Crede and Rensing, CPAs, are preparing their services revenue (sales) budget for

Question

Crede and Rensing, CPAs, are preparing their services 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.

Prepare the service revenue (sales) budget for 2011 by the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

Pletcher Company produces and sells automobile batteries, the heavy- duty HD-240.

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 HD-240 is 2,500 units. Management desire 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.

Prepare a quarterly production budgets for each quarter and in total for 2011.

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

Explanation / Answer

Sales: Q1 Auditing 2200* 80= 176,000 Tax 3000*90= 270,000 Consulting 1500*100= 150,000 Total Q1 5700 596,000 Q2 Auditing 1600* 80= 128,000 Tax 2400*90= 216,000 Consulting 1500*100= 150,000 Total Q2 5500 494,000 Q3 Auditing 2,000* 80= 160,000 Tax 2,000* 90= 180,000 Consulting 1,500*100= 150,000 Total Q3 5,500 490,000 Q4 Auditing 2,400* 80= 192,000 Tax 2,500*90= 225,000 Consulting 1,500 *100 150,000 Total Q4 6,400 567,000 Production Budget 1Q Beginning Inventory 2,500 Produced 6,000 Sold 5,000 Ending Inventory 3,500 2Q Beginning Inventory 3,500 Produced 7,500 Sold 7,000 Ending Inventory 4,000 3Q Beginning Inventory 4,000 Produced 9,000 Sold 8,000 Ending Inventory 5,000 4Q Beginning Inventory 5,000 Produced 8,250 Sold 10,000 Ending Inventory 3,250

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