Exam 9: Profit Planning

Belant Company budgeted 200,000 units of production for June,210,000 units for July and 300,000 units for August.Each unit requires 0.25 direct labor hours.How many direct labor hours are budgeted for August?

Abrams Bottling Company sells fruit-flavored colas.Estimated sales in cartons for May,June,and July are 1,000,3,000 and 5,000 respectively.The price is forecast at $5 per carton.Abrams requires that finished goods ending inventory be 20 percent of the next month's sales.Inventory was 500 units on May 1.Each carton requires 12 oz of fruit syrup and 130 oz of carbonated water.Materials ending inventory is 10 percent of the next month's production needs.May 1 inventory met that requirement.

Figure 9-6. Toscano Company makes all its sales on account.Accounts receivable payment experience is as follows: Toscano provided information on sales as follows: Refer to Figure 9-6.How much of June credit sales are expected to be collected in the month of July?

Communication and coordination are served by budgets.

Budgets are

The alignment of managerial and organizational goals is referred to as goal

Figure 9-9. Yummy Jams Company produces a line of jams.Yummy's estimated production of jars of jam for the fourth quarter of the year is as follows: Each jar requires half a pound of berries.Yummy prefers to buy the freshest berries,so its policy is to have just 3 percent of the following month's production needs in ending inventory.On October 1,the company had 1,125 pounds of berries in inventory.Yummy's pays $0.60 per pound of berries.It buys all berries on account and typically pays 40 percent of a month's purchases in that month,and the remaining 60 percent the following month. Refer to Figure 9-9.How much cash is paid in November for berry purchases (rounded to the nearest dollar)?

Figure 9-10. Connor Company produces speaker systems for cars.Estimated sales (in units)in January are 40,000; in February 37,000; and in March 34,000.Each unit is priced at $60.Connor wants to have 35 percent of the following month's sales in ending inventory.That requirement was met on January 1. Each speaker system requires 3 boxes and 15 yards of wire.Boxes cost $4 each and wire is $0.60 per yard.Connor wants to have 20 percent of the following month's production needs in ending raw materials inventory.On January 1,Connor had 24,000 boxes and 100,000 yards of wire in inventory. Refer to Figure 9-10.What is Connor's expected sales revenue for February?

Which of the following is true of the master budget?

Figure 9-7. Lambert Company purchased $140,000 of goods in September and expects to purchase $130,000 of goods in October.Lambert typically pays for 20 percent of purchases in the month of purchase and 80 percent in the following month. Every month,Lambert must make the following payments: In mid-October,Lambert expects to buy a new computer for $4,500 using the company credit card.Typically,the credit card bill is paid in full in the following month.September credit card purchases totaled $6,000. Refer to Figure 9-7.What is Lambert's expected cash disbursement in October for purchases of goods?

Describe some problems with participative budgeting.

Figure 9-3. Zion Company manufactures sneakers.Production of their new sneaker for the coming three months is budgeted as follows: Each sneaker requires 1.5 hours of direct labor time.Direct labor wages average $13 per hour.Monthly overhead averages $8 per direct labor hour plus fixed overhead of $4,300. Refer to Figure 9-3.What is the total overhead budgeted for the month of September?

The budget that describes how many units must be produced in order to meet sales needs and ending inventory objectives is the

Which of the following is a use of budgets for control?

Figure 9-8. Cohlmia Company makes all its sales on account.Cohlmia's accounts receivable payment experience is as follows: Cohlmia provided information on sales as follows: Refer to Figure 9-8.What are the expected cash receipts in December?

Rapid-Lube provides oil changes and lubes.The estimated number of oil changes for April and May are 3,600 and 4,000.Each oil change takes 12 minutes of direct labor.The wage rate is $10 per hour.Overhead is $3,700 per month and $2 per oil change.

A company's planned borrowings and repayments appear on the

Gilbert Company purchased $40,000 of goods in July and expects to purchase $60,000 of goods in August.Gilbert typically pays for 25 percent of purchases in the month of purchase and 75 percent in the following month.What are Gilbert Company's total expected cash disbursements for purchases in the month of August?

Ressen Company finds that typically 30 percent of a month's sales are for cash.Payments on accounts receivable are 60 percent in the month of sale and 38 percent in the month following sale.Budgeted sales for June are $100,000,for July $140,000,and for August $120,000.What are the total cash receipts budgeted for July?

Foster Company makes power tools.The sales budget for drills for the first four months of the year is: Foster has taken a just-in-time approach to production and wants only 5 percent of the next month's sales needs in ending inventory.January 1 inventory of drills was zero.Each drill takes 15 minutes of direct labor at $18 per hour.The factory overhead formula is $27,000 + $1.20 per direct labor hour.