Problem 10-50: Comprehensive Profit Plan Background Spring Manufacturing Company makes two components identified as C12 and D57. Selected budgetary data for 2016 follow: Finished Components C12 D57 Requirements for each finished component: RM1 10 pounds 8 RM2 0 4 RM3 2 pounds 1 Direct labor 2 hours 3 Product information: Sales price $150 $220 Sales units 12,000 9,000 Estimated beginning inventory (units) 400 150 Desired ending inventory (units) 300 200 Direct Materials Information RM1 RM2 RM3 Cost per pound $2.00 $2.50 $0.50 Estimated beginning inventory in pounds 3,000 1,500 1,000 Desired ending inventory in pounds 4,000 1,000 1,500 The firm expects the average wage rate to be $25 per hour in 2016. Spring Manufacturing uses DLHs to apply overhead. Each year the firm determines the overhead application rate for the year based on the budgeted ouput for the year. The company maintains negligible WIP inventory and expects the cost per unit for both beginning and ending finished products inventories to be identical. Factory Overhead Information Indirect materials-variable $10,000 Miscellaneous supplies and tools-variable $5,000 Indirect labor-variable $40,000 Supervision-fixed $120,000 Payroll taxes and fringe benefits-variable $250,000 Maintenance costs-fixed $20,000 Maintenance costs-variable $10,080 Depreciation-fixed $71,330 Heat, light, and power-fixed $43,420 Heat, light, and power-variable $11,000 Total $580,830 Selling and Administrative Expense Information Advertising $60,000 Sales salaries $200,000 Travel and entertainment $60,000 Depreciation-warehouse $5,000 Office salaries $60,000 Executive salaries $250,000 Supplies $4,000 Depreciation-office $6,000 Total $645,000 Income Tax Rate 40% Requirements Prepare the following schedules or statements for 2016: 7. Selling and administrative expense budget 8. Budgeted Income Statement

Problem 10-50: Comprehensive Profit Plan Background Spring Manufacturing Company makes two components identified as C12 and D57. Selected budgetary data for 2016 follow: Finished Components C12 D57 Requirements for each finished component: RM1 10 pounds 8 RM2 0 4 RM3 2 pounds 1 Direct labor 2 hours 3 Product information: Sales price $150 $220 Sales units 12,000 9,000 Estimated beginning inventory (units) 400 150 Desired ending inventory (units) 300 200 Direct Materials Information RM1 RM2 RM3 Cost per pound $2.00 $2.50 $0.50 Estimated beginning inventory in pounds 3,000 1,500 1,000 Desired ending inventory in pounds 4,000 1,000 1,500 The firm expects the average wage rate to be $25 per hour in 2016. Spring Manufacturing uses DLHs to apply overhead. Each year the firm determines the overhead application rate for the year based on the budgeted ouput for the year. The company maintains negligible WIP inventory and expects the cost per unit for both beginning and ending finished products inventories to be identical. Factory Overhead Information Indirect materials-variable $10,000 Miscellaneous supplies and tools-variable $5,000 Indirect labor-variable $40,000 Supervision-fixed $120,000 Payroll taxes and fringe benefits-variable $250,000 Maintenance costs-fixed $20,000 Maintenance costs-variable $10,080 Depreciation-fixed $71,330 Heat, light, and power-fixed $43,420 Heat, light, and power-variable $11,000 Total $580,830 Selling and Administrative Expense Information Advertising $60,000 Sales salaries $200,000 Travel and entertainment $60,000 Depreciation-warehouse $5,000 Office salaries $60,000 Executive salaries $250,000 Supplies $4,000 Depreciation-office $6,000 Total $645,000 Income Tax Rate 40% Requirements Prepare the following schedules or statements for 2016: 7. Selling and administrative expense budget 8. Budgeted Income Statement

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 5E: Prepare a cost of goods sold budget for MacLaren Manufacturing Inc. for the year ended December 31,...

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Problem 10-50: Comprehensive Profit Plan
Background
Spring Manufacturing Company makes two components identified as C12 and D57. Selected budgetary data for 2016 follow:


				Finished Components
				C12		D57

	Requirements for each finished component:
	RM1			10	pounds	8
	RM2			0		4
	RM3			2	pounds	1
	Direct labor			2	hours	3
	Product information:
	Sales price			$150		$220
	Sales units			12,000		9,000
	Estimated beginning inventory (units)		400		150
	Desired ending inventory (units)			300		200


				Direct Materials Information
				RM1	RM2	RM3
	Cost per pound			$2.00	$2.50	$0.50
	Estimated beginning inventory in pounds		3,000	1,500	1,000
	Desired ending inventory in pounds		4,000	1,000	1,500


The firm expects the average wage rate to be $25 per hour in 2016. Spring Manufacturing uses DLHs to apply overhead. Each
year the firm determines the overhead application rate for the year based on the budgeted ouput for the year. The company
maintains negligible WIP inventory and expects the cost per unit for both beginning and ending finished products inventories to
be identical.


		Factory Overhead Information

	Indirect materials-variable				$10,000
	Miscellaneous supplies and tools-variable			$5,000
	Indirect labor-variable				$40,000
	Supervision-fixed				$120,000
	Payroll taxes and fringe benefits-variable			$250,000
	Maintenance costs-fixed				$20,000
	Maintenance costs-variable				$10,080
	Depreciation-fixed				$71,330
	Heat, light, and power-fixed				$43,420
	Heat, light, and power-variable				$11,000
	Total				$580,830


				Selling and Administrative Expense Information


	Advertising				$60,000
	Sales salaries				$200,000
	Travel and entertainment				$60,000
	Depreciation-warehouse				$5,000
	Office salaries				$60,000
	Executive salaries				$250,000
	Supplies				$4,000
	Depreciation-office				$6,000
	Total				$645,000


	Income Tax Rate	40%

Requirements

Prepare the following schedules or statements for 2016:

7. Selling and administrative expense budget
8. Budgeted Income Statement

Definition Definition Benefits in addition to compensation that companies give to their employees. Fringe benefits can boost morale and productivity and keep employees motivated. Companies often use fringe benefits as a competitive advantage to recruit and retain employees. Examples of fringe benefits include pensions, vacation time, tuition reimbursement, free or subsidized meals, and gym memberships.

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