Explore BrainMass

Explore BrainMass

    Budget Analysis

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    In December of 2007, Jones Inc. was formed as a corporation. The company plans to start its operations in early January of 2008. They have the following purchases budgeted for the first quarter of 2008:

    January $600,000
    February 500,000
    March 300,000

    Jones has worked out agreements with its various suppliers to pay for one-fourth of a month's purchases each month, beginning in the month of purchase, until the purchases are paid in full. No purchases were made prior to January.

    What are total cash disbursements expected for the first quarter of 2008?
    A. $425,000.
    B. $625,000.
    C. $775,000
    D. $350,000.

    Sampson Apparel Inc. incurred actual variable overhead expenses of $62,000 in the current year for the production of 10,000 units. Variable overhead was applied at a rate of $2.00 per direct labor hour and 3 direct labor hours were budgeted for each unit. The company used 29,000 direct labor hours for production. What was Sampson's variable overhead spending variance?
    A. $4,000 U
    B. $4,000 F.
    C. $2,000 U.
    D. $2,000 F.

    © BrainMass Inc. brainmass.com June 4, 2020, 3:53 am ad1c9bdddf
    https://brainmass.com/business/budgets/budget-analysis-540538

    Solution Preview

    1). In December of 2007, Jones Inc. was formed as a corporation. The company plans to start its operations in early
    January of 2008. They have the following purchases budgeted for the first quarter of 2008:

    January $600,000
    February 500,000
    March 300,000

    Jones has worked out agreements with its various suppliers to pay for one-fourth of a month's purchases each
    month, beginning in the month of purchase, until the purchases are paid in full. No purchases were made prior
    to January.

    What are total cash disbursements expected for the first quarter ...

    Solution Summary

    This two-part budget analysis exercise calls for (1) the calculation of total cash disbursements from a company's monthly financial data, and (2) the determination of the variable overhead spending variance from the company's production data.

    $2.19

    ADVERTISEMENT