Fuqua Company\'s sales budget projects unit sales of part 198Z of 10,000 units i

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Fuqua Company's sales budget projects unit sales of part 198Z of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each unit of part 198Z requires 4 kilos of materials, which cost $2 per kilo. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month's production requirements, and it's ending finished goods inventory to equal 20% of the next month's expected unit sales. These goals were met at December 31, 2014. Prepare a production budget for January and February 2015. Prepare a direct materials budget for January 2015. Hopkins Clothiers is a small company that manufactures tall-men's suits. The company has used a standard cost accounting system. In May 2014,11, 200 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used. Compute the total, price, and quantity variances for: materials and labor. Which of the variances should be investigated if management considers a variance of more than 4% from standard to be significant?

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Question 3 - Fuqua Company’s sales budget projects unit sales of part 198Z of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each unit of part 198Z requires 4 kilos of materials, which cost $2 per kilo. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month’s production requirements, and it's ending finished goods inventory to equal 20% of the next month’s expected unit sales. These goals were met at December 31, 2014. a) Prepare a production budget for January and February 2015. b) Prepare a direct materials budget for January 2015. Requirement: a) FUQUA COMPANY Production Budget For the Two Months Ending February, 2015 January February Expected Unit Sales 10,000 12,000 Add: Desired Ending Finished Goods Inventory 12,000 @ 40% = 4,800 4,800 5,200 March units 13000 x 40% = 5,200 Total Required Units 14,800 17,200 Less: Beginning Finished Goods Inventory = 10,000 x 40% = 4,000 4,000 4,800 Required Production Units 10,800 12,400 b) FUQUA COMPANY Direct Materials Budget For the Month Ending January 31, 2015 January Units to Be Produced 10,800 Direct Materials Kilos per Unit 4 Total Kilos needed for Production = 10,800 x 4 = 43,200 Add: Desired Kilos in Ending Direct Materials Inventory = 12,400 x 4 x 40% = 19,840 Total Materials Required = 43,200 + 19,840 = 63,040 Less: Beginning Direct Materials (Kilos) = 10,800 x 4 x 40% = 17,280 Direct Materials Purchases = 63,040 - 17,280 = 45,760 Cost per Kilo $2 Total Cost of Direct Materials Purchases = 45,760 x $2 = $91,520 Question 4 - Hopkins Clothiers is a small company that manufactures tall-men's suits. The company has used a standard cost accounting system. In May 2014, 11,200 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All materials purchased were used. Cost Element Standard (per unit) Actual Direct materials 8 metres at $4.40 per metre $375,575 for 90,500 metres ($4.15 per metre) Direct labor 1.20 hours at $13.40 per hour $200,220 for 14,200 hours ($14.10 per hour) (a) Compute the total, price, and quantity variances for: (i) materials and (ii) labor. (i) materials and Cost Element Standard (per unit) Actual Direct materials 8 metres at $4.40 per metre $375,575 for 90,500 metres ($4.15 per metre) SQ/Unit=8 SP=4.4 AQ=90,500 SQ=8*11,200=89,600 AP=4.15 Total materials variance $2,85,975 F (AQ x AP) - (SQ x SQ) = Total Materials Variance (90,500 x 4.15) - (11,200 x 8) (375,575) - (89,600) = 2,85,975 F Materials price variance $22,625 U (AQ x AP) - (AQ x SP) = Material Price Variance (90,500 x 4.15) - (90,500 x 4.4) = Material Price Variance (375,575) - (398,200) = 22,625 U Materials quantity variance $3,960 F (AQ x SP) - (SQ x SP) = Materials Quantity Variance (90,500 x 4.4) - (89,600 x 4.4) = Materials Quantity Variance (398,200) - (394,240) = 3,960 F (ii) labor. Cost Element Standard (per unit) Actual Direct labor 1.20 hours at $13.40 per hour $200,220 for 14,200 hours ($14.10 per hour) SQ/Unit= 1.2 AH=14,200 SR = 13.40*14,000=1,87,600 AR=14.1 Total labor variance $12,620 F (AH X AR) - (SH X SR) (14,200 x 14.10) - (14,000 x $13.40) (200,220) - (187,600) = 12,620 F Labor price variance $9,940 F (AH X AR) - (AH X SR) (14,200 x 14.10) - (14,200 x $13.40) (200,220) - (190,280) = 9,940 F Labor quantity variance $2,680 F (AH X SR) - (SH X SR) (14,200 x $13.40) - (14,000 x $13.40) (190,280) - (187,600) = 2,680 F

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