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DAWSON COMPANY ASSIGNMENT: PART ONE
Dawson Company produces a glue that they package in gallon containers.
Use the following information to prepare a master budget for Dawson.  Worksheets for the various
elements of the budget are included below.
STANDARD COSTS:
Standard cost per gallon:  TOTAL
   Container 1 container @ $2.00 $2.00
   Resin 8 pounds @ $0.50 $4.00
   Direct labor 2 hours @ $6.00 $12.00
   Variable overhead 2 DL hours @ $3.00 $6.00
    -  
$24.00
=  
Variable overhead rate:
   Est. annual overhead $57,600
   Est. annual hours 19,200 based on 9,600 units
-  
   Variable overhead rate $3.00 per hour
=  
Other Data:
   Sales price $100 per gallon
   Sales - cash 20%
   Sales - credit 80%
   A/R receipt - current 60%
   A/R receipt - next mn. 40%
   A/P payment - current 50%
   A/P payment - next mn. 50%
   End inv - raw material 10%
   End inv - super glue 20%
General Ledger - 1/1
   Cash $3,500
   Accounts receivable $20,000
   Accounts payable $1,700
   Inv - containers 60 containers
   Inv - resin 400 pounds
   Inv - super glue 150 gallons
Expense Data:
   Variable S & A 5%  of sales revenue
   Fixed S & A - no depr. $35,250  per month
   Fixed S & A - depr. $4,750  per month
Special Events:
   Dividend $20,000 March
   Purchase - New Truck $12,000 February 60 month life
SALES FORECAST
  January February March April May
Sales forecast 600 700 900 950 800
Budgeted Sales Revenue
 
PRODUCTION BUDGET
  January February March April
   Sales forecast
 
- - - -  
   Total units required
   Beginning inventory
- - - -  
   Production budget
= = = =  
PURCHASING BUDGET
Containers:
   Required for production
   Desired ending inventory
- - -  
   Total required
   Beginning inventory
- - -  
   Purchase budget-containers
   Price per container
- - -  
   Purchase budget-amount
- - -  
Resin:
   Required for production
   Desired ending inventory
- - -  
   Total required
   Beginning inventory
- - -  
   Purchase budget-pounds
   Price per pound
- - -  
   Purchase budget-amount
- - -  
Total RM Purchases
= = =  
DIRECT LABOR BUDGET
   Production budget
   DL hours per gallon
- - -  
   Total budgeted hours
   Direct labor rate
- - -  
   Direct labor budget
= = =  
VARIABLE OVERHEAD BUDGET
   Total budget hours
   Variable overhead rate
- - -  
   Variable overhead
= = =  
January February March Quarter
CASH BUDGET
Beginning cash balance
Cash Receipts:
   Cash Sales
   Credit sales - current
   Credit sales-prior month
- - - -  
   Total cash receipts
- - - -  
Total Cash Available
Cash Disbursements:
   Raw Materials-current
   Raw materials-prior month
   Direct labor
   Variable overhead
   Variable S & A
   Fixed S & A
   Cash dividend
   Equipment purchase
- - - -  
   Total disbursements
- - - -  
Ending cash balance
= = = =  
INCOME STATEMENT
Sales Revenue
Variable Costs:
   Manufacturing
   Selling and Admin
- - - -  
   Total variable costs
- - - -  
Contribution Margin
Fixed Costs:
   Fixed S & A
   Depreciation-S & A
   Depr.- new truck
- - - -  
   Total fixed
- - - -  
Net Income
= = = =  
DAWSON COMPANY ASSIGNMENT PART TWO
I. The following represents the ACTUAL data for the quarter:
        (1)   Production of Super Glue--the company met their budgeted production
        (2)   Direct costs:
       Quantity         Price / Rate
      ----------        --------------
Direct Materials used:
    Containers 2,426 $1.90  per container
    Resin 18,500  pounds $0.55  per pound
Direct Labor 4,205  DLH's $6.25  per DLH
        (3)   Actual Variable Overhead $13,440
II.   Using the preceding actual data and the previously
supplied standard cost figures, complete the
following performance report:
Calculate the materials price variances based on the quantities purchased.  The company
purchased the quantities budgeted.
Standard Standard Actual 
Quantity Actual Price / Price / Quantity Rate
Allowed Quantity    Rate Rate Variance Variance
 ----------  ----------  ----------  ----------  ----------  ----------
Direct Materials:
    Containers
    Resin
Direct Labor
Variable OH
- -
Totals
= =