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Exam 8: Master Budgeting

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Question 61

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Which of the following budgets are prepared before the sales budget?

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Question 62

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The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 1,600 direct labor-hours will be required in February. The variable overhead rate is $3.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $28,320 per month, which includes depreciation of $3,680. All other fixed manufacturing overhead costs represent current cash flows. -The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for February should be:

A) $3.40 per direct labor-hour
B) $21.10 per direct labor-hour
C) $17.70 per direct labor-hour
D) $18.80 per direct labor-hour

E) A) and C)
F) None of the above

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Question 63

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-The selling and administrative expense budget of Garney Corporation is based on the number of units sold,which are budgeted to be 1,800 units in October.The variable selling and administrative expense is $2.00 per unit.The budgeted fixed selling and administrative expense is $22,680 per month,which includes depreciation of $7,020.The remainder of the fixed selling and administrative expense represents current cash flows. Required: Prepare the selling and administrative expense budget for October.

LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.5 hours of direct labor at the rate of $14.50 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. -The budgeted direct labor cost per unit of Product WZ 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 15,000 Debs in February,then the total budgeted fixed selling and administrative expenses for February is:

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.

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

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. -If 60,500 pounds of raw materials are required for production in December,then the budgeted cost of raw material purchases for November is closest to:

At March 31 Streuling Enterprises,a merchandising firm,had an inventory of 38,000 units,and it had accounts receivable totaling $85,000.Sales,in units,have been budgeted as follows for the next four months: Streuling's board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month's budgeted sales. The selling price is $2 per unit.One-third of sales are paid for by customers in the month of the sale,the balance is collected in the following month. Required: a.Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April,May,and June. b.Prepare a schedule of expected cash collections for each of the months April,May,and June.

Frolic Corporation has budgeted sales and production over the next quarter as follows: The company has 17,500 units of product on hand at July 1.25% of the next month's sales in units should be on hand at the end of each month.October sales are expected to be 97,000 units.Budgeted sales for September would be (in units) :

Sedita Inc.is working on its cash budget for July.The budgeted beginning cash balance is $46,000.Budgeted cash receipts total $175,000 and budgeted cash disbursements total $174,000.The desired ending cash balance is $50,000.The excess (deficiency) of cash available over disbursements for July will be:

Gusler Corporation makes one product and has provided the following information: The estimated cost of goods sold for May is closest to:

The LaGrange Corporation had the following budgeted sales for the first half of the current year: The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled: The accounts receivable balance on January 1 of the current year was $70,000, of which $50,000 represents uncollected December sales and $20,000 represents uncollected November sales. -The total cash collected during January by LaGrange Corporation would be:

Bentsen Corporation makes one product. The ending finished goods inventory equals 40% 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 6 pounds of raw materials.The raw materials cost $2.00 per pound.If 76,680 pounds of raw materials are required for production in September,then the budgeted cost of raw material purchases for August is closest to:

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 estimated finished goods inventory balance at the end of February is closest to:

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 17,000 Debs in March,then the average budgeted selling and administrative expenses per unit sold for March is closest to:

When preparing a direct materials budget,beginning inventory for raw materials should be added to production needs,and desired ending inventory should be subtracted to determine the amount of raw materials to be purchased.

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 budgeted sales for May is closest to:

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. -Expected cash collections in December are: