NAME:______________________________

Stars and Stripes Inc. produces flags for government buildings. It forecasts
that it will need to produce 90,000 flags for 2010. It budgets the following costs
for the year:
Cost per flag
Materials (2 yards cloth @ $1.50 per yard)
$ 3.00
Labor (1 hour @ $10 per hour)
$10.00
Variable overhead (1 labor- hour @ $4 per labor-hour)
$ 4.00
Budgeted total fixed overhead
Actual results for the year were:
Output (sales in units)
Materials purchased and used
Actual labor
Actual Variable Overhead
Actual Fixed Overhead

$45,000
105,000 flags
200,000 yards of cloth@ 1.35 per yard
100,000 hours costing $1,014,000
$340,000
$48,000

a. Compute the material price and efficiency variances and prepare the journal entries which
account for them.

b. Compute the labor price and efficiency variances and prepare the journal entries which
account for them.

c. Compute the variable overhead spending and efficiency variances and prepare the journal
entries which account for them.

d. Compute the fixed overhead spending and production-volume variances and prepare the
journal entries which account for them.

e. Prepare the journal entries to close out all variances except production-volume variance to
Cost of Goods sold.

f. Given values as follows at year-end, prepare the journal entry to close out the productionvolume variance:
Work-in-Process
150,000
Finished Goods
150,000
Cost of Goods Sold 1,200,000

NAME ___________________________________
School Supplies, Inc. (SSI) purchases books from publishers who sell large quantities at a
discount and resells them to schools at discounted prices. You have been asked to prepare the
companys cash budget for January. The following information is provided.
1. Cash in bank on January 1 is $33,000.
2. Actual sales for November and December, and budgeted sales for January are
November December January
42,000
33,000
26,000
Cash from sales are received 50% in the month of sale, 30% the month after sale and
15% two months after sale. (The remaining 5% is a bad debt and is never received.)
3. Selling and Administrative expenses are expected to be $20,000 (which
includes 2,000 in depreciation)
4. Vendors provide a 1% discount for purchases paid for in the month of purchase.
SSI pays for 75% of its purchases in the month of purchase and 25% of
purchases in the month after purchase. Purchases in November,
December and January, are $28,000, 30,000, and 20,000 respectively.
5. $15,000 worth of computer equipment will be bought for cash in January.
Prepare the following schedules to then determine what the cash balance on January 31 is.
1. Prepare a schedule of cash receipts for January.

2. Prepare a schedule of cash disbursements for inventory purchases for January.

3. Prepare a schedule of other cash disbursements for January.

4. Cash January 31:____________________________

NAME ___________________________________
Applestein makes a cardiac surgical device. The goal for 2012 is to reduce usage of surgical
steel (direct material) usage per unit. No defective units are currently produced.
Manufacturing conversion costs depend on production capacity defined in terms of units of
the device that can be produced. The following additional data are available for 2011 and
2012:
2011
2012
Units of cardiac surgical device produced and sold
100
110
Selling price
$3,000 $2,850
Surgical steel (direct material) (ounces)
600
638
Surgical steel cost per ounce
$100
$110
Manufacturing capacity in units
125
120
Total manufacturing conversion costs
$75,000 $72,000
Manufacturing conversion costs per unit of capacity
$600
$600
a) What is operating income for 2011?

b) What is operating income for 2012?

c) Account for the change in operating income on the balanced scorecard.