ACC 206 Week 4 Assignment: Chapter 6 and 7 Problems Solution done in june 2015

| October 3, 2018

Please complete the following exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.Chapter 6 Problem 31. Comprehensive budgetingThe balance sheet of Watson Company as ofDecember 31, 20X1, follows.WATSON COMPANYBalance SheetDecember 31, 12X1AssetsCash $4,595Accounts receivable 10,000Finished goods (575 units x $7.00) 4,025Direct materials (2,760 units x $0.50) 1,380Plant & equipment $50,000Less: Accumulated depreciation 10,000 40,000Total assets $60,000Liabilities & Stockholders’ EquityAccounts payable to suppliers $14,000Common stock $25,000Retained earnings 21,000 46,000Total liabilities &. stockholders’ equity $60,000The following information has been extracted from the firm’s accounting records:1. All sales are made on account at $20 per unit. Sixty percent of the sales are collected in the month of sale; the remaining 40% are collected in the following month. Forecasted sales for the first five months of 20X2 are: January, 1,500 units,- February, 1,600 units; March, 1,800 units; April, 2,000 units; May, 2,100 units.2. Management wants to maintain the finished goods inventory at 30% of the following month’s sales.3. Watson uses four units of direct material in each finished unit. The direct material price has been stable and is expected to remain so over the next six months. Management wants to maintain the ending direct materials inventory at 60% of the following month’s production needs.4. Seventy percent of all purchases are paid in the month”>purchase; the remaining 30% are paid in the subsequent month.5. Watson’s product requires 30 minutes of direct labor time. Each hour of direct labor costs $7.Instructions:a. Rounding computations to the nearest dollar, prepare the following for January through March:1) Sales budget2) Schedule of cash collections3) Production budget4) Direct material purchases budget5) Schedule of cash disbursements for material purchases6) Direct labor budgetb. Determine the balances in the following accounts as ofMarch 31:1) Accounts Receivable2) Direct Materials3) Accounts PayableChapter 7 Problem 12. Basic flexible budgetingCentron, Inc., has the following budgeted production costs:Direct materials $0.40 per unitDirect labor 1.80 per unitVariable factory overhead 2.20 per unitFixed factory overheadSupervision $24,000Maintenance 18,000Other 12,000The company normally manufactures between 20,000 and 25,000 units each quarter. Should output exceed 25,000 units, maintenance and other fixed costs are expected to increase by $6,000 and $4,500, respectively.During the recent quarter endedMarch 31, Centron produced 25,500 units and incurred the following costs:Direct Materials $10,710Direct Labor 47,175 Variable factory overhead 51,940 Fixed factory overhead Supervision 24,500 Maintenance 23,700 Other 16,800 Total production costs $174,825Instructions:a. Prepare a flexible budget for 20,000, 22,500, and 25,000 units of activity.b. Was Centron’s experience in the quarter cited better or worse than anticipated? Prepare an appropriate performance report and explain your answer.c. Explain the benefit of using flexible budgets (as opposed to static budgets) in the measurement of performance.Chapter 7 Problem 53. Straightforward variance analysisArrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows.Direct materials: 4 units @ $6.50 $26.00Direct labor: 8 hours @ $8.50 68Variable factory overhead: 8 hours @ $7.00 56Fixed factory overhead: 8 hours @ 2.5 20Total standard cost per unit $170.00The following information pertains to activity for December:1. Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.2. Arrow incurred an average wage rate of $8.75 for 51,400 hours of activity.3. Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread evenly throughout the year.4. Actual production amounted to 6,500 completed units.Instructions:a. Compute Arrow’s direct material variances.b. Compute Arrow’s direct labor variances.c. Compute Arrow’s variances for factory overhead.

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