Question

Complete the problems listed below. Chapter 9 Tonga Toys manufactures and distributes a number of products...

Complete the problems listed below.

Chapter 9

Tonga Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires seven kilograms of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter – July, August, and September. Peak sales of Playclay occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements:

  1. The finished goods inventory on hand at the end of each month must be equal to 5 000 units plus 40% of next month’s sales. The finished goods inventory on June 30 is budgeted to be 29 000 units.
  2. The raw materials inventory on hand at the end of each month must be equal to 20% of the following month’s production needs for raw materials. On June 30, the raw materials inventory for material A135 is budgeted to be 88,200 kilograms.
  3. The company maintains no work in process inventories

A sales budget for Playclay for the last six months of the year follows:

                        

Budgeted Sales
in Units

July

60,000

August

80,000

September

40,000

October

45,000

November

55,000

December

30,000

Required:

  1. Prepare a production budget for Playclay for the months July, August, September, and October. – 12 Marks
  2. Prepare a budget showing the quantity of material A135 to be purchased for July, August, and September and for the quarter in total. – 12 Marks

Chapter 10

Correct answers for Chapter 10 must state whether the Variance is Favourable or Unfavourable.To receive full credityour answer mustbe labeled as such.

For example: An answer such as “- $4500”will not be given full credit, even if the number is correct. The same number shown as “$4500 Favourable”would receive full marks.

The following are independent questions:

  1. Information on Fleming Company's direct material costs follows:

Actual amount of direct materials purchased and used      20,000 kilograms

Actual direct material costs                                              $40,000

Standard direct material costs                                          $2.10 per kilogram

Calculate the direct materials price variance – 2 marks

  1. During March, Younger Company’s direct material costs for product T were as follows:

Actual unit purchase price                                          $6.50 per meter

Standard quantity allowed for actual production        2,100 meters

Quantity purchased and used for actual production    2,300 meters

Standard unit price                                                      $6.25 per meter

Calculate the materials usage variance – 2 marks

  1. The following labour standards have been established for a particular product

Standard labour hours per unit of output                    1.7 hours

Standard labour rate                                                   $14.25 per hour

The following data pertains to operations concerning the product for the last month:

Actual hours worked                                                  3,700 hours

Actual total labour cost                                               $50,690

Actual output                                                              2,300 units

Calculate the labour rate variance – 2 marks

  1. Yola Company manufactures a product with standards for direct labour of 4 direct labour-hours per unit at a cost of $12.00 per direct labour-hour. During June, 1,000 units were produced using 4,100 hours at $12.20 per hour. What was the direct labour efficiency variance?

Calculate the labour efficiency variance – 2 marks

Chapter 11

The following selected data pertain to the belt division of Allen Corp. for last year:

Sales                                                    $500,000

Average Operating Assets                  $200,000

Turnover                                                     2.5 times

Minimum required return                           20.0%

  1. The Return on Investment – 2 marks
  2. The Residual Income – 2 marks

Harstin Corporation has provided the following data:

Sales                                                    $625,000

Gross Margin                                      $  70,000

Operating Income                               $ 50,000
Shareholders’ Equity                          $  90,000

Average Operating Assets                  $250,000

Residual Income                                 $  20,000

Compute the following:

  1. The Margin – 2 marks
  2. The Turnover – 2 marks

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