Exam 8: Master Budgeting

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:

Varughese Inc. is working on its cash budget for March. The budgeted beginning cash balance is $33,000. Budgeted cash receipts total $182,000 and budgeted cash disbursements total $191,000. The desired ending cash balance is $40,000. -The budgeted cash disbursements for December are:

Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: o Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for January. o Collections are expected to be 80% in the month of sale and 20% in the month following the sale. o The cost of goods sold is 75% of sales. o The company would like to maintain ending merchandise inventories equal to 60% of the next 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 $24,000. o Monthly depreciation is $15,000. o Ignore taxes. -The difference between cash receipts and cash disbursements for December would be:

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 required production for August is closest to:

Masde Corporation produces and sells Product CharlieD.To guard against stockouts,the company requires that 25% of the next month's sales be on hand at the end of each month.Budgeted sales of Product CharlieD over the next four months are: Budgeted production for August would be:

One disadvantage of budgeting is that budgeting makes it more difficult to coordinate the activities of the entire organization.

Rokosz 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 $104. Budgeted unit sales for October, November, December, and January are 6,900, 7,100, 11,300, and 15,300 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 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 5 pounds of raw materials. The raw materials cost $2.00 per pound. e. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. -The expected cash collections for November is closest to:

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

Jannusch Corporation makes one product.Budgeted unit sales for July,August,September,and October are 10,000,11,600,13,300,and 12,700 units,respectively.The ending finished goods inventory should equal 20% of the following month's sales.The budgeted required production for August is closest to:

Mumbower 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: 40% in the month of purchase 60% 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 40% of the following month's raw materials production needs. Required: a.What are the budgeted sales for November? b.What are the expected cash collections for November? c.What is the budgeted accounts receivable balance at the end of November? d.According to the production budget,how many units should be produced in November? e.If 40,000 pounds of raw materials are needed for production in December,how many pounds of raw materials should be purchased in November? f.What is the estimated cost of raw materials purchases for November? g.If the cost of raw material purchases in October is $201,040,then in November what are the total estimated cash disbursements for raw materials purchases? h.What is the estimated accounts payable balance at the end of November? i.What is the estimated raw materials inventory balance at the end of November? j.What is the total estimated direct labor cost for November 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 $7.00 per direct labor-hour.What is the estimated unit product cost? l.What is the estimated finished goods inventory balance at the end of November? m.What is the estimated cost of goods sold and gross margin for November? n.What is the estimated total selling and administrative expense for November? o.What is the estimated net operating income for November?

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 budgeted sales for February 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 410 units. The company needs to prepare a production budget for the second quarter of the year. -The desired ending inventory for August is:

One of the weaknesses of budgets is that they are of little value in uncovering potential bottlenecks.

Um Corporation has provided the following information concerning its raw materials purchases.The budgeted cost of raw materials purchases in November is $286,032.The company pays for 40% of its raw materials purchases in the month of purchase and 60% in the following month.The budgeted accounts payable balance at the end of November 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.

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 the budgeted cost of raw materials purchases in April is $207,650 and in May is $282,625,then in May the total budgeted cash disbursements for raw materials purchases is closest to:

Litzinger Corporation makes one product.The ending raw materials inventory should equal 20% of the following month's raw materials production needs.Each unit of finished goods requires 4 pounds of raw materials.The raw materials cost $1.00 per pound.The company estimates that it will need 53,720 pounds of raw material to satisfy production needs in June.The raw materials inventory balance at the end of May should be closest to:

Dustman Manufacturing Corporation's most recent production budget indicates the following required production: Each unit of finished product requires 3 feet of raw materials.The company maintains raw materials inventory equal to 2,000 feet plus 10% of the next month's expected production needs.The raw material used in Dustman Manufacturing Corporation's product costs $4.50 per foot.What is the value of raw material that Dustman Manufacturing should plan on purchasing for the month of February?

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 unit product cost is closest to:

Rokosz 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 $104. Budgeted unit sales for October, November, December, and January are 6,900, 7,100, 11,300, and 15,300 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 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 5 pounds of raw materials. The raw materials cost $2.00 per pound. e. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. -The estimated direct labor cost for November is closest to: