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Exam 8: Master Budgeting

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Question 121

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Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: o Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January. o Collections are expected to be 65% in the month of sale and 35% in the month following the sale. o The cost of goods sold is 80% of sales. o 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. o Other monthly expenses to be paid in cash are $21,100. o Monthly depreciation is $21,000. o Ignore taxes. -December cash disbursements for merchandise purchases would be:

A) $192,000
B) $243,200
C) $117,600
D) $248,000

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

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Question 122

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Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: The company wants to maintain monthly ending inventories of Jurislon equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 10,800 kilograms of Jurislon were on hand. The cost of Jurislon is $18.00 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. -The desired ending inventory of Jurislon for September is:

A) $81,720
B) $76,680
C) $191,700
D) $204,300

E) All of the above
F) C) and D)

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Question 123

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Marty's Merchandise has budgeted sales as follows for the second quarter of the year: Cost of goods sold is equal to 70% of sales. The company wants to maintain a monthly ending inventory equal to 120% of the cost of goods sold for the following month. The inventory on March 31 was below this target and was only $22,000. The company is now preparing a Merchandise Purchases Budget for April, May, and June. -The budgeted purchases for May are:

Varughese Inc. is working on its cash budget for March. The budgeted beginning cash balance is $33,000. Budgeted cash receipts total $182,000 and budgeted cash disbursements total $191,000. The desired ending cash balance is $40,000. -The budgeted net income for December is:

Stut Corporation,a retailer,plans to sell 28,000 units of Product X during the month of August.If the company has 6,000 units on hand at the start of the month,and plans to have 9,000 units on hand at the end of the month,how many units of Product X must be purchased from the supplier during the month?

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 budgeted required production for November is closest to:

Parwin Corporation plans to sell 23,000 units during August.If the company has 8,000 units on hand at the start of the month,and plans to have 9,000 units on hand at the end of the month,how many units must be produced during the month?

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:

Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Each unit of finished goods requires 7 grams of raw material. The company plans to sell 270,000 units during the year -How much of the raw material should the company purchase during the year?

Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase. -The budgeted direct labor cost per unit of Product T is closest to:

In the merchandise purchases budget,the required purchases (in units)for a period can be determined by subtracting the beginning merchandise inventory (in units)from the budgeted sales (in units)and desired ending merchandise inventory (in units).

The LaPann Corporation has obtained the following sales forecast data: The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts. -The budgeted cash receipts for October would be:

Pooler Corporation is working on its direct labor budget for the next two months.Each unit of output requires 0.15 direct labor-hours.The direct labor rate is $7.00 per direct labor-hour.The production budget calls for producing 6,500 units in April and 6,200 units in May.The company guarantees its direct labor workers a 40-hour paid work week.With the number of workers currently employed,that means that the company is committed to paying its direct labor work force for at least 1,000 hours in total each month even if there is not enough work to keep them busy.What would be the total combined direct labor cost for the two months?

Tsosie Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: > The budgeted selling price per unit is $103.Budgeted unit sales for April,May,June,and July are 9,300,11,300,9,800,and 12,800 units,respectively.All sales are on credit. > Regarding credit sales,20% are collected in the month of the sale and 80% in the following month. > The ending finished goods inventory equals 10% of the following month's sales. > The ending raw materials inventory equals 10% of the following month's raw materials production needs.Each unit of finished goods requires 2 pounds of raw materials.The raw materials cost $4.00 per pound. > Regarding raw materials purchases,10% are paid for in the month of purchase and 90% in the following month. > The direct labor wage rate is $20.00 per hour.Each unit of finished goods requires 2.7 direct labor-hours. > The variable selling and administrative expense per unit sold is $3.70.The fixed selling and administrative expense per month is $80,000. Required: a.What are the budgeted sales for May? b.What are the expected cash collections for May? c.What is the budgeted accounts receivable balance at the end of May? d.According to the production budget,how many units should be produced in May? e.If 20,200 pounds of raw materials are needed for production in June,how many pounds of raw materials should be purchased in May? f.What is the estimated cost of raw materials purchases for May? g.If the cost of raw material purchases in April is $77,320,then in May what are the total estimated cash disbursements for raw materials purchases? h.What is the estimated accounts payable balance at the end of May? i.What is the estimated raw materials inventory balance at the end of May? j.What is the total estimated direct labor cost for May assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced? k.For simplicity,we will assume that there is no fixed manufacturing overhead and that the variable manufacturing overhead is $11.00 per direct labor-hour.What is the estimated unit product cost? l.What is the estimated finished goods inventory balance at the end of May? m.What is the estimated cost of goods sold and gross margin for May? n.What is the estimated total selling and administrative expense for May? o.What is the estimated net operating income for May?