Posted: April 21st, 2016

3. Production Budget Chrystal Telecom has budgeted the sales of its innovative mobile phone over the next four months as follows: Sales in Units July………………………………………………………………………30,000 August………………………………………………………………….45,000 September…………………………………………………………..60,000 October……………………………………………………………….50,000 The company is now in the process of preparing a production budget for the third quarter. Past experience has shown that end-of-month finished goods inventories must equal 10% of the next month’s sales. The inventory at the end of Jun was 3,000 units. Required: Prepare a production budget for the third quarter showing the number of units to be produced each month and for the quarter in total. 4. Manufacturing Overhead Budget The direct labor budget of Krispin Corporation for the upcoming fiscal year includes the following budgeted direct labor-hours. 1st quarter 2nd quarter 3rd quarter 4th quarter Budgeted direct labor-hours………. 5,000 4,800 5,200 5,400 The company’s variable manufacturing overhead rate is $1.75 per direct labor-hour and the company’s fixed manufacturing overhead is $35,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $15,000 per quarter. Required: 1. Construct the company’s manufacturing overhead budget for the upcoming fiscal year. 2. Compute the company’s manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. Round off to the nearest whole cent. 6. Prepare a Report Showing Activity Variances Air Meals is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company’s planning budget for December appears below: Air Meals Planning Budget For the Month Ended December 31 Budgeted meals (q) …………………………………………………….. 20,000 Revenue ($3.80 q) ………………………………………………………. $76,000 Expenses: Raw Materials (2.30q) ……………………………………………….. 46,000 Wages and Salaries ($6,400 + $0.25q) ……………………….. 11,400 Utilities (2,100 + $0.05q) ……………………………………………. 3,100 Facility Rent ($3,800) …………………………………………………. 3,800 Insurance ($2,600) ……………………………………………………… 2,600 Miscellaneous ($700 + $0.10q) …………………………………… 2,700 Total expenses ………………………………………………………………. 69,600 Net operating income ……………………………………………………. $ 6,400 In December, 21,000 meals were actually served. The company’s flexible budget for this level of activity follows: Air Meals?

3. Production Budget
Chrystal Telecom has budgeted the sales of its innovative mobile phone over the next four months as follows:
Sales in Units
July………………………………………………………………………30,000
August………………………………………………………………….45,000
September…………………………………………………………..60,000
October……………………………………………………………….50,000
The company is now in the process of preparing a production budget for the third quarter. Past experience has shown that end-of-month finished goods inventories must equal 10% of the next month’s sales. The inventory at the end of Jun was 3,000 units.
Required:
Prepare a production budget for the third quarter showing the number of units to be produced each month and for the quarter in total.

4. Manufacturing Overhead Budget
The direct labor budget of Krispin Corporation for the upcoming fiscal year includes the following budgeted direct labor-hours.
1st quarter 2nd quarter 3rd quarter 4th quarter
Budgeted direct labor-hours………. 5,000 4,800 5,200 5,400
The company’s variable manufacturing overhead rate is $1.75 per direct labor-hour and the company’s fixed manufacturing overhead is $35,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $15,000 per quarter.
Required:
1. Construct the company’s manufacturing overhead budget for the upcoming fiscal year.
2. Compute the company’s manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. Round off to the nearest whole cent.

6. Prepare a Report Showing Activity Variances
Air Meals is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company’s planning budget for December appears below:
Air Meals
Planning Budget
For the Month Ended December 31
Budgeted meals (q) …………………………………………………….. 20,000
Revenue ($3.80 q) ………………………………………………………. $76,000
Expenses:
Raw Materials (2.30q) ……………………………………………….. 46,000
Wages and Salaries ($6,400 + $0.25q) ……………………….. 11,400
Utilities (2,100 + $0.05q) ……………………………………………. 3,100
Facility Rent ($3,800) …………………………………………………. 3,800
Insurance ($2,600) ……………………………………………………… 2,600
Miscellaneous ($700 + $0.10q) …………………………………… 2,700
Total expenses ………………………………………………………………. 69,600
Net operating income ……………………………………………………. $ 6,400
In December, 21,000 meals were actually served. The company’s flexible budget for this level of activity follows:
Air Meals