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Budgeting and variances

I really need help solving these practice exercises, please let me know if you can help.

Exercise #1
VitaPup produces a vitamin-enhanced dog food that is sold in Kansas. The company expects sales to be 12,600 bags in January, 14,500 bags in February, 19,000 bags in March, and 21,500 bags in April. There are 1,260 bags on hand at the start of January. VitaPup desires to maintain monthly ending inventory equal to 10 percent of next month's expected sales.

Required
Prepare the production budget for VitaPup for the months of January, February, and March.

Exercise #2
The Warrenburg Antique Mall expects to make purchases in the first quarter of 2009 to be as follows:

January $84,000
February 96,000
March 78,000

Purchases in December 2008 are expected to be $87,000. The company expects that 50 percent of a month's purchases will be paid in the month of purchase and 50 percent will be paid in the following month.

Required
Estimate cash disbursements related to purchases for each month of the first quarter

Exercise #3
Mississippi Retailers expects credit sales in the next year quarter as follows:

April $75,000
May 85,000
June 108,000

Prior experience has shown that 50 percent of a month's sales are collected in the month of sale, 30 percent in the month following sale, and the remaining 20 percent in the second month following sale. February and March sales were $85,000 and $95,000 respectively.
Required
Estimate budgeted cash receipts for April, May, and June.

Exercise #4
Star Band Uniforms uses a standard costing system. The standard material and labor costs for producing a marching bad hat is as follows:
Materials (.75 yards * $10.00) $7.50
Direct Labor (1.0 hours * $12.50) $12.50
During May, the company produced 3,000 band hats; 3,500 yards of material were purchased for $33,250, and 2,600 yards of material were used in production. Also during May 3, 100 direct labor hours were worked at a cost of $42,625. Calculate material price and quantity variances and labor rate and efficiency variances. Indicate whether the variances are favorable or unfavorable.

Exercise #5
Barret Hospital is interested in analyzing overhead related laundry services. The hospital administrator estimated that monthly fixed costs would be $75,000 and variable cost would be $2.50 per patient day. During the month of September, the hospital had 15,000 patient days. Total laundry costs were $115,000.

Required
Analyze laundry costs for the month of September using the procedures for calculating a controllable overhead variance. Is the variance favorable or unfavorable?

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Exercise #1
VitaPup produces a vitamin-enhanced dog food that is sold in Kansas. The company expects sales to be 12,600 bags in January, 14,500 bags in February, 19,000 bags in March, and 21,500 bags in April. There are 1,260 bags on hand at the start of January. VitaPup desires to maintain monthly ending inventory equal to 10 percent of next month's expected sales.

Required
Prepare the production budget for VitaPup for the months of January, February, and March.

In a production budget we estimate the production that is needed. The required production is calculated as
Production = Sales + Ending Inventory - Beginning Inventory
The production budget is below
Jan Feb Mar April
Sales 12,600 14,500 19,000 21,500
Desired Ending Inventory 1,450 1,900 2,150
Total Needs 14,050 16,400 21,150
Beginning Inventory 1,260 1,450 1,900
Required Production 12,790 14,950 19,250

The desired ending inventory is 10% of next month sales and the ending inventory of first month is the beginning inventory of next month.

Exercise #2
The Warrenburg Antique Mall expects to make purchases in the first quarter of 2009 to be as follows:

January $84,000
February 96,000
March 78,000

Purchases in ...

Solution Summary

The solution has various questions relating to budgeting and calculation of variances.

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