Reference no: EM131765999
Exercise 1 - Crede and Rensing, CPAs, are preparing their service revenue (sales) budget for the coming year (2011). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.
Department Quarter 1 Quarter 2 Quarter 3 Quarter 4
Auditing 2,200 1,600 2,000 2,400
Tax 3,000 2,400 2,000 2,500
Consulting 1,500 1,500 1,500 1,500
Average hourly billing rates are: auditing $80, tax $90, and consulting $100.
Instructions - Prepare the service revenue (sales) budget for 2011 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.
Exercise 2 - Pletcher Company produces and sell automobile batteries, the heavy-duty HD-24. The 2011 sales forecast is as follows.
Quarter HD-240
1 5,000
2 7,000
3 8,000
4 10,000
The January 1, 2011, inventory of DH-240is 2,500 units. Management desires an ending inventory each quarter equal to 50% of the next quarter's sales. Sales in the first quarter of 2012 are expected to be 30% higher than sales in the same quarter in 2011.
Instructions - Prepare quarterly production budgets for each quarter and in total for 2011.