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Unit 7 Exercise

BUSI 2083

1)Etisalat Vancouver manufactures picture frames. Sales for August are expected to be 10,000 units of various sizes. Historically, the average frame requires four metres of framing, one square metre of glass, and two square metres of backing. Beginning inventory includes 1,500 metre of framing, 500 square metres of glass, and 500 square metres of backing. Current prices are $0.30 per metre of framing, $6.00 per square metre of glass, and $2.25 per square metre of backing. Ending inventory should be 150% of beginning inventory. Purchases are paid for in the month acquired. (40 marks)

Required:

a. Determine the quantity of framing, glass, and backing that is to be purchased during August.

b. Determine the total costs of direct materials for August purchases.

2) Istanbul enterprises has the following projected account balances for April 30, 2018: (40 marks)

Accounts payable $20,000 Sales $400,000

Accounts receivable 50,000 Capital stock 200,000

Amortization, factory 12,000 Retained earnings ?

Inventories (3/31 & 4/30) 90,000 Cash 28,000

Direct materials used 100,000 Equipment, net 120,000

Office salaries 40,000 Buildings, net 200,000

Insurance, factory 2,000 Utilities, factory 8,000

Plant wages 70,000 Selling expenses 30,000

Bonds payable 80,000 Maintenance, factory14,000

Required:

a. a budgeted income statement for April 2018.

b. a budgeted balance sheet as of April 30, 2018.

3) What are the implications of budgeting for a growing business? Should you choose static budget for a company with multiple production targets? Explain! (30 marks)

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