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Exam 8: Master Budgeting

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Question 41

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Whitmer Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.05 direct labor-hours. The direct labor rate is $11.80 per direct labor-hour. The production budget calls for producing 7,100 units in February and 6,800 units in March. Required: Construct the direct labor budget for the next two months, assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month.

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Question 42

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Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: $\bullet$ Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for January. $\bullet$ Collections are expected to be 80% in the month of sale and 20% in the month following the sale. $\bullet$ The cost of goods sold is 75% of sales. $\bullet$ The company would like to maintain ending merchandise inventories equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. $\bullet$ Other monthly expenses to be paid in cash are $24,000. $\bullet$ Monthly depreciation is $15,000. $\bullet$ Ignore taxes. December cash disbursements for merchandise purchases would be:

A) $139,500
B) $246,000
C) $240,000
D) $235,500

E) B) and D)
F) A) and C)

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Question 43

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Porter Corporation makes and sells a single product called a Yute. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the year. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 12,000 Yutes in December, then the budgeted total cash disbursements for selling and administrative expenses for December would be:

Garry Corporation's most recent production budget indicates the following required production: Each unit of finished product requires 5 pounds of raw materials. The company maintains raw materials inventory equal to 25% of the next month's expected production needs. How many pounds of raw material should Garry plan on purchasing for the month of November?

Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected: 30% in the month of the sale 70% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs. The estimated unit product cost is closest to:

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: $\bullet$ Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January. $\bullet$ Collections are expected to be 65% in the month of sale and 35% in the month following the sale. $\bullet$ The cost of goods sold is 80% of sales. $\bullet$ The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. $\bullet$ Other monthly expenses to be paid in cash are $21,100. $\bullet$ Monthly depreciation is $21,000. $\bullet$ Ignore taxes. Accounts payable at the end of December would be:

The Jung Corporation's production budget calls for the following number of units to be produced each quarter for next year: Budgeted production Each unit of product requires three pounds of direct material. The company's policy is to begin each quarter with an inventory of direct materials equal to 30% of that quarter's direct material requirements. Budgeted direct materials purchases for the third quarter would be:

Brinso Supply Corporation manufactures and sells cotton gauze. Expected sales of gauze (in boxes) for upcoming months are as follows: Management likes to maintain a finished goods inventory equal to 10% of the next month's estimated sales. Required: Prepare the company's production budget for the third quarter of this year (the months of July, August and September). Include a column for each month and a total column for the entire quarter.

The selling and administrative budget is typically prepared before the cash budget.

Tilson Corporation has projected sales and production in units for the second quarter of the coming year as follows: Cash-related production costs are budgeted at $7 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $110,000 per month. The accounts payable balance on March 31 totals $193,000, which will be paid in April. All units are sold on account for $16 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $520,000 ($100,000 from February's sales and $420,000 from March's sales). Required: a. Prepare a schedule for each month showing budgeted cash disbursements for Tilson Corporation. b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Corporation.

The basic idea underlying responsibility accounting is that a manager should be held responsible for those items-and only those items-that the manager can actually control to a significant extent.

Rokosz Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $104. Budgeted unit sales for October, November, December, and January are 6,900, 7,100, 11,300, and 15,300 units, respectively. All sales are on credit. B. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. C.The ending finished goods inventory equals 20% of the following month's sales. D. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound. E.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. The estimated direct labor cost for November is closest to:

Smith Corporation makes and sells a single product called a Pod. Each Pod requires 1.4 direct labor-hours at $9.60 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. Smith Corporation is preparing a Direct Labor Budget for the second quarter of the year. In June the company has budgeted to produce 22,000 Pods. Budgeted direct labor costs incurred in June would be:

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit. B. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. C.. The ending finished goods inventory equals 30% of the following month's sales. D.The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $4.00 per pound. E. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. F. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours. G. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour. H. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000. The expected cash collections for February is closest to:

Davis Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $1.70 per direct labor-hour; the budgeted fixed manufacturing overhead is $116,000 per month, of which $30,000 is factory depreciation. If the budgeted direct labor time for November is 7,000 hours, then the total budgeted cash disbursements for manufacturing overhead for November must be:

Seventy percent of Pitkin Corporation's sales are collected in the month of sale, 20% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data for the company: Total budgeted cash collections in April would be:

The production budget is typically prepared prior to the sales budget.

Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit. B. Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month. C.The ending finished goods inventory equals 20% of the following month's sales. D. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound. E. Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month. F. The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours. G. The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000. The estimated direct labor cost for May is closest to:

Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: $\bullet$ Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January. $\bullet$ Collections are expected to be 90% in the month of sale and 10% in the month following the sale. $\bullet$ The cost of goods sold is 75% of sales. $\bullet$ The company desires to have an ending merchandise inventory equal to 60% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase. $\bullet$ Other monthly expenses to be paid in cash are $24,700. $\bullet$ Monthly depreciation is $16,000. $\bullet$ Ignore taxes. Accounts payable at the end of December would be:

The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 16,000 Debs in January, then the total budgeted variable selling and administrative expenses for January will be: