Exam 8: Profit Planning

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. In Adi's budgeted balance sheet at December 31, at what amount will accounts payable for raw materials be shown?

The sales budget is usually prepared before the production budget.

Paradise Corporation budgets on an annual basis for its fiscal year.The following beginning and ending inventory levels (in units)are planned for next year. * Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 480, 000 units during next year, the number of units it would have to manufacture during the year would be:

The manufacturing overhead budget is typically prepared before the production budget.

The WRT Corporation makes collections on sales according to the following schedule: The following sales have been budgeted: Budgeted cash collections in June would be:

Starg Corporation, a retailer, plans to sell 25, 000 units of Product X during the month of August.If the company has 9, 000 units on hand at the start of the month, and plans to have 7, 000 units on hand at the end of the month, how many units of Product X must be purchased from the supplier during the month?

Morrish Inc.bases its manufacturing overhead budget on budgeted direct labor-hours.The direct labor budget indicates that 7, 100 direct labor-hours will be required in January.The variable overhead rate is $1.80 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $102, 950 per month, which includes depreciation of $19, 880.All other fixed manufacturing overhead costs represent current cash flows.The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

The manufacturing overhead budget of Paparella Corporation is based on budgeted direct labor-hours.The November direct labor budget indicates that 6, 000 direct labor-hours will be required in that month.The variable overhead rate is $2.00 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $79, 200 per month, which includes depreciation of $21, 000.All other fixed manufacturing overhead costs represent current cash flows. Required: a.Determine the cash disbursements for manufacturing overhead for November.Show your work! b.Determine the predetermined overhead rate for November.Show your work!

On a cash budget, the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment.

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 December is 4, 000 hours, then the predetermined manufacturing overhead per direct labor-hour for December would be:

Rogers Corporation is preparing its cash budget for July.The budgeted beginning cash balance is $25, 000.Budgeted cash receipts total $141, 000 and budgeted cash disbursements total $139, 000.The desired ending cash balance is $30, 000. The excess (deficiency)of cash available over disbursements for July is:

Vandel Inc.bases its selling and administrative expense budget on budgeted unit sales.The sales budget shows 6, 600 units are planned to be sold in April.The variable selling and administrative expense is $9.70 per unit.The budgeted fixed selling and administrative expense is $127, 380 per month, which includes depreciation of $8, 580 per month.The remainder of the fixed selling and administrative expense represents current cash flows.The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be:

The following information was taken from the production budget of Paeke Corporation for next quarter: How many units is the company expecting to sell in the month of February?

Trumbull Corporation budgeted sales on account of $120, 000 for July, $211, 000 for August, and $198, 000 for September.Experience indicates that none of the sales on account will be collected in the month of the sale, 60% will be collected the month after the sale, 36% in the second month, and 4% will be uncollectible.The cash receipts from accounts receivable that should be budgeted for September would be:

Richards Corporation has the following budgeted sales for the first half of next 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: The accounts receivable balance on January 1 is $70, 000.Of this amount, $60, 000 represents uncollected December sales and $10, 000 represents uncollected November sales. The total cash collected during January would be:

The manufacturing overhead budget at Cardera Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 2, 300 direct labor-hours will be required in January.The variable overhead rate is $1.00 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $28, 060 per month, which includes depreciation of $4, 600.All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management.

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. The difference between cash receipts and cash disbursements for December would be:

The Khaki Corporation has the following budgeted sales data: The regular pattern of collection of credit sales is 40% in the month of sale, 50% in the month following sale, and the remainder in the second month following the month of sale.There are no bad debts. The budgeted accounts receivable balance on February 28 would be:

Both variable and fixed manufacturing overhead costs are included in the selling and administrative expense budget.