Accounting 101B - Group Project Summer 2020 (1).|Verified Solution

ACCOUNTING 101B - Group Project Summer 2020 (1).To be completed in groups of 3-4 students (depending on class size) TBA, Inc., manufactures and sells concrete block for residential and commercial building. TBA expects the following unit sales, unit selling price and desired ending inventory in 2020: Quarter Sales (Units) Selling Price (per unit) Ending Inventory (units) 1 2,000,000 $.70 500,000 2 6,000.000 $.70 500,000 3 6,000,000 $.80 100,000 4 2,000,000 $.80 100,000 Inventory on both January 1, 2020, and December 31, 2020, is expected to be 500,000 blocks. Each block requires 26 pounds of raw materials (a mixture of cement, sand, gravel, shale, pumice, and water). TBA's raw materials inventory policy is to have 5 million pounds in ending inventory for the third and fourth quarters and 8 million pounds in ending inventory for the first and second quarters. Thus, desired direct materials inventory on both January 1, 2020, and December 31, 2020, is 5,000,000 pounds of materials. Each pound of raw materials costs $0.01. Each block requires 0.015 direct labor hour; direct labor is paid $14 per direct labor hour. Variable overhead is $8 per direct labor hour. Fixed overhead is budgeted at $320,000 per quarter ($100,000 for supervision, $200,000 for depreciation, and $20,000 for rent). TBA also provided the information that beginning finished goods inventory is $55,000; and the ending finished goods inventory budget for TBA for the year $67,000. TBA's only variable marketing expense is a $0.05 commission per unit (block) sold. Fixed marketing expenses for each quarter include the following: • Salaries = $20,000 • Depreciation = $5,000 • Travel = $3,000 Advertising expense is $10,000 in Quarters 1, 3, and 4. However, at the beginning of the summer building season, TBA increases advertising; in Quarter 2, advertising expense is $15,000. TBA has no variable administrative expense. Fixed administrative expenses for each quarter include the following: • Salaries = $35,000 • Insurance = $4,000 • Depreciation = $12,000 • Travel = $2,000