Week 8 quiz - Week 8 PDF

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Week 8 Q1

Sevenbergen Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit Budgeted unit sales (all on credit): July

$ 92

9,000 11,30 0 10,40 September 0 10,80 October 0 Raw materials requirement per unit of output Raw materials cost Direct labor requirement per unit of output August

Direct labor wage rate Variable selling and administrative expense Fixed selling and administrative expense

Credit sales are collected: 40% in the month of the sale 60% in the following month Raw materials purchases are paid:

4

pounds

$ 1.00 per pound 2.8

direct labor-hours

$ 22.00

per direct laborhour

$ 1.50 per unit sold $ per month 70,000

30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month’s raw materials production needs. Theexpect edcas hc ol l ec t i onsf orAugus ti sc l os es tt o:Theex pec t edCas hCol l ec t i onf orAugus ti sc l os es tt o$912640. Det ai lwor ki ngf or r ef er ence 956, 800 CashCol l ect i on Jul Aug $828, 000. 00 $1, 039, 600. 00

Sal es( a) 40% c ol l ec t edi nmont hof $331, 200. 00 s al e 60% per c entc ol l ect edi n fi r s tmont haf t ers al es Tot alcashcol l ect i ons

$415, 840. 00

Sep $956, 800. 00 $382, 720. 00

$496, 800. 00 $331, 200. 00

$912, 640. 00

$382, 720. 00

Q2 Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: ● Sales are budgeted at $300,000 for November, $320,000 for December, and $220,000 for January. ● Collections are expected to be 70% in the month of sale and 30% in the month following the sale. ● The cost of goods sold is 75% of sales.

● The company desires to have an ending merchandise inventory at the end of each month equal to 80% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. ● Other monthly expenses to be paid in cash are $22,100. ● Monthly depreciation is $26,000. ● Ignore taxes. Balance Sheet October 31 Assets Cash Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity

$ 30,000 82,000 186,400 1,014,000 $ 1,312,400 $ 246,000 750,000 316,400 $ 1,312,400

Expected cash collections in December are: = 320,000 x 70% = 224,000

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:

1. 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. 2. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. 3. The ending finished goods inventory equals 30% of the following month's sales. 4. 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. 5. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. 6. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours. 7. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour. 8. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000. The budgeted required production for February is closest to:

10600 Q4

The Jung Corporation's production budget calls for the following number of units to be produced each quarter for next year: Budgeted production Quarter 1 Quarter 2 Quarter 3 Quarter 4

45,000 units 38,000 units 34,000 units 48,000 units

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: Computation of Direct Material Purchase for Third Quarter Particular

Unit

Production in Qtr-3 Raw material pound require per Unit Material Required for Production ( 34,00 X 3) (a)

34,000 3 102,000

Add: Desired Inventory (30% of next Quarter Need) (48,000 X 3 X 30%) (b)

43,200

Less : Beg Inventory (45,000 X 3 X30%) ( C) Budgeted Direct material Purchase in Q-2 (a+b-c)

(40,500) 104700

JAM JCORPORATI ON Di r ectMat er i al sBudget

Rawmat er i al sneededt omeetpr oduc t i on Add:Des i r edendi ngr awmat er i al si nv ent or y Tot aluni t sofr awmat er i al sneeded

Less :begi nni ngr awmat er i al si nv ent or y Uni t sofr aw mat er i al st obepur chased

Quar t er3 102, 000 1020 0 112, 200 4320 0

* Cal cul at i onsf orr aw mat er i al sneededt omeetpr oduct i on:

Budget edpr oduc t i on( uni t s ) ( X)Mat er i al sr equi r ementperuni t

Rawmat er i al sneededt omeetpr oduc t i on

Q QuarQT TR3 t er1 R2 QTR4 3 000 45, 0 38, 0 4, 000 00 00 48, 3 3 3 3 1020 1350 114 00 00 000144000

* Cal cul at i onsf orEndi ngi nvent or y: Endi ngi nv ent or yf orQuar t er3=Rawmat er i al sneedf orQuar t er4*30% 144000*30% 43200 * Cal cul at i onsf orBegi nni ngi nvent or y: Quar t er2begi nni ngi nv ent or y=Endi ngi nv ent or yofquar t er1= Rawmat er i al sneedf orQuar t er2*30% 34,000 * 30% = 10200 114600

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 February cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: Manuf ac t ur i ngOv er headBudget

Budgeted direct labor-hours

1,600

Variable manufacturing overhead rate

× $3.40

Variable manufacturing overhead

$5440

Fixed manufacturing overhead

$28,320

Total manufacturing overhead

$33760

Less depreciation

$3680

Cash disbursement for manufacturing overhead

$30080

Schuepfer Incorporated bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 1,300 units are planned to be sold in March. The variable selling and administrative expense is $4.20 per unit. The budgeted fixed selling and administrative

expense is $19,240 per month, which includes depreciation of $3,380 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the March selling and administrative expense budget should be:

Ex pl anat i on-Cas hdi s bur sement sf orsel l i ngandadmi ni s t r at i v eex pens es={ ( 1300uni t s * $4. 20peruni t ) +$19240} $3380 =( $5460+$19240) $3380 Thec as hdi s bur s ement sf ors el l i ngandadmi ni s t r at i v eex pens esonMar c hsel l i ng&admi ni s t r at i v eex pens ebudgets houl dbe=$21320

Q9 Bries Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $18,000. Budgeted cash receipts total $183,000 and budgeted cash disbursements total $188,000. The desired ending cash balance is $30,000. To attain its desired ending cash balance for January, the company should borrow: Particulars

Amount

Budgeted beginning cash balance

18,000

Add: budgeted cash receipts

183,000

Less: Budgeted cash disbursements

188,000

Actual ending cash balance

13,000

The desired ending cash balance

30,000

Amount to be borrowed = (30,000 – 13,000)

17,000

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:       

Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January. Collections are expected to be 90% in the month of sale and 10% in the month following the sale. The cost of goods sold is 75% of sales. 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. Other monthly expenses to be paid in cash are $24,700. Monthly depreciation is $16,000. Ignore taxes.

Balance Sheet October 31 Assets Cash Accounts receivable Inventory Property, plant and equipment, net of $502,000 accumulated depreciation Total assets Liabilities and Stockholders’ Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders’ equity The net income for December would be?

$ 19,000 77,000 157,500 1,002,000 $ 1,255,500 $ 272,000 780,000 203,500 $ 1,255,500

Net income

Sales revenue - Expenses

Calculation of net income for December is shown below Sales revenue

$320,000

Less: Cost of goods sold

$240,000

Gross margin

(320000*75%)

$80,000

Less: Monthly expenses

$24,700

Less: Depreciation

$16,000

Net income

$39,300

Thus, net income for December month is $39,300

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: 1. 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. 2. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. 3. The ending finished goods inventory equals 30% of the following month's sales. 4. 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. 5. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. 6. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours. 7. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour. 8. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000. The budgeted sales for February is closest to: 110 x 10600 = 1166000 Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: ● Sales are budgeted at $420,000 for November, $400,000 for December, and $390,000 for January. ● Collections are expected to be 55% in the month of sale and 45% in the month following the sale. ● The cost of goods sold is 70% of sales. ● 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. ● Other monthly expenses to be paid in cash are $24,800. ● Monthly depreciation is $15,800.

● Ignore taxes. Balance Sheet October 31 Assets Cash Accounts receivable Merchandise inventory Property, plant and equipment, net of $572,800 accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity Expected cash collections in December are: =( 55% ofDec embers al e)+( 45% ofNov embers al es ) =( 400, 000x55%)+( 420, 000x45%) =220000+189000 =$409, 000Answer

$ 20,800 70,800 176,400 1,094,800 $ 1,362,800 $ 254,800 820,800 287,200 $ 1,362,800

Coles Corporation, Incorporated makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows: August 14,000 units September 14,500 units October 15,500 units November 12,600 units December 11,900 units The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. The total cost of Material K to be purchased in August is:

Purchase quantity = raw material needed for production + desired ending inventory-Beginning inventory = (14,500*3)+(15,500*3*20%)- 2500 Purchase quantity = 50300 Purchase cost = 50300*0.85 = $42755

Fuson Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $ 118 Budgeted unit sales (all on credit): October 9,600 November 10,100 December 13,700 January 11,300 Raw materials requirement per unit of output Raw materials cost Direct labor requirement per unit of output Direct labor wage rate Predetermined overhead rate (all variable) Credit sales are collected:

3 pounds $ 4.00 per pound 2.7 direct labor-hours $ 23.00 per direct labor-hour $ 12.00 per direct labor-hour

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 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month’s raw materials production needs. If the budgeted cost of raw materials purchases in October is $116,772 and in November is $129,120, then in November the total budgeted cash disbursements for raw materials purchases is closest to:

Pa ymentf orOc t oberpur c has es

81740

Pa ymentf orNov emberpur chas es Budget edcashdi sbur sement sf or pur chases

38736

=116, 772* 70 % =129120* 30 %

120476

Opt i onD$120, 476i scor r ect

Rokosz Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: 1. 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. 2. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. 3. The ending finished goods inventory equals 20% of the following month's sales. 4. 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. 5. 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: Pr oduct i onUni ti nNov ember=7100+( 11300* 20%) 7100* 20% =7940Uni t s Di r ec tl aborCos tf orNov ember=7940* 2. 5* 23=$456550

Arciba Incorporated bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,400 direct labor-hours will be required in January. The variable overhead rate is $9.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $130,980 per month, which includes depreciation of $10,360. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for January should be:

A Estimated Manufacturing Overheads$ 130,980 B Estimated Labor Hours

4700

C=A/B Overheads for fixed overheads D Variable overhead rate

$ 27.87 $9.50

E=D+C Predetermined overhead rate $37

Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit Budgeted unit sales (all on credit): January February March

$ 97

10,00 0 12,00 0 13,30

0 15,20 0 Raw materials requirement per unit of output Raw materials cost Direct labor requirement per unit of output

April

Direct labor wage rate Predetermined overhead rate (all variable) Variable selling and administrative expense Fixed selling and administrative expense

4

pounds

$ 1.00 per pound 2.5

direct labor-hours

per direct laborhour per direct labor$ 9.00 hour $ 23.00

$ 3.10 per unit sold $ per month 70,000

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 selling and administrative expense for February is closest to:

Budgeted unit sales

12,000

Variable selling and administrative expense per unit

$3.10

Total variable selling and administrative expense

$37,200

Fixed selling and administrative expenses

$70,000

Estimated selling and administrative expense

$107,200

Varughese Incorporated 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. To attain its desired ending cash balance for March, the company needs to borrow: Begi nni ngc as hbal anc e Add: c as hr ec ei pt s Less : cas hdi s bur s ement s Endi ngc ashbal anc e Des i r edendi ngc as hbal anc e Bor r owi ngs( 40, 00024, 000)

33, 000 182, 000 ( 191, 000) 24, 000 40, 000 $16, 000

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:     

Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January. Collections are expected to be 65% in the month of sale and 35% in the month following the sale. The cost of goods sold is 80% of sales. 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. Other monthly expenses to be paid in cash are $21,100.

 Monthly depreciation is $21,000.  Ignore taxes. Balance Sheet October 31 Assets Cash Acco...