Problem 10-9 (Part Level Submission) Fenzel Slide Oil produces a lubricant, Slic
ID: 2474486 • Letter: P
Question
Problem 10-9 (Part Level Submission)
Fenzel Slide Oil produces a lubricant, SlickTone, which is used on trombone slides. Information about the budget for the year 2015 is as follows:
1: Prepare a material purchases budget for each quarter of 2015 for chemical a.
2.. Prepare a budgeted income statement for each quarter of 2015 (ignore taxes).
1. The company expects to sell 7,600 bottles of SlickTone in the first quarter, 6,400 in the second quarter, 10,000 in the third quarter, and 8,800 in the fourth quarter. 2. A bottle of SlickTone requires 5 ounces of Chemical A and 3.5 ounces of Chemical B. 3. For the first, second, and third quarters of 2015, the desired ending inventory of finished goods is equal to 8 percent of next quarter’s sales, whereas the desired ending inventory for material is 13 percent of next quarter’s production requirements. 4. There are 1,500 bottles of SlickTone, 4,700 ounces of Chemical A, and 1,700 ounces of Chemical B on hand at the beginning of the first quarter. 5. At the end of the fourth quarter, the company must have 900 bottles of SlickTone, 8,300 ounces of Chemical A, and 4,900 ounces of Chemical B to meet its needs in the first quarter of 2016. 6. The cost of Chemical A is $1.10 per ounce, the cost of Chemical B is $0.13 per ounce, and the selling price of SlickTone is $13 per bottle. 7. The cost of direct labor is $0.50 per bottle, and the cost of variable overhead is $0.65 per bottle. Fixed manufacturing overhead is $2,600 per quarter. 8. Variable selling and administrative expense is 3 percent of sales and fixed selling and administrative expense is $3,300 per quarter.Explanation / Answer
Quarter wise detials of slicktone bottles at the beginning inventory, purchases, sold and ending inventory is as under: Ending inventory of the 1st, 2nd and 3rd Quarter is calculated by 8% of next quarter sales quantity. Finished goods details quarter wise is as under: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Beginning inventory 1,500 512 800 704 Produced 6,612 6,688 9,904 8,996 Less: Sold 7,600 6,400 10,000 8,800 Ending inventory 512 800 704 900 Material required for production : Chemical A and Chemical B Chemical A requires 5 ounces Chemical B requires 3.5 ounces 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Production 6,612 6,688 9,904 8,996 Material required for produciton: Chemical A : 5 Ounces 33,060 33,440 49,520 44,980 Chemical B : 3.5 Ounces 23,142 23,408 34,664 31,486 Ending inventory of material:13% of production requirement of next quarter. Chemical A: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Production requirement 33,060 33,440 49,520 44,980 Ending inventory of Chemical A 4347 6438 5847 8300 Chemical B: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Production requirement 23,142 23,408 34,664 31,486 Ending inventory of Chemical A 3043 4506 4093 4900 1. Material purchase budget for each quarter of 2015 is as under: (Material required for use+ending inventory-Beginning inventory) Chemical A: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Material used for production 33,060 33,440 49,520 44,980 Ending Inventory 4,347 6,438 5,847 8,300 Less: Beginning Inventory (4,700) (4,347) (6,438) (5,847) Material purchased: Chemical A 32,707 35,530 48,930 47,433 Cost per ounce:$1.10 Cost of purchase $ 35,978 $ 39,083 $ 53,823 $ 52,176 Chemical B: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Material used for production 23,142 23,408 34,664 31,486 Ending Inventory 3,043 4,506 4,093 4,900 Less: Beginning Inventory (1,700) (3,043) (4,506) (4,093) Material purchased (Chemical B) 24,485 24,871 34,251 32,293 Cost per ounce:$0.13 Cost of purchase $ 3,183 $ 3,233 $ 4,453 $ 4,198 Cost of material used in the production is as under: Chemical A 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Material used (Chemical A) 33,060 33,440 49,520 44,980 Cost of material used: Cost per ounce of Chemical A @ $1.10 (1) $ 36,366 $ 36,784 $ 54,472 $ 49,478 Material used (Chemical B) 23,142 23,408 34,664 31,486 Cost of material used: Cost per ounce of Chemical B @ $0.13 (2) $ 3,008 $ 3,043 $ 4,506 $ 4,093 Total cost of material (1+2) $ 39,374 $ 39,827 $ 58,978 $ 53,571 2 Budgeted income statement for each quarter of the year 2015 is as under" 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Sales Qty 7,600 6,400 10,000 8,800 Sales (@ $13 per bottle) $ 98,800 $ 83,200 $ 130,000 $ 114,400 Less: Direct material cost $ (39,374) $ (39,827) $ (58,978) $ (53,571) Direct labor cost (@ $0.50 per bottle) $ (3,800) $ (3,200) $ (5,000) $ (4,400) Variable overhead (@$0.65 per bottle) $ (4,940) $ (4,160) $ (6,500) $ (5,720) Fixed manufacturing overhead $ (2,600) $ (2,600) $ (2,600) $ (2,600) Variable selling and admistrative OH(@ 3% on sales) $ (2,964) $ (2,496) $ (3,900) $ (3,432) Fixed selling and adminstrative exp. $ (3,300) $ (3,300) $ (3,300) $ (3,300) Net Income $ 41,822 $ 27,617 $ 49,722 $ 41,377
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.