ACC 206 Week 4 Assignment Chapter Six and Seven Problems

Chapter 6 and 7 Problems

Please complete the following 8 exercises below in either Excel or a word docume
nt (but must be single document). You must show your work where appropriate (lea
ving the calculations within Excel cells is acceptable). Save the document, and
submit it in the appropriate week using the Assignment Submission button.

Chapter 6 Exercise 2
Schedule of cash collections
Sugarland Company sells a single product and anticipates opening a new facility
in Charlotte on May 1 of the current year. Expected sales during the first three
months of activity are: May, $60,000; June, $80,000; and July, $85,000. Thirty
percent of all sales are for cash; the remaining 70% are on account. Credit sale
s have the following collection pattern:

Chapter 6 Exercise 4
Production and cash-outlay computations
RPR, Inc., anticipates that 120,000 units of product K will be sold during May.
Each unit of product K requires four units of raw material A. Actual inventories
as of May 1 and budgeted inventories as of May 31 follow.

Chapter 6 Exercise 5
Abbreviated cash budget; financing emphasis
An abbreviated cash budget for Big Chuck Enterprises follows.

Chapter 6 Problem 3
Comprehensive budgeting
The balance sheet of Watson Company as of December 31, 20X1, follows.

Chapter 7 Exercise 3
Variances for direct materials and direct labor
Banner Company manufactures flags of various countries. Each flag has a standard
of eight square feet of fabric and three hours of direct labor time. Informatio
n about recent production activity follows.
Chapter 7 Exercise 5
Overhead variances
Nova Manufacturing applies factory overhead to products on the basis of direct l
abor hours. At the beginning of the current year, the company's accountant made
the following estimates for the forthcoming period:
Estimated variable overhead: $500,000
Estimated fixed overhead: $400,000
Estimated direct labor hours: 40,000

It is now 12 months later. Actual total overhead incurred in the manufacture of
7,900 units amounted to $895,100. Actual labor hours totaled 39,800. Assuming a
direct labor standard of five hours per finished unit, calculate the following:
a. Variable overhead efficiency variance
b. Fixed overhead volume variance
c. Overhead spending variance

Chapter 7 Problem 1
1. P26-A1 Basic flexible budgeting (L.O. 2)
Centron, Inc., has the following budgeted production costs:
Direct materials $0.40 per unit
Direct labor 1.80 per unit
Variable factory overhead 2.20 per unit
Fixed factory overhead
Supervision $24,000
Maintenance 18,000
Other 12,000

The company normally manufactures between 20,000 and 25,000 units each quarter.
Should output exceed 25,000 units, maintenance and other fixed costs are expecte
d to increase by $6,000 and $4,500, respectively.
During the recent quarter ended March 31, Centron produced 25,500 units and incu
rred the following costs:

Direct Materials $10,710
Direct Labor 47,175
Variable factory overhead 51,940
Fixed factory overhead
Supervision 24,500
Maintenance 23,700
Other 16,800
Total production costs $174,825

Instructions:
a. Prepare a flexible budget for 20,000, 22,500, and 25,000 units of activi
ty.
b. Was Centron's experience in the quarter cited better or worse than antic
ipated? Prepare an appropriate performance report and explain your answer.
c. Explain the benefit of using flexible budgets (as opposed to static budg
ets) in the measurement of performance.

Chapter 7 Problem 5
5. P26-B3 Straightforward variance analysis (L.O. 5)
Arrow Enterprises uses a standard costing system. The standard cost sheet for pr
oduct no. 549 follows.
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