BUDGETING
This assignment consists of three independent scenarios for which computations should be shown.
Scenario A
Skaters, Inc. plans to sell 90,000 skateboards next quarter at a price of $36 per unit. Production costs are $14.40 per unit. Selling and administrative expenses are: variable, $7.20 per unit; and fixed, $604,800 per quarter. What are the budgeted earnings for next quarter? (Do not consider federal income taxes.)
Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.
Scenario B
Speedy Delivery currently delivers packages for $9 each. The variable cost is $3 per package, and fixed costs are $60,000 per month. Prepare a budget showing the expected current profit and profit after the changes in costs.
- Fixed costs are increased to $75,000.
- Selling price is increased by 10%.
- Variable cost is increased to $4.50 per unit.
- Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.
Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.
Scenario C
Houston Corporation considers materials and labor to be completely variable costs. Expected production for the year is 50,000 units. At that level of production, direct materials cost is budgeted at $198,000, and direct labor cost is budgeted at $450,000.
- Prepare a flexible budget for materials and labor for possible production levels of 55,000 and 65,000 units of product.
- Assume that in the previous exercise the actual production was 60,000 units, materials cost was $247,000, and labor cost was $510,000. Compute the budget variances. Denote variances as favorable (F) or unfavorable (U).
SLP Assignment Expectations
Show computations in good format and explain answers as required. Excel is a great tool to make computations and present financial information in an easy to understand format. Write comments below the computations in Excel
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