Exam 9: Budgeting

James Enterprises has budgeted unit sales for the next four months as follows: November 4,800 units December 5,800 units January 6,400 units February 5,200 units The ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on October 31 was below this level and contained only 600 units. -What are the total units to be produced in October?

KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given. May (actual) June (budget) July (budget) Sales \ 42,000 \ 40,000 \ 45,000 Cost of sales Gross margin 21,000 20,000 22,500 Operating expenses 20,000 20,000 20,000 Operating income \ 1,000 \ 0 \ 2,500 Sales are collected 80% in the month of the sale and the balance in the month following the sale. (There are no bad debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month following the purchase. The operating expenses are paid in the month of the sale. -What should be the amount of cash collected during the month of June?

Windsor Limited makes and sells a single product. The company employs a flexible budgeting system that covers a relevant range from 20,000 units to 25,000 units and a just in time inventory system. Budget data for April, based on 22,000 units, are as follows: Prime costs \ 30 per unit Manufacturing overhead \ 132,000 plus \ 3 per unit Selling and administrative expenses \ 30,000 plus \ 2 per unit Selling price \ 60 per unit -Suppose the company produces and sells 25,000 units instead of the original 22,000 units at an average selling price of $55.What is the company's flexible budget operating income (loss)for April,given the actual sales volume of 25,000 units?

nformation on the actual sales and inventory purchases of the Law Company for the first quarter follow: Inventory Sales Purchases January \ 120,000 \ 60,000 February 100,000 78,000 March 130,000 90,000 Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month. The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000. -What would be the expected cash collections from customers during April?

The LaGrange Company had the following budgeted sales for the first half of the current year: Cash Sales Credit Sales January \ 70,000 \ 340,000 February 50,000 190,000 March 40,000 135,000 April 35,000 120,000 May 45,000 160,000 June 40,000 140,000 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: 60% in month of sale 30% in month following sale 10% in second month following sale The accounts receivable balance on January 1 of the current year was $70,000, of which $50,000 represents uncollected December sales and $20,000 represents uncollected November sales. -What is the budgeted accounts receivable balance on June 1 of the current year?

The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. -If all cash expenses are paid for in the month incurred what is the budgeted cash disbursements for manufacturing overhead if 5,500 units are produced?

Mandalay Hotel bases its budgets on guest-days. The hotel's static budget for August appears below: Budgeted number of guest-days 4,300 Budgeted variable overhead costs: Supplies (@0 per guest-day) \ 41,280 Laundry ( @9.40 per guest-day) Total variable overhead cost 81,700 Budgeted fixed overhead costs: Wages and salaries 57,190 Occupancy costs Total fixed overhead cost 109,220 Total budgeted overhead cost \ 190,920 -What is the expected total fixed overhead cost at an activity level of 5,500 guest-days per month?

The Tobler Company has budgeted production for next year as follows: Quarter First Second Third Fourth Production in 10,000 12,000 16,000 14,000 Units Four kilograms of raw materials are required for each unit produced.At the start of the year,raw materials on hand total 4,000 kilograms.The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs.What would be the budgeted purchases of raw materials in the third quarter?

The LFM Company makes and sells a single product: Product T. Each unit of Product T requires 1.3 hours of labour at a labour rate of $9.10 per hour. LFM Company needs to prepare a Direct Labour Budget for the second quarter of next year. -What would be the budgeted direct labour cost per unit of Product T?

On March 31,Streuling Enterprises,a merchandising firm,had an inventory of 38,000 units,and it had accounts receivable totaling $85,000.Sales,in units,have been budgeted as follows for the next four months: April 60,000 May 75,000 June 90,000 Tuly 81,000 Streuling's board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month's budgeted sales. The selling price is $2 per unit.One-third of sales are paid for by customers in the month of the sale; the balance is collected in the following month. Required: a)Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April,May,and June. b)Prepare a schedule of expected cash collections for each of the months April,May,and June.

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars. Carney Corporation Cash Budget -What is the cash balance at the beginning of the second quarter (item e),in thousands of dollars?

The Stacy Company makes and sells a single product: Product R.Budgeted sales for April are $300,000.Gross margin is budgeted at 30% of sales dollars.If the net income for April is budgeted at $40,000,what are the budgeted selling and administrative expenses?

Roberts Enterprises has budgeted sales in units for the next five months as follows: June 4,500 units July 7,100 units August 5,300 units September 6,700 units October 3,700 units 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. -What is the desired ending inventory for August?

Noel Enterprises has budgeted sales in units for the next five months as follows: January 6,800 units February 5,400 units March 7,200 units April 4,600 units May 3,800 units 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 December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year. -What is the total number of units to be produced in February?

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below: Budgeted number of patient-visits 8,300 Budgeted variable overhead costs: Supplies (@ \5 .00 per patient-visit) \ 41,500 Laundry (@ \7 .30 per patient-visit) Total variable overhead cost 102,090 Budgeted fixed overhead costs: Wages and salaries 60,590 Occupancy costs Total fixed overhead cost 133,630 Total budgeted overhead cost \ 235,720 -What should be the total fixed overhead cost at an activity level of 9,600 patient-visits per month?

The following is a summarized master budget that Winnipeg Company prepared for January: Sales 9,000 units Sales revenue \ 450,000 Less variable costs: Manufacturing \ 270,000 Selling and administrative Contribution \ 162,000 Less fixed costs: Manufacturing 72,000 Selling and administrative Operating income \ 63,000 $\text { Actual results for January were as follows: }$ Units produced and sold 8,500 units Selling price per unit \ 55.00 Variable costs per unit: Manufacturing \ 32.00 Selling and administrative \ 1.50 Total fixed costs \ 99,000 -What total sales volume variance did Winnipeg Company report for January?

The Shoe Company, a merchandising firm, has budgeted its activity for April according to the following information: I. Sales at $650,000, all for cash. II. Merchandise inventory on March 31st was $300,000. III. Budgeted depreciation for April is $35,000. IV. The cash balance at April 1 was $25,000. V. Selling and administrative expenses are budgeted at $60,000 for April and are paid in cash. VI. The planned merchandise inventory on April 30 is $270,000. VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash. -What are the budgeted cash disbursements for April?

Modesto Company produces and sells Product AlphaB.To guard against stockouts,the company requires that 20% of the next month's sales be on hand at the end of each month.Budgeted sales of Product AlphaB over the next four months are: June July August September Budgeted Sales in Units 30,000 40,000 60,000 50,000 What would be the budgeted production for August?

Which of the following best describes a method of budgeting in which the cost of each program must be justified every year?

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars. Carney Corporation Cash Budget -What is the cash disbursed for purchases during the second quarter (item c),in thousands of dollars?