Part 2: Essay
Do you agree or disagree with the following statement? “Budgeting is an unnecessary burden on many managers and employees. It takes time away from important day to day activities.” Please explain.
Cost of Goods Manufactured
Presented below is selected information from the Greenville Company’s current period accounting
records (in $000s):
Raw Materials Used 2,500
Direct Labor Costs 1,000
Period Costs (Selling and Administrative) 2,500
Beginning Raw Material Inventory 300
Ending Raw Material Inventory 1,000
Net Income 200
Beginning Work-in-Process Inventory 0
Ending Work-in-Process Inventory 300
Beginning Finished Goods Inventory 700
Ending Finished Goods Inventory 400
* NOTE: All raw materials used were direct materials.
Determine the following (in dollars):
a. Raw Material Purchases
b. Gross Profit
c. Cost of Goods Manufactured
d. Manufacturing Overhead
Landis Company has the following sales forecasts for the selected three-month period in the current year:
Seventy percent of sales are collected in the month of the sale, and the remaining balance is collected in the following month.
Accounts Receivable balance (April 1) $10,000
Cash balance (April 1) 5,000
Minimum cash balance is $5,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). Calculate the expected cash balance at the end of April and May, assuming that cash is received only from customers and that $16,000 is paid out during April and 14,000 is paid out during May.
Use the following information to answer questions 1 and 2.
ShoppingKart, Inc. is a supermarket having three operating departments. An income statement for the most recent month of operations appears below:
General Meat Produce Total
Sales $50,000 $40,000 $10,000 $100,000
Variable Costs 30,000 16,000 5,000 51,000
Contribution Margin 20,000 24,000 5,000 49,000
Direct, avoidable (5,000) (4,000) (3,500) (12,500)
Common, Allocated based
on sales dollars (10,000) (8,000) (2,000) (20,000)
Profit (Loss) $ 5,000 $12,000 ($ 500) $16,500
1. If ShoppingKart, Inc. were to drop the produce line and make no other changes to its operations, income for the month would be:
a. $12,000 b. $15,000 c. $16,000 d. $17,000
2. The space currently being used by the produce department could be converted to a deli department. If there were done, sales of the deli are expected to be $20,000 with variable costs of $8,000 and avoidable direct fixed costs of $3,000. Assuming no effects on the general grocery and meat departments, income for the month would be:
a. $23,500 b. $24,000 c. $24,500 d. some other amount