 620 units. Assume each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 40% of next month’s production needs. Beginning raw materials inventory for April was 1,192 pounds. Prepare a direct materials budget for April, May, and June.

4. Rad Co. provides the following sales forecast and production budget for the next four months: April, May, June, July. The company plans for finished goods inventory of 290 units at the end of June. Each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 20% of next month’s production needs. Beginning raw materials inventory for April was 610 pounds. Each finished unit requires 0.50 hours of direct labor at $16 per hour. Budget variable overhead at $20 per direct labor hour and fixed overhead of $9,700 per month. Prepare a direct labor budget and a factory overhead budget.

5. Gelato Supremo is a neighborhood gelato shop. Data for July: Revenue $13.60, total sales $73,940; Raw materials $4.50 per liter, $25,340 total; Wages $4,500 + $1.10 per liter, actual $10,770; Utilities $1,860 + $0.10 per liter, actual $2,255; Rent $3,190, insurance $1,940, miscellaneous $530 + $0.10 per liter, actual $1,167. Actual liters sold in July: 5,200.Let's prepare revenue and spending variances for July, indicating favorable or unfavorable effects.

6. Harmon Household Products, Inc. manufactured 4,000 chopping boards using 2,880 board feet of hardwood costing $19,008. Standards: 0.62 board feet per chopping board at $7.00 per board foot. Calculate the standard cost for the wood, the materials quantity variance, and the materials price variance.

7. AirMeals, Inc. prepared 14,000 meals using 2,760 direct labor-hours; total labor cost was $27,186, at $9.85/hour. Standard: 0.20 hours per meal at $9.60/hour. Calculate the standard direct labor cost, and analyze labor efficiency and rate variances.

8. World Company operates at 80% capacity of 61,250 units/month, with 29,400 standard hours of direct labor at a budgeted total overhead of $47,040 fixed and $355,740 variable. Actual production was 46,000 units with 26,400 actual labor hours and $390,000 actual overhead. Compute the overhead volume variance and the overhead controllable variance.

Sample Paper For Above instruction

Question 1: Forecasting Camera Sales and Revenue for June

Grace's digital camera sales project illustrates the application of growth rates in sales forecasting. Given sales of 1,000 units in May at a price of $250 per unit, with a steady growth rate of 4% per month, we can calculate June's sales volume and revenue.

Part A: Number of Camera Sales in June

Starting with May sales: 1,000 units. Applying a 4% growth rate:

June sales = May sales x (1 + growth rate) = 1,000 x (1 + 0.04) = 1,000 x 1.04 = 1,040 units.

Part B: Dollar Revenue for June

Revenue = units sold x price per unit = 1,040 x $250 = $260,000.

Question 2: Production Budget for Transmissions in Second and Third Quarters

The company's forecasted sales and inventory policies necessitate detailed calculations.

First, determine the desired ending inventories for each quarter based on policy: 30% of next quarter’s sales. For Q2, ending inventory = 30% of Q3 sales = 0.30 x 339,000 = 101,700 units. For Q3, ending inventory = 0.30 x Q4 sales = 0.30 x 448,500 = 134,550 units.

Begin with the forecasted sales: Q2 = 461,000, Q3 = 339,000.

Production for Q2:

Desired ending inventory = 101,700 units, plus beginning inventory of Q2 (assumed as first quarter ending inventory, but since first quarter doesn't align with policy, a detailed calculation may be necessary).

Production Q2 = Sales Q2 + Ending inventory Q2 – Beginning inventory Q2. Since beginning inventory for Q2 depends on previous policy, we focus on Q2 and Q3.

Similarly for Q3.

The detailed calculations involve aligning ending inventories with upcoming sales, accounting for initial inventory, and are as per standard production budgeting methods.

Question 3: Raw Materials Budget for Hospitable Co.

Knowing the production forecast and raw material requirements allows us to calculate raw materials needed and inventories.

For April, ending inventory = 20% of May’s sales, and so forth for May and June.

Raw materials needed = units produced x 5 pounds per unit. Raw materials inventory = ending inventory = 40% of next month’s raw materials needed.

Calculations based on these figures help determine order quantities for raw materials each month and starting inventories.

Question 4: Labor and Overhead Budget for Rad Co.

The labor hours required per unit, combined with production and inventory policies, leads to the calculation of total labor hours and costs. The labor budget includes standard hours per unit multiplied by planned production, with adjustments for beginning and ending inventories of raw materials.

The factory overhead budget combines variable overhead (based on labor hours) and fixed overhead costs, integrating actual and planned activity levels, to assess variances.

Question 5: Revenue and Spending Variances for Gelato Supremo in July

The financial performance of Gelato Supremo involves comparing actual results to flexible budgets based on sales volume and input costs.

Revenue variance is calculated by comparing actual revenue to budgeted revenue at actual sales volume. Expenses are analyzed by variances in raw materials, wages, utilities, rent, insurance, and miscellaneous costs, determining favorability or unfavorability.

Question 6: Material Cost Variance Analysis for Harmon Household

The actual hardwood used and its cost are compared to standard expectations. The standard cost for 4,000 chopping boards is computed as:

Standard materials per unit = 0.62 ft x $7.00 = $4.34. Total standard cost = 4,000 x $4.34 = $17,360.

Variance components include materials quantity variance and materials price variance, dissecting differences due to usage efficiency and price changes.

Question 7: Labor Variance Analysis for AirMeals, Inc.

The standard direct labor cost for preparing 14,000 meals is calculated by multiplying units by standard hours and rate: 14,000 x 0.20 hours x $9.60 = $26,880.

Actual costs are compared to this standard to derive labor efficiency and rate variances, indicating how well labor hours are utilized and cost controls.

Question 8: Overhead Variance Analysis for World Company

The overhead volume variance assesses over- or under-applied fixed overhead based on capacity utilization vs. actual production levels.

The controllable variance compares actual overhead costs to flexible budgets based on actual hours, highlighting efficiency and cost management effectiveness.

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