Reference no: EM131726353

OPERATING BUDGETS -

Annette Company produces a caliber used in the production of automobile transmissions.  The caliber is sold to automobile manufactures and automobile engine manufacturers.   The Sales Price is $240 per unit.  The Budgeted (Expected) Sales In Units for the first four (4) months of the next year are as follow:

MONTH                                UNITS

JANUARY                             30,000

FEBRUARY                           40,000

MARCH                               50,000

APRIL                                 60,000

Annette Company's policy is to have twenty percent (20%) of next month's Budgeted (Expected) Sales in Ending Finished Goods Inventory.  In addition, each caliber requires four (4) pounds of metal materials (Direct Materials) which cost $12.50 per pound.  Annette Company's policy is to have forty percent (40%) of next month's production needs in Ending Raw Materials (Direct Materials) Inventory.

Required - Prepare a monthly Operating Budget for the first quarter of next year for the following individual Budgets:

1. Sales Budget

2. Production Budget

3. Direct Materials Purchases Budget

STANDARD COSTING -

Osbourne Company produces Leather Jackets.  The following Standards for producing leather jackets have been established as follow:

1. Direct Materials (10 Leather Strips @ $20 Per Unit)      2. $200

3. Direct Labor (8 Hours @ $16 Per Hour)                       4. 128

5. Total Standard Prime Cost Per Unit                            6. $328

Osbourne Company produced 2,100 Leather Jackets during the current year.  The actual Leather Strips purchased by Osbourne Company was 24,600 Leather Strips at $24 per Leather Strip.  The total number of Leather Strips used during the current year was 21,600 Leather Strips.  The actual Direct Labor for Osbourne Company for the current year was 15,200 hours at $18 per hour.

Required -

1. Compute the two (2) Direct Materials Variances (ie. Direct Materials Price Variance and Direct Materials Quantity (Usage) Variance) and the Total Direct Materials Variance.

2. Compute the two (2) Direct Labor Variances (ie. Direct Labor Rate Variance and Direct Labor Efficiency Variance) and the Total Direct Labor Variance.

3. What are the advantages and disadvantages of a Standard Costing System?

Attachment:- Assignment.rar