Exam 8: Master Budgeting

Petrini 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 $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.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.The ending finished goods inventory equals 30% 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 5 pounds of raw materials. The raw materials cost $4.00 per pound.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.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:

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?

Michard 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 $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.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.The ending finished goods inventory equals 20% of the following month's sales.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.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours.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:

Avril Incorporated bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $4.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $54,080 per month, which includes depreciation of $3,840. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,200 direct labor-hours will be required in October.The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for October should be:

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:

The budgeted income statement is typically prepared before the budgeted balance sheet.

Marty's Merchandise has budgeted sales as follows for the second quarter of the year: Cost of goods sold is equal to 70% of sales. The company wants to maintain a monthly ending inventory equal to 120% of the cost of goods sold for the following month. The inventory on March 31 was below this target and was only $22,000. The company is now preparing a Merchandise Purchases Budget for April, May, and June.The desired beginning inventory for June is:

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 12,600 kilograms of Jurislon were on hand. The cost of Jurislon is $25 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months.The total cost of Jurislon to be purchased in August is:

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 sale70% in the following monthRaw materials purchases are paid:30% in the month of purchase70% in the following monthThe 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:

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 sale70% in the following monthRaw materials purchases are paid:30% in the month of purchase70% in the following monthThe 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:

Bux Corporation produces and sells one product. In November it expects to sell 10,600 units of this product. The company's variable selling and administrative expense is $3.70 per unit sold and its fixed selling and administrative expense is $50,000 per month. The estimated selling and administrative expense for November is closest to:

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

Craney 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 $87. Budgeted unit sales for January, February, March, and April are 7,100, 8,300, 13,700, and 13,600 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 40% 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 5 pounds of raw materials. The raw materials cost $1.00 per pound.> Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.> The direct labor wage rate is $19.00 per hour. Each unit of finished goods requires 2.7 direct labor-hours.Required:a. What are the budgeted sales for February?b. What are the expected cash collections for February?c. According to the production budget, how many units should be produced in February?d. If 68,300 pounds of raw materials are needed for production in March, how many pounds of raw materials should be purchased in February?e. What is the estimated cost of raw materials purchases for February?f. If the cost of raw material purchases in January is $43,660, then in February what are the estimated cash disbursements for raw materials purchases?g. 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?

The LaGrange Corporation had the following budgeted sales for the first half of the current year: The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:Collections on sales:55% in month of sale40% in month following sale5% in second month following saleThe accounts receivable balance on January 1 of the current year was $82,000, of which $63,000 represents uncollected December sales and $19,000 represents uncollected November sales.What is the budgeted accounts receivable balance on May 31?

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. Retained earnings at the end of December would be:

Brinso Supply Corporation manufactures and sells cotton gauze. Expected sales of gauze (in boxes) for upcoming months are as follows: Management likes to maintain a finished goods inventory equal to 10% of the next month's estimated sales.Required: Prepare the company's production budget for the third quarter of this year (the months of July, August and September). Include a column for each month and a total column for the entire quarter.

Tracie Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.2 yards of cloth. Selected data from Tracie's master budget for next quarter are shown below: Each unit requires 0.7 hours of direct labor, and the average hourly cost of Tracie's direct labor is $20. What is the cost of Tracie Corporation's direct labor in September?

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 sale60% in the following monthRaw materials purchases are paid:30% in the month of purchase70% in the following monthThe 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:

Harden, Incorporated, 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 1,230 units. The company needs to prepare a production budget for the next five months.The beginning inventory for September should be:

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: