Exam 8: Profit Planning

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 company recomputes its predetermined overhead rate every month.The predetermined overhead rate for January should be:

The budget method that maintains a constant twelve-month planning horizon by adding a new month on the end as the current month is completed is called:

In a merchandising company, the required merchandise purchases for a period are determined by subtracting the desired ending inventory from the sum of the units to be sold during the period and the units in beginning inventory.

The following are budgeted data: Two pounds of material are required for each finished unit.The inventory of materials at the end of each month should equal 20% of the following month's production needs.Purchases of raw materials for May should be:

Which of the following budgets are prepared before the production budget?

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 20, 000 Debs in March, then the average budgeted selling and administrative expenses per unit sold for March is closest to:

The manufacturing overhead budget at Amrein Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 4, 900 direct labor-hours will be required in August.The variable overhead rate is $9.40 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $96, 040 per month, which includes depreciation of $7, 350.All other fixed manufacturing overhead costs represent current cash flows.The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

The Gerald Corporation makes and sells a single product called a Clop.Each Clop requires 1.1 direct labor-hours at $8.20 per direct labor-hour.The direct labor workforce is fully adjusted each month to the required workload.The company is preparing a Direct Labor Budget for the first quarter of the year. If the budgeted direct labor cost for February is $162, 360, then the budgeted production of Clops for February is:

Skeete Inc.bases its selling and administrative expense budget on the number of units sold.The variable selling and administrative expense is $1.70 per unit.The budgeted fixