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Exam 8: Master Budgeting

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Question 51

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Pabon Corporation makes one product. Budgeted unit sales for August and September are 11,100 and 12,600 units, respectively. The ending finished goods inventory equals 40% of the following month's sales. The direct labor wage rate is $19.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. The estimated direct labor cost for August is closest to:

A) $389,000
B) $555,750
C) $29,250
D) $222,300

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

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Question 52

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

A) $44,388
B) $117,957
C) $101,517
D) $145,905

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

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Question 53

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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?

Raimondo Corporation makes one product and has provided the following information: a. The budgeted selling price per unit is $89. Budgeted unit sales for August is 8,300 units. B. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound. C. The direct labor wage rate is $21.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours. D. Manufacturing overhead is entirely variable and is $7.00 per direct labor-hour. The estimated cost of goods sold for August 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:

Botz 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 $94. Budgeted unit sales for April, May, June, and July are 8,200, 10,600, 10,100, and 15,200 units, respectively. All sales are on credit. > Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. > The ending finished goods inventory equals 30% of the following month's sales. > The ending raw materials inventory equals 40% of the following month's raw materials production needs. Each unit of finished goods requires 2 pounds of raw materials. The raw materials cost $1.00 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 $23.00 per hour. Each unit of finished goods requires 2.4 direct labor-hours. 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 23,260 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 $19,064, 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?

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

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:

The following information relates to Mapfes Manufacturing Corporation for next quarter: How many units should the company plan on producing for the month of February?

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:

The following information was taken from the production budget of Piwte Corporation for next quarter: How many units is the company expecting to sell in the month of February?

The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable manufacturing overhead is $5.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $75,000 per month, of which $15,000 is factory depreciation. If the budgeted direct labor time for December is 8,000 hours, then average budgeted manufacturing overhead per direct labor-hour is closest to:

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 selling and administrative expense for February is closest to:

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. In Acti's budgeted balance sheet at December 31, at what amount will accounts payable for raw materials be shown?

Luchini 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 $111. Budgeted unit sales for April, May, June, and July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit. B. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. C. The ending finished goods inventory equals 10% 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 $5.00 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 $18.00 per hour. Each unit of finished goods requires 2.9 direct labor-hours. G.Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing overhead is zero. If 66,850 pounds of raw materials are required for production in June, then the budgeted raw material purchases for May is closest to:

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?

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:

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. If 54,480 pounds of raw materials are required for production in June, then the budgeted cost of raw material purchases for May is closest to:

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. The expected cash collections for May is closest to:

Sioux Corporation is estimating the following sales for the first four months of next year: Sales are normally collected 60% in the month of sale and 40% in the month following the sale. Based on this information, how much cash should Sioux expect to collect during the month of April?