D\"Assignments xc Chegg.com New Tab ssignment5.pdf Question 1 (80 marks) Timberl

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D"Assignments xc Chegg.com New Tab ssignment5.pdf Question 1 (80 marks) Timberline Ltd. manufactures and sells a single product. The company is preparing a monthly budget for the first quarter of 20x1. The following information has been accumulated: Projected sales for December 20x0 are $600,000. For the first quarter, the company believes that sales will increase by 10% each month over the previous month's sales. Sales will then remain constant for the second quarter. Sales on account are typically 75% of total sales. Records indicate that 55% of the credit sales are collected during the month of sale, and the remainder are collected during the following month. Management has determined that an ending inventory equal to 25% of next month's sales is required to fit sales demands. a. b. Cost of goods sold are typically 65% of sales. Inventory is purchased on account. Timberline pays for 20% of a month's purchases in the month of purchase and the remainder in the following month. C. Monthly expenses are estimated as follows Training and development Property and business taxes Supervisor's salary d. $10,000 1,000 7,000 15,000 16,000 25,000 . Depreciation * Insurance Administrative salaries Property and business taxes are paid on March 31st for the six month period Sales commissions are 2% of gross sales

Explanation / Answer

1. Timberline Ltd.

Master budget for the first quarter of 20x1:

a. Sales Budget:

b. Cash receipts budget:

c. Purchases Budget:

d. Cash disbursements budget:

e. Cash Budget:

2. a. Direct material price variance = ( Standard rate - Actual rate ) x Actual quantity used = (2 -2.15) x 160,000 = $24,000U

b. Direct material quantity variance = ( Standard quantity for actual output - Actual quantity used) x Standard rate per unit = ( 150,000 - 160,000) x 2 =$ 20,000 U

c. Direct labor rate variance = ( Standard rate per hour- Actual rate per hour) x Actual hours used = (15 - 16.61) x 7,000 =$11,250 U

d. Direct labor efficiency variance= ( Standard hours for actual output - Actual hours used ) x Standard rate per hour = (7,500 -7,000) x 15 = $ 7,500 F

January February March Total $ $ $ $ Sales 660,000 726,000 798,600 2,184,600

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