Reference no: EM131580483

Accounting in Organisations Assignment

QUESTION 1 - Smooth Sounds manufactures and sells a new line of music players. Unfortunately, Smooth Sounds suffered serious fire damage at its accounting office and as a result the accounting records for March 2015 were partially destroyed. Smooth Sound has hired you to help figure out the missing pieces of the accounting information. The following accounts have been retrieved for the month of March.

	Debit	Credit
Finished Goods, 1 March	34,500
Work in Process, 1 March	11,250
Prepaid Rent	40,500
Accounts Payable		27,000
Share Capital		70,000
Retained Earnings		55,500
Work in Process, 31 March	13,050
Freight Inwards	2,400
Sales Revenue		1,299,500
Discount Allowed	9,500
Raw Materials, 31 March	4,650
Freight Outwards	8,900
Direct Labour	330,000
Raw Materials Purchases	305,100
Raw Materials, 1 March	5 550
Indirect Labour	108,300
Factory Supplies Expense	27,670
Gross Profit		391,080
Plant energy costs	64,400
Insurance Expense	9,780
Electricity and Gas Expense	33,600
Plant manager Salary	52,650
Sales Salaries Expenses	48,000
Administrative Salaries Expenses	101,550
Interest Expense	34,500
Machinery Depreciation Expense	31,500
Depreciation Expense - Sales Office	10,500

Required: Prepare the Costs of Goods Manufactured statement for the month ended 31 March 2015.

QUESTION 2 - Big Foot Co. produces sport socks and sells it across different states in Australia. The company is considering expanding their product market internationally by next year. The CEO, Ray, believes that an aggressive campaign is needed next year to maintain the entity's present growth. The financial year begins in July and ends in June. The CFO has presented Ray with the following data for the current year, 2014, for use in preparing next year's advertising campaign.

Cost Schedules
Variable costs	Per Unit ($)
Direct labour per pair	21.00
Direct materials	8.00
Variable overhead	9.00
Variable cost per pair	38.00
Fixed costs
Manufacturing	$70,300
Selling	46,000
Administrative	28,600
	$144,900
Selling price per pair	$50.00
Sales, 2014	$700,000

Ray has set the sales target for the year 2015 at a level of $800,000.

Required:

a) What is the contribution margin per unit and ratio for 2014?

b) What is the break-even point in units for 2014?

c) How many pair of socks would have to be sold in 2014 to earn a target profit of $171,600?

d) Ray believes that to attain the sales target in the year 2015 additional selling expenses of $34,000 for advertising will be required in 2015, with all other costs remaining constant. What will be the break-even point in dollar sales for 2015 if Big Foot Co. spends the additional $34,000 of the selling expenses?

QUESTION 3 - Byron Bay Surf Company has the following budgeted sales for the next six-month period:

Month	Unit Sales
June	90,000
July	120,000
August	210,000
September	150,000
October	180,000
November	120,000

The company sells the product at a price of $100 per unit. There were 24,000 units of finished goods in inventory at the beginning of July. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month.

Five kilograms of materials are required for each unit produced. To make each unit of FG it needs $10 of direct labour cost and $10 of manufacturing overhead cost. Each kilogram of material costs $8 ($6 in April 2015). Ending inventory levels for materials are equal to 30% of the production needs for the next month. Material inventory at the beginning of July was $1,242,000 (207,000 kilograms). Assume company uses a FIFO inventory method for both direct materials and finished goods.

Required:

(a) Prepare sales budgets in units and dollars for July and August.

(b) Prepare production budgets in units for July and August.

(c) Prepare direct materials purchases budgets (in kilograms and dollars) for July.

(d) Calculate the amount budgeted cost of goods sold for July.