Cost Accounting due in 3days

timer Asked: Oct 9th, 2013
account_balance_wallet $30

Question description

Problem 1:

The following information is used for Lucky's Inc.’s monthly master budget.

June's balance sheet balances:

Cash $10,500 Accounts payable $53,760
Accounts receivable $80,000 Capital stock $260,000
Inventory $26,000 Retained earnings $2,740
Building and equipment (net) $200,000

Actual sales for June and budgeted sales for July, August, and September:

June (actual) $140,000
July (budget) $320,000
August (budget) $180,000
September (budget) $200,000

Sales are 25% cash and 75% on credit. All credit sales are collected in the following month. There are no bad debts.

Gross margin percentage is 60% of sales.

The desired ending inventory is expected to be 20% of the following month's cost of goods sold. One fifth of the purchases are paid for in the month of purchase, and the remaining balance is purchased on credit and paid in the following month.

The monthly cash operating expenses are $80,000, including the monthly depreciation expense of $7,000.

During July, Lucky's Inc. will purchase new office equipment for $17,000 cash.

Dividends of $13,500 were declared and paid in July.

The company must maintain a minimum cash balance of $25,000. A line of credit is used to maintain this balance. Borrowing will be made in increments of $1,000. All borrowing is done at the beginning of the month, and repayments are made at the end of the month. The annual interest rate is 12%, paid when the loan is repaid (ignore accrual of interest).


Prepare a balance sheet, income statement, and cash budget for the month of July.

Problem 2:

The Sparkly Corporation has the following budget and actual results.

Budgeted data
Unit sales 30,000
Unit production 30,000
Fixed overhead
  • Supervision
  • Depreciation
  • Rent
Variable costs per unit
  • Direct materials
  • Direct labor
  • Supplies
  • Indirect labor
  • Electricity
Actual results
Unit sales 33,000
Unit production 36,000
Fixed overhead
  • Supervision
  • Depreciation
  • Rent
Variable costs
  • Direct materials
  • Direct labor
  • Supplies
  • Indirect labor
  • Electricity


  1. Prepare a performance report for all costs, showing static budget variances (indicate F or U).
  2. Prepare a performance report for all costs, showing flexible budget variances (indicate F or U).

Tutor Answer

School: Cornell University

flag Report DMCA

Outstanding Job!!!!

Similar Questions
Hot Questions
Related Tags

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors