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Exam 8: Master Budgeting

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Question 111

Multiple Choice

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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 direct labor cost for February is closest to:

A) $284,970
B) $712,425
C) $499,000
D) $30,975

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

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Question 112

Multiple Choice

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All of Gaylord Corporation's sales are on account. Thirty-five percent of the sales on account are collected in the month of sale, 45% in the month following sale, and the remainder are collected in the second month following sale. The following are budgeted sales data for the company: What is the amount of cash that should be collected in March?

A) $24,000
B) $37,000
C) $41,000
D) $51,000

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

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Question 113

Multiple Choice

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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 accounts receivable balance at the end of February 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. If the budgeted cost of raw materials purchases in February is $222,180, then the budgeted accounts payable balance at the end of February is closest to:

In the manufacturing overhead budget, the non-cash charges (such as depreciation) are deducted from the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead.

Sevenbergen 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 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production needs. If 41,920 pounds of raw materials are required for production in September, then the budgeted raw material purchases for August is closest to:

Harden, Inc., has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on May 31 contained 1,050 units. The company needs to prepare a production budget for the next five months. The beginning inventory for September should be:

Wasilko Corporation produces and sells one product a. The budgeted selling price per unit is $114. Budgeted unit sales for February is 9,900 units. B. Each unit of finished goods requires 6 pounds of raw materials. The raw materials cost $4.00 per pound. C. The direct labor wage rate is $24.00 per hour. Each unit of finished goods requires 2.4 direct labor-hours. D. Manufacturing overhead is entirely variable and is $9.00 per direct labor-hour. E. The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $70,000. The estimated net operating income (loss) for 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 budgeted cash disbursements for selling and administrative expenses for April total $195,500, then how many Debs does the company plan to sell in April?

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. The net income for December would be:

The production budget is typically prepared before the direct materials budget.

Darke Corporation makes one product and has provided the following information: a. Budgeted unit sales for October, November, and December are 7,600, 9,000, and 10,100 units respectively. B. The ending finished goods inventory equals 40% of the following month's sales. C. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $1.00 per pound. D. The direct labor wage rate is $19.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours. E. Manufacturing overhead is entirely variable and is $11.00 per direct labor-hour. The estimated finished goods inventory balance at the end of November is closest to:

Roberts Enterprises has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on May 31 contained 450 units. The company needs to prepare a production budget for the second quarter of the year. The total number of units to be produced in July is:

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:

The cash budget is the starting point in preparing the master budget.

The master budget consists of a number of separate but interdependent budgets.

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 cost of goods sold for February is closest to:

Sevenbergen 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 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production needs. The budgeted sales for August is closest to:

Stefanovich Corporation makes one product. The company has provided the following information concerning its raw materials needs: The ending raw materials inventory should equal 20% of the following month's raw materials production needs. Each unit of finished goods requires 2 pounds of raw materials. The raw materials cost $3.00 per pound. The company will need 26,440 pounds of raw material to satisfy production needs in March. The raw materials inventory balance at the end of February should be closest to:

Zolezzi Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $42,000. Budgeted cash receipts total $178,000 and budgeted cash disbursements total $175,000. The desired ending cash balance is $50,000. The company can borrow up to $160,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for March in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.