Question 20: (4 points)

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32

Exercise 9-3 Direct Materials Budget [LO4]

Four grams of musk oil are required for each bottle of Mink Caress, a very popular perfume
made by a small company in western Siberia. The cost of the musk oil is 200 roubles per
kilogram. (Siberia is located in Russia, whose currency is the rouble.) Budgeted production of
Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

Year
3

Year 2

Budgeted production, in
bottles

First

Second

Third

Fourth

First

59,000

84,000

157,00
0

93,000 79,000

Musk oil has become so popular as a perfume ingredient that it has become necessary to
carry large inventories as a precaution against stock-outs. For this reason, the inventory of
musk oil at the end of a quarter must be equal to 15% of the following quarter's production
needs. Some 35,400 grams of musk oil will be on hand to start the first quarter of Year 2.

Required:
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the
bottom of your budget, show the amount of purchases in roubles for each quarter and for the
year in total. (Input all amounts as positive values. Round your answers to the nearest
whole number.)

Year 2
First

Second

Third

Fourth

Year

list

list

list

list

list

list

list

list

list

list

Production needsgrams

: desired
string

list

list

list

list

list

list

list

list

list

list

ending inventorygrams

Total needsgrams

: beginning
string

inventorygrams

list

list

list

list

list

list

list

list

list

list

Raw materials to be purchasedgrams

Cost of raw materials to be purchased

Question 21: (4 points)

multi

50

Exercise 9-7 Cash Budget [LO8]

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year.
Management has prepared the following summary of its budgeted cash flows:

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Total cash receipts

197,00
0

$ 338,000

$ 216,000

$ 240,000

Total cash
disbursements

260,00
0

$ 230,000

$ 214,000

$ 228,000

The company's beginning cash balance for the upcoming fiscal year will be $20,000. The
company requires a minimum cash balance of $10,800 and may borrow any amount needed
from a local bank at a quarterly interest rate of 1.2%. The company may borrow any amount
at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of
any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity,
assume that interest is not compounded.

Required:
Prepare the company's cash budget for the upcoming fiscal year. (Show deficiencies,
repayments, interest, and total financing preceded by a minus sign when appropriate.
Enter all other amounts as positive values. Round interest amounts to the nearest whole
number. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$"
sign in your response.)

Garden Depot
Cash Budget
2nd
Quarter

1st Quarter

Cash balance, beginning

3rd Quarter

4th Quarter

Year

list

list

list

list

list

list

list

list

list

list

list

list

list

list

list

list

list

list

list

list

Total cash receipts

Total cash available

Less total cash disbursements

list

list

list

list

list

list

list

list

list

list

Excess (deficiency) of cash available over

disbursements

Financing:
Borrowings (at beginnings of quarters)

list

list

list

list

list

list

list

list

list

list

Repayments (at ends of quarters)

Interest

list

list

list

list

list

Total financing

Cash balance, ending

list

list

list

list

list

Question 22: (4 points)

multi

Exercise 10-1 Prepare a Flexible Budget [LO1]

Puget Sound Divers is a company that provides diving services such as underwater ship
repairs to clients in the Puget Sound area. The company's planning budget for May appears
below:

Puget Sound Divers

Planning Budget
For the Month Ended May 31
Budgeted diving-hours (q)
Revenue ($379 q)

93
$ 35,247

Expenses:
Wages and salaries ($6,500 + $125
q)
Supplies ($3 q)

18,125

279

Equipment rental ($1,640 + $16 q)

3,128

Insurance ($2,480)

2,480

Miscellaneous ($630 + $2 q)
Total expense
Net operating income

816
24,828
$ 10,419

Required:
During May, the company's activity was actually 107 diving-hours. Prepare a flexible budget
for that level of activity. (Input all amounts as positive values. Omit the "$" sign in your
response.)

Puget Sound Divers

Flexible Budget
For the Month Ended May 31

list

Revenue

Expenses:

list

Wages and salaries

list

Supplies

list

Equipment rental

Insurance

list

list

Miscellaneous

Total expense

list

list

Net operating income

Question 23: (4 points)

multi

18

Exercise 10-2 Prepare a Report Showing Activity Variances [LO2]

Flight Caf 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 July appears below:

Flight Caf
Planning Budget
For the Month Ended July 31
Budgeted meals (q)
Revenue ($6.4 q)

18,500
$ 118,400

Expenses:
Raw materials ($1.9 q)

35,150

Wages and salaries ($3,900 + $0.1

q)

5,750

Utilities ($1,700 + $0.02 q)

