Exam 8: Profit Planning

All the following are considered to be benefits of participative budgeting, except for:

The following information is budgeted for McCracken Plumbing Supply Corporation for next quarter: All sales at McCracken are on credit.Forty percent are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectible.Merchandise purchases are paid in full the month following the month of purchase.The selling and administrative expenses above include $8, 000 of depreciation on display fixtures and warehouse equipment.All other selling and administrative expenses are paid as incurred.McCracken wants to maintain a cash balance of $15, 000.Any amount below this can be borrowed from a local bank as needed in increments of $1, 000.All borrowings are made at month end. Required: Prepare McCracken's cash budget for May.McCracken expects to have $24, 000 of cash on hand at the beginning of May.

Poriss Corporation makes and sells a single product called a Yute.The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the 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 total budgeted selling and administrative expense for October is $459, 200, then how many Yutes does the company plan to sell in October?

Adi Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Adi, 30% of raw materials purchases are normally paid for in the month of purchase.The remaining 70% is paid for in the month following the purchase. How much cash should Adi expect to pay out for raw material purchases during November?

The following information relates to Marter Manufacturing Corporation for next quarter: How many units should the company plan on producing for the month of February?

Davey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year.The budgeted variable manufacturing overhead rate is $3.00 per direct labor-hour;the budgeted fixed manufacturing overhead is $66, 000 per month, of which $10, 000 is factory depreciation. If the budgeted direct labor time for November is 9, 000 hours, then the total budgeted cash disbursements for manufacturing overhead for November must be:

Dilbert Farm Supply is located in a small town in the rural west.Data regarding the store's operations follow: o Sales are budgeted at $260, 000 for November, $230, 000 for December, and $210, 000 for January. O Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and 1% uncollectible. O The cost of goods sold is 65% of sales. O The company desires to have an ending merchandise inventory at the end of each month 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 $20, 300. O Monthly depreciation is $20, 000. O Ignore taxes. Accounts payable at the end of December would be:

All of Porter Corporation's sales are on account.Sixty percent of the credit sales are collected in the month of sale, 25% in the month following sale, and 10% in the second month following sale.The remainder are uncollectible.The following are budgeted sales data for the company: Cash receipts in April are expected to be:

Cowles 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 30% of the following month's production needs.On July 31, this requirement was not met because only 3, 500 yards of Material K were on hand.The cost of Material K is $0.80 per yard.The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. The total cost of Material K to be purchased in August is:

The Prattle 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 16, 000 Debs in February, then the total budgeted fixed selling and administrative expenses for February is:

Two yards of a fabric are required for each blouse produced by Northern Shirt Corporation.The cost of the fabric is $4 per yard.Budgeted production of blouses is given below for the fourth quarter and the first month of the following quarter. To prevent against stock outs of the fabric, the company maintains an ending inventory each month equal to 10% of the next month's production needs.The beginning inventory of the fabric in October will be 3, 600 yards. Required: Prepare a direct materials budget for the fabric, by month and in total for the fourth quarter.Be sure to include both the quantity to be purchased and its cost for each month.

Axsom Inc.bases its manufacturing overhead budget on budgeted direct labor-hours.The direct labor budget indicates that 1, 300 direct labor-hours will be required in March.The variable overhead rate is $8.90 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $20, 020 per month, which includes depreciation of $2, 600.All other fixed manufacturing overhead costs represent current cash flows.The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for March should be:

A self-imposed budget is a budget that is prepared with the full cooperation and participation of managers at all levels.

The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information: • Sales at $450, 000, all for cash. • Merchandise inventory on October 31 was $200, 000. • The cash balance November 1 was $18, 000. • Selling and administrative expenses are budgeted at $60, 000 for November and are paid for in cash. • Budgeted depreciation for November is $25, 000. • The planned merchandise inventory on November 30 is $230, 000. • The cost of goods sold is 70% of the selling price. • All purchases are paid for in cash. • There is no interest expense or income tax expense. The budgeted cash receipts for November are:

Mutskic Corporation produces and sells Product BetaC.To guard against stockouts, the company requires that 30% of the next month's sales be on hand at the end of each month.Budgeted sales of Product BetaC over the next four months are: Budgeted production for August would be:

Seventy percent of Parlee Corporation's sales are collected in the month of sale, 25% in the month following sale, and 5% in the second month following sale.The following are budgeted sales data for the company: Total budgeted cash collections in April would be:

The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information: • Sales at $450, 000, all for cash. • Merchandise inventory on October 31 was $200, 000. • The cash balance November 1 was $18, 000. • Selling and administrative expenses are budgeted at $60, 000 for November and are paid for in cash. • Budgeted depreciation for November is $25, 000. • The planned merchandise inventory on November 30 is $230, 000. • The cost of goods sold is 70% of the selling price. • All purchases are paid for in cash. • There is no interest expense or income tax expense. The budgeted net income for November is:

The cash budget is usually prepared after the budgeted income statement.

The following are budgeted data for the Bingham Corporation, a merchandising company: Assume that all purchases are paid for in the month following the month of purchase.The cash disbursements for purchases that would appear in the April cash budget would be:

The manufacturing overhead budget at Pendley Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 8, 900 direct labor-hours will be required in August.The variable overhead rate is $5.50 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $133, 500 per month, which includes depreciation of $30, 260.All other fixed manufacturing overhead costs represent current cash flows.The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for August should be: