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Exam 8: Master Budgeting

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Question 1

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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 selling and administrative expense for May is closest to:

A) $115,700
B) $80,000
C) $77,130
D) $35,700

E) None of the above
F) B) and D)

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Question 2

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Fuson 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 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs. -The budgeted accounts receivable balance at the end of November is closest to:

A) $795,000
B) $357,540
C) $1,191,800
D) $834,260

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

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Question 3

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The manufacturing overhead budget at Foshay Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 5,800 direct labor-hours will be required in May.The variable overhead rate is $9.10 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $104,400 per month,which includes depreciation of $8,120.All other fixed manufacturing overhead costs represent current cash flows.The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for May should be:

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

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:

Sparks Corporation has a cash balance of $18,000 on April 1.The company must maintain a minimum cash balance of $10,000.During April,expected cash receipts are $98,000.Cash disbursements during the month are expected to total $112,000.Ignoring interest payments,during April the company will need to borrow:

Corvi Corporation produces and sells one product.The budgeted selling price per unit is $126.Budgeted unit sales are shown below: All sales are on credit with 40% collected in the month of the sale and 60% in the following month.The expected cash collections for August is closest to:

Fuson 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 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 40,380 pounds of raw materials are required for production in December,then the budgeted raw material purchases for November is closest to:

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 -The number of units the company would have to manufacture during the year 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 estimated direct labor cost 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 December is 4,000 hours,then the predetermined manufacturing overhead per direct labor-hour for December would be:

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 company has budgeted to produce 28,000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 800 and 600 units,respectively.Budgeted direct labor costs for June would be:

The disbursements section of a cash budget consists of all cash payments for the period except cash payments for dividends.

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 budgeted sales for February is closest to:

The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory.

-Sthilaire Corporation is working on its direct labor budget for the next two months.Each unit of output requires 0.34 direct labor-hours.The direct labor rate is $11.10 per direct labor-hour.The production budget calls for producing 8,000 units in April and 8,300 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 2,840 hours in total each month even if there is not enough work to keep them busy. Required: Construct the direct labor budget for the next two months.

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

Hennagir 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: 40% in the month of the sale 60% 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 40% of the following month's raw materials production needs. Required: a.What are the budgeted sales for February? b.What are the expected cash collections for February? c.What is the budgeted accounts receivable balance at the end of February? d.According to the production budget,how many units should be produced in February? e.If 32,400 pounds of raw materials are needed for production in March,how many pounds of raw materials should be purchased in February? f.What is the estimated cost of raw materials purchases for February? g.If the cost of raw material purchases in January is $145,680,then in February what are the total estimated cash disbursements for raw materials purchases? h.What is the estimated accounts payable balance at the end of February? i.What is the estimated raw materials inventory balance at the end of February? j.What is the total estimated direct labor cost for February assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?

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 14,000 Yutes in November,then the total budgeted selling and administrative expenses for November would be:

Hesterman 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: 40% in the month of the sale 60% in the following month The ending finished goods inventory should equal 40% of the following month's sales. The ending raw materials inventory should equal 20% of the following month's raw materials production needs. -If 39,720 pounds of raw materials are required for production in June,then the budgeted cost of raw material purchases for May is closest to: