Exam 8: Profit Planning

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. To attain its desired ending cash balance for July, the company should borrow:

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. Expected cash collections in December are:

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 October is 6, 000 hours, then the total budgeted manufacturing overhead for October is:

Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs.Expected mug sales at Fab (in units)for the next three months are as follows: Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales.How many mugs should Fab plan on producing during the month of November?

The manufacturing overhead budget lists all costs of production other than selling and administrative expenses.

In companies that do not have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate.

Carter 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 $380, 000 for November, $390, 000 for December, and $400, 000 for January. O Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible. O The cost of goods sold is 65% of sales. O The company desires to have an ending merchandise inventory equal to 80% 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 $22, 000. O Monthly depreciation is $20, 000. O Ignore taxes. Accounts payable at the end of December would be:

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 17, 000 Debs in January, then the total budgeted variable selling and administrative expenses for January will be:

The basic idea underlying responsibility accounting is that each manager should be held responsible for the overall profit of the company to ensure that all managers are acting together.

Freet Inc.is preparing its cash budget for November.The budgeted beginning cash balance is $11, 000.Budgeted cash receipts total $126, 000 and budgeted cash disbursements total $130, 000.The desired ending cash balance is $20, 000.The company can borrow up to $170, 000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for November in good form.Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.

Noel 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 400 units.The company needs to prepare a production budget for the second quarter of the year. The total number of units to be produced in July is:

LFM Corporation makes and sells a product called Product WZ.Each unit of Product WZ requires 3.5 hours of direct labor at the rate of $16.00 per direct labor-hour.Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 31, 000 units of Product WZ in June.The finished goods inventories on June 1 and June 30 are budgeted to be 100 and 600 units, respectively.Budgeted direct labor costs for June would be:

Sparks Corporation has a cash balance of $7, 500 on April 1.The company must maintain a minimum cash balance of $6, 000.During April, expected cash receipts are $48, 000.Cash disbursements during the month are expected to total $52, 000.Ignoring interest payments, during April the company will need to borrow:

Edgington Inc.bases its manufacturing overhead budget on budgeted direct labor-hours.The variable overhead rate is $4.90 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $39, 590 per month, which includes depreciation of $5, 920.All other fixed manufacturing overhead costs represent current cash flows.The November direct labor budget indicates that 3, 700 direct labor-hours will be required in that month. Required: a.Determine the cash disbursements for manufacturing overhead for November. b.Determine the predetermined overhead rate for November.

The TS Corporation has budgeted sales for the year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units.The finished goods inventory at the start of the year is 2, 500 units.Four pounds of raw materials are required for each unit produced.Raw materials on hand at the start of the year total 4, 200 pounds.The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in material. Scheduled purchases of raw materials for the second quarter should be:

Home Corporation will open a new store on January 1.Based on experience from its other retail outlets, Home Corporation is making the following sales projections: Home Corporation estimates that 70% of the credit sales will be collected in the month following the month of sale, with the balance collected in the second month following the month of sale. Based on these data, the balance in accounts receivable on January 31 will be:

A continuous or perpetual budget is a budget that almost never needs to be revised.

Bracken Corporation is a small wholesaler of gourmet food products.Data regarding the store's operations follow: o Sales are budgeted at $330, 000 for November, $340, 000 for December, and $340, 000 for January. O Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible. O The cost of goods sold is 75% of sales. O The company would like to maintain ending merchandise inventories 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, 800. O Monthly depreciation is $19, 000. O Ignore taxes. The cost of December merchandise purchases would be:

The selling and administrative expense budget of Ruffing Corporation is based on budgeted unit sales, which are 4, 800 units for February.The variable selling and administrative expense is $8.10 per unit.The budgeted fixed selling and administrative expense is $71, 520 per month, which includes depreciation of $16, 800 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 February selling and administrative expense budget should be:

When preparing a direct materials budget, the units of raw material needed to meet production should be added to desired ending inventory and the beginning inventory for raw materials should be subtracted to determine the amount of raw materials to be purchased.