2,070

Facility rent ($2,600)

2,600

Insurance ($1,850)

1,850

Miscellaneous ($570 + $0.2 q)

4,270

Total expense
Net operating income

51,690
$ 66,710

In July, 19,000 meals were actually served. The company's flexible budget for this level of
activity appears below:

Flight Caf
Flexible Budget
For the Month Ended July 31
Budgeted meals (q)

19,000

Revenue ($6.4 q)

$ 121,600

Expenses:
Raw materials ($1.9 q)

36,100

Wages and salaries ($3,900 + $0.1

q)

5,800

Utilities ($1,700 + $0.02 q)

2,080

Facility rent ($2,600)

2,600

Insurance ($1,850)

1,850

Miscellaneous ($570 + $0.2 q)

4,370

Total expense
Net operating income

52,800
$ 68,800

Required:
Prepare a report showing the company's activity variances for July. (Leave no cells blank be certain to enter "0" wherever required. Input all amounts as positive values. Indicate
the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and
"None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Flight Caf
Activity Variances
For the Month Ended July 31
Activity Variances

list

2
string

Revenue

Expenses:

list

2
string

Raw materials

list

2
string

Wages and salaries

list

2
string

Utilities

list

2
string

Facility rent

Insurance

list

string

list

string

Miscellaneous

list

Total expense
2

string

list

2
string

Net operating income

Question 24: (4 points)

multi

18

Exercise 10-3 Prepare a Report Showing Revenue and Spending Variances [LO3]
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested
and sold 8,300 pounds of oysters in August. The company's flexible budget for August
appears below:

Quilcene Oysteria
Flexible Budget
For the Month Ended August 31
Actual pounds (q)
Revenue (4.3 q)

8,300
$ 35,690

Expenses:
Packing supplies (0.31 q)

2,573

Oyster bed maintenance (1,200)

1,200

Wages and salaries (2,250 +0.15 q)

3,495

Shipping (0.75 q)

6,225

Utilities (690)

690

Other (420 + 0.05 q)

835

Total expense
Net operating income

15,018
$ 20,672

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds

8,300

Revenue

$ 39,200

Expenses:
Packing supplies

4,000

Oyster bed maintenance

1,100

Wages and salaries

3,740

Shipping

5,250

Utilities

630

Other

780

Total expense
Net operating income

15,500
$ 23,700

Required:
Prepare a report showing the company's revenue and spending variances for August. (Input
all amounts as positive values. Indicate the effect of each variance by selecting "F" for
favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the
"$" sign in your response.)

Quilcene Oysteria
Revenue and Spending Variances
For the Month Ended August 31
Revenue and
Spending Variances

list

2
string

Revenue

Expenses:

list

2
string

Packing supplies

list

2
string

Oyster bed
maintenance

list

2
string

Wages and salaries

list

2
string

Shipping

Utilities

list

string

list

string

Other

list

Total expense
2

string

list

2
string

Net operating income

Question 25: (4 points)

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32

Exercise 10-4 Prepare a Flexible Budget Performance Report [LO4]

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington
State that explosively erupted in 1982. Data concerning the company's operations in July
appear below:

Vulcan Flyovers
Operating Data
For the Month Ended July 31

Flights (q)
Revenue ($327 q)

Planning
Budget

Flexible
Budget

Actual
Budget

52

51

51

$ 17,004

$ 16,677

$ 13,500

6,636

6,568

8,230

Expenses:
Wages and salaries ($3,100 +
$68 q)

Fuel ($21 q)

1,092

1,071

1,170

Airport fees ($635 + $36 q)

2,507

2,471

2,350

Aircraft depreciation ($5 q)

260

255

332

Office expenses ($177 + $1 q)

229

228

290

10,724

10,593

12,372

6,280

$ 6,084

$ 1,128

Total expense
Net operating income

The company measures its activity in terms of flights. Customers can buy individual tickets
for overflights or hire an entire plane for an overflight at a discount.

Required:
Prepare a flexible budget performance report for July. (Input all amounts as positive values.
Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of
each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no

effect (i.e., zero variance). Omit the "$" sign in your response.)

Vulcan Flyovers
Flexible Budget Performance Report
For the Month Ended July 31
Activity Variances

Revenue and Spending Variances

list

list

2
string

Revenue

string

Expenses:
Wages and salaries

list

string

list

string

list

list

2
string

string

Fuel

Airport fees

list

list
string

string

list

list

2
string

string

Aircraft depreciation

Office expenses

list

list
string

string

list

list

string

string

Total expense

list

list

Net operating income

string

string