Exam 8: Master Budgeting

-A sales budget is given below for one of the products manufactured by the Key Co.: The inventory of finished goods at the end of each month should equal 20% of the next month's sales.However,on December 31 the finished goods inventory totaled only 4,000 units. Each unit of product requires three specialized electrical switches.Since the production of these specialized switches by Key's suppliers is sometimes irregular,the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs.This requirement had been met on January 1 of the current year. Required: a.Prepare a budget showing the required production each month for January,February,March,and April. b.Prepare a budget showing the quantity of switches to be purchased each month for January,February,and March. March.

Cardle Corporation makes one product.Budgeted unit sales are shown below: The ending finished goods inventory should equal 30% of the following month's sales.The budgeted required production for February is closest to:

Coles Corporation, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows: The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. -The total needs (i.e.,production requirements plus desired ending inventory)of Material K for November are:

Bries Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $18,000. Budgeted cash receipts total $183,000 and budgeted cash disbursements total $188,000. The desired ending cash balance is $30,000. -The excess (deficiency)of cash available over disbursements for January is:

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: o Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January. o Collections are expected to be 90% in the month of sale and 10% in the month following the sale. o The cost of goods sold is 75% of sales. o 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. o Other monthly expenses to be paid in cash are $24,700. o Monthly depreciation is $16,000. o Ignore taxes. -Retained earnings at the end of 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 estimated finished goods inventory balance at the end of November is closest to:

-Brockney Inc.bases its manufacturing overhead budget on budgeted direct labor-hours.The variable overhead rate is $8.60 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $107,970 per month,which includes depreciation of $9,760.All other fixed manufacturing overhead costs represent current cash flows.The July direct labor budget indicates that 6,100 direct labor-hours will be required in that month. Required: a.Determine the cash disbursements for manufacturing overhead for July. b.Determine the predetermined overhead rate for July.

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

The manufacturing overhead budget at Franklyn Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 4,400 direct labor-hours will be required in January.The variable overhead rate is $1.30 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $60,280 per month,which includes depreciation of $17,160.All other fixed manufacturing overhead costs represent current cash flows.The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

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 total cost of Jurislon to be purchased in August is:

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. -If the budgeted direct labor time for December is 8,000 hours,then average budgeted manufacturing overhead per direct labor-hour 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. -If the budgeted cash disbursements for manufacturing overhead for December total $105,000,then the budgeted direct labor-hours for December must be:

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 estimated direct labor cost for May is closest to:

-Whitmer Corporation is working on its direct labor budget for the next two months.Each unit of output requires 0.05 direct labor-hours.The direct labor rate is $11.80 per direct labor-hour.The production budget calls for producing 7,100 units in February and 6,800 units in March. Required: Construct the direct labor budget for the next two months,assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month.

When preparing a direct materials budget,the required purchases of raw materials in units equals:

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 expected cash collections for August is closest to:

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

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:

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

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?