Exhibit 1 Exhibit 1 - Summary of Actuals and Master Budget Actual Master Budget Units sold (# of bears) 331,400 295,000 Revenue Retail $ 10,389,390 $ 12,040,000 Wholesale 1,888,980 2,960,000 Amazon...

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Exhibit 1 Exhibit 1 - Summary of Actuals and Master Budget ActualMaster Budget Units sold (# of bears)331,400295,000 Revenue Retail$ 10,389,390$ 12,040,000 Wholesale1,888,9802,960,000 Amazon4,546,808- 0 Total revenue16,825,17815,000,000 Direct materials Actrylic pile fabric288,403283,873 Acrylic eyes138,862123,900 Plastic joints288,035221,250 Polyester fiber filling534,788427,455 Label19,70717,700 Designer box66,32976,700 Accessories62,53841,300 Total Materials1,398,6621,192,178 Direct labor4,305,8813,292,200 Variable manufacturing overhead1,979,4411,235,460 Fixed manufacutring overhead767,228746,940 Variable selling expenses1,879,7791,405,500 Fixed selling expenses5,865,8155,146,500 Administrative expenses1,184,8011,190,000 Operating profit$ (556,430)$ 791,222 Note: The above actual operating income does not include the bonuses paid to management. Exhibit 2 Exhibit 2 - Sales by Channel ActualUnitsUnit PriceTotal Sales ($) Retail188,89855.0010,389,390 Wholesale49,71038.001,888,980 Amazon92,79249.004,546,808 331,40016,825,178 Budget Retail215,00056.0012,040,000 Wholesale80,00037.002,960,000 295,00015,000,000 Exhibit 3 Exhibit 3 - Standard Cost Information Input UnitsInput PriceStandard cost Direct materialsQuantityUnitsDollars PerInput Unit$ per bear Actrylic pile fabric0.02673bolts36bolt0.9623 Acrylic eyes2.00eyes0.21eye0.4200 Plastic joints5.00joints0.15joint0.7500 Polyester fiber filling0.90000pounds1.61pound1.4490 Label1.00label0.06label0.0600 Designer box1.00box0.26box0.2600 Accessories1.00various0.14each0.1400 Total Materials4.0413 Direct laborHoursUnitsDollars PerInput Unit$ per bear Sewing0.5hours9.30hour4.65 Cutting and stuffing0.3hours9.30hour2.79 Assembly0.3hours9.30hour2.79 Dressing and packaging0.1hours9.30hour0.93 Total Labor1.2hours9.30hour11.1600 Variable manufactring overhead1.20DL hours3.4900DL hour4.1880 Fixed manufacturing overhead1.20DL hours2.1100DL hour2.5320 Notes: Normal expected production and sales is 295,000 units The cost of accessories ranges depending on the accessory type (from $0.07 to $0.41). A standard is used to reflect all accessories given their low cost. Variable and fixed overhead costs are allocated to bears based on the standard direct labor costs allowed. Standards are computed at the normal production level of 295,000 bears. Maximum capacity is 350,000 units. Exhibit 4 Exhibit 4 - Actual Costs Quantity UsedInput PriceTotal Cost Direct materialsQuantityUnitsDollars PerInput UnitTotal Actrylic pile fabric8,345bolts34.5600bolt288,403 Acrylic eyes661,248eyes0.2100eye138,862 Plastic joints1,937,023joints0.1487joint288,035 Polyester fiber filling354,164pounds1.5100pound534,788 Label328,447labels0.0600label19,707 Designer box315,854boxes0.2100box66,329 Accessories330,190various0.1894each62,538 Total Materials1,398,662 Direct laborHoursUnitsDollars PerInput UnitTotal Sewing189,211hours9.59hour1,814,533 Cutting and stuffing104,117hours9.59hour998,482 Assembly121,054hours9.59hour1,160,908 Dressing and packaging34,615hours9.59hour331,958 Total Labor448,997hours9.59hour4,305,881 Variable manufacturing overhead1,979,441 Fixed manufacturing overhead767,228 Exhibit 5 Exhibit 5 - Actual Selling Expenses FY 2000FY 1999 Units Sold (# of bears)331,400271,971 Variable Selling Expenses ($) Packing and shipping$ 1,589,900$ 1,176,929 Commissions125,789249,330 Marketing materials164,09075,956 Total variable selling exp$ 1,879,779$ 1,502,215 Fixed Selling Expenses ($) Salaries3,274,8712,726,091 Advertising and promotion2,590,9442,440,501 Total fixed selling exp$ 5,865,815$ 5,166,592 1 CH Company Toni Halliday is employed by the Curve Corporation, a publicly traded conglomerate. The corporation manufactures and sells many different kinds of products, including plumbing hardware, food products, sporting goods, children's games and toys, and many other products. Halliday is the President of CH Company, a wholly-owned subsidiary of Curve Corporation. It is July 2000 and Halliday has just received the preliminary income statement for her division for the fiscal year ended June 30, 2000. The master budget and overall variances for the same period are included for comparison purposes. Halliday looks at the bottom line, a loss, then picks up the phone to call you. You are an accountant in the controller's office at the headquarters of Curve Corporation. "I know the bottom line looks pretty bad. But we made great strides this year. Sales are higher than ever. Customers love our product and respect our quality. The variances should provide some insights. Could you do a full variance analysis, please?" BACKGROUND AND EVOLUTION The CH Company was founded by Simon Halliday, Toni’s father, in 1982. Halliday was an industrial artist who enjoyed making toys in his spare time. After many years of planning, in 1983, Simon Halliday acquired an old pneumatic pump that had been used to manufacture pillows in the 1950s and 1960s. He modified the machine to mass produce stuffed animals, and the CH Company started to take off. CH has always maintained and prioritized its reputation for quality. And from this quality was borne profits. By 1992, annual sales exceeded $3,000,000. Toni Halliday had learned the business from the bottom up. While a student, she held various positions during the summer and on school breaks. After graduating, she expanded her role in a variety of departments, getting to know the business. Altogether, Toni has held positions in the mail-room, production, sales, and (her favorite) accounting. Based on her performance in theses roles, Toni was named Assistant to the President in 1997 after receiving her M.B.A. In early 1998, at her urging, the company launched an initial public offering of common stock and became publicly traded. After Simon’s retirement, Toni became President of CH on January 1, 1999. On March 31, 1999, Halliday was acquired by Curve Corporation. Halliday ensured the acquisition involved protection for existing employees and managers, as well as for herself. 2 The CH Bear The CH Company produces the CH Bear, a teddy bear enjoyed by children and adult toy collectors around the world. The company touts the handcrafted features of the bear. The bears are fully jointed, constructed of washable acrylic pile fabric, and stuffed with a polyester fiber filling. They stand approximately 17 inches high. The toys are dressed in various accessories, such as bow ties, sports jerseys, or character and occupational costumes. Thus, the product can be personalized for numerous occasions. The CH Bear is sold with an unconditional lifetime guarantee. Organizational Structure A majority of CH’s employees are organized into three departments: purchasing, production, and marketing. The purchasing department consists of Dean Garcia, the purchasing manager, and a staff of ten individuals. The department is responsible for acquiring and maintaining the supply of production materials. William Reid manages over 160 employees in the production department, where the manufacture and assembly of the product takes place. The marketing department is headed by Harriet Wheeler. She is responsible for all aspects of marketing and supervises approximately 50 individuals that make up CH’s marketing department and sales force. The remaining employees include Toni Halliday and a few assistants. BEAR PRODUCTION Production begins with a cutting function that creates the required pieces of acrylic pile fabric. The bolts of fabric are rolled out and layered on the cutting table. The fabric is measured at this time for length and width and inspected for flaws. Flaws, as well as shortages in length or width, increase fabric waste and time inefficiencies, given the rework necessary to fix these problems. CH Bears come in a variety of colors. Fabric dye lots are important for matching colors. Thus, quality control for fabric color is performed as well. Off-color fabric must be scrapped or returned to the supplier. 3 CH obtains the most economical price for specified colors by timing its fabric orders with the production runs of its suppliers. Rush orders almost always substantially increase the price of the required fabric. In the next stage of production, operators of industrial sewing machines construct the various bear parts: arms, legs, head, and torso. Each piece is sewn inside out and then turned right-side- out for assembly. Sewing is the most labor-intensive phase of the production process. Any additional sewing steps (i.e., for specialty bears) require additional production time. In the next step, acrylic eyes are attached to the head with plastic rivets. If the rivet posts are too short, the eyes may fall off later. If the rivet posts are too long, the eyes will stand out from the head, giving a nonstandard appearance. Acrylic eyes are purchased from vendors in “dark brown,” but the exact shade may vary from supplier to supplier. Defects are not discovered until the eyes are used in production. At that point, defective eyes are discarded and replaced with ones that meet specifications. After the cut pieces have been sewn together and the eyes have been attached, the company's unique pneumatic stuffing machine is used to blow the polyester fiber filling into the unassembled parts. Except for a few replacement parts and upgraded motors, this is the same machine that Simon Halliday acquired in 1983. Bags of filling are loaded into the machine hopper and mechanically fluffed to the proper loft. An operator places the empty arm, leg, body, or head over a stationary nozzle and uses a foot pedal to control the flow of filling. The machine operator judges whether the part has been filled correctly. Too little filling affects the firmness of the bear; too much filling is unnecessary and expensive. Inferior grade fiber filling is less expensive but can cause clumping and clogging in the hopper. When this happens, production is interrupted and the operator must unclog the vacuum hose and reset the machine. Next, the arms, legs, and head are attached to the torso using hard plastic disc joints. The disc joints allow the head and limbs to rotate and eliminate the need for sewn attachment. The plastic joints are designed to be foolproof in production and dependable for the life of the product. However, the joints cannot be removed without destroying them. Occasionally, after initial joint insertion, the parts do not fit together properly, and they must
Answered 2 days AfterJul 03, 2021

Answer To: Exhibit 1 Exhibit 1 - Summary of Actuals and Master Budget Actual Master Budget Units sold (# of...

Nitish Lath answered on Jul 06 2021
141 Votes
Exhibit 1
        Exhibit 1 - Summary of Actuals and Master Budget
                    Actual        Master Budget
        Units sold (# of bears)            331,400        295,000
            Retail        $ 10,389,390        $ 12,040,000
            Wholesale        1,888,980        2,960,0
            Amazon        4,546,808        - 0
            Total revenue        16,825,178        15,000,000
        Direct materials
            Actrylic pile fabric        288,403        283,873
            Acrylic eyes        138,862        123,900
            Plastic joints        288,035        221,250
            Polyester fiber filling        534,788        427,455
            Label        19,707        17,700
            Designer box        66,329        76,700
            Accessories        62,538        41,300
            Total Materials        1,398,662        1,192,178
        Direct labor            4,305,881        3,292,200
        Variable manufacturing overhead            1,979,441        1,235,460
        Fixed manufacutring overhead            767,228        746,940
        Variable selling expenses            1,879,779        1,405,500        5.67    4.76
        Fixed selling expenses            5,865,815        5,146,500
        Administrative expenses            1,184,801        1,190,000
        Operating profit            $ (556,430)        $ 791,222
        Note: The above actual operating income does not include the bonuses paid to management.
Exhibit 2
        Exhibit 2 - Sales by Channel
        Actual        Units    Unit Price    Total Sales ($)        Sales mix percentage
        Retail        188,898    55.00    10,389,390        57%
        Wholesale        49,710    38.00    1,888,980        15%
        Amazon        92,792    49.00    4,546,808        28%
                331,400        16,825,178
        Retail        215,000    56.00    12,040,000        73%
        Wholesale        80,000    37.00    2,960,000        27%
                295,000        15,000,000
        Actual sales volume at budgeted mix
        Retail        241,528.81
        Wholesale        89,871.19
Exhibit 3
        Exhibit 3 - Standard Cost Information
                    Input Units            Input Price            Standard cost
                                                    Qty for actual output    Standard cost for actual output        Standard mix percentage        Budgeted qty
        Direct materials            Quantity    Units        Dollars Per    Input Unit        $ per bear
            Actrylic pile fabric        0.02673    bolts        36    bolt        0.9623        8858.322    318,900        0.24%        7885.35
            Acrylic eyes        2.00    eyes        0.21    eye        0.4200        662800    139,188        18.30%        590000
            Plastic joints        5.00    joints        0.15    joint        0.7500        1657000    248,550        45.76%        1475000
            Polyester fiber filling        0.90000    pounds        1.61    pound        1.4490        298260    480,199        8.24%        265500
            Label        1.00    label        0.06    label        0.0600        331400    19,884        9.15%        295000

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