E20-2 Zeller Electronics Inc. produces and sells two models of pocket calculators, XQ-
103 and XQ-104. The calculators sell for $12 and $25, respectively. Because of the intense
competition Zeller faces, management budgets sales semiannually. Its projections for the
first 2 quarters of 2010 are as follows.
Unit Sales
Product Quarter 1 Quarter 2
XQ-103 20,000 25,000
XQ-104 12,000 15,000
No changes in selling prices are anticipated.
Instructions
Prepare a sales budget for the 2 quarters ending June 30, 2010. List the products and
show for each quarter and for the 6 months, units, selling price, and total sales by product
and in total.

E20-5 Moreno Industries has adopted the following production budget for the first
4 months of 2011.
Month Units Month Units
January 10,000 March 5,000
February 8,000 April 4,000
Each unit requires 3 pounds of raw materials costing $2 per pound. On December 31,
2010, the ending raw materials inventory was 9,000 pounds. Management wants to have
a raw materials inventory at the end of the month equal to 30% of next month’s production
requirements.
Instructions
Prepare a direct materials purchases budget by month for the first quarter.

E21-4 Using the information in E21-3, assume that in July 2010, Raney Company
incurs the following manufacturing overhead costs.
Variable Costs Fixed Costs
Indirect labor $8,700 Supervision $4,000
Indirect materials 4,300 Depreciation 1,500
Utilities 3,200 Property taxes 800
Instructions
(a) Prepare a flexible budget performance report, assuming that the company worked
9,000 direct labor hours during the month.
(b) Prepare a flexible budget performance report, assuming that the company worked
8,500 direct labor hours during the month.

E22-5 The standard cost of Product B manufactured by Mateo Company includes three
units of direct materials at $5.00 per unit. During June, 28,000 units of direct materials
are purchased at a cost of $4.70 per unit, and 28,000 units of direct materials are used
to produce 9,000 units of Product B.
Instructions
(a) Compute the total materials variance and the price and quantity variances.
(b) Repeat (a), assuming the purchase price is $5.20 and the quantity purchased and
used is 26,200 units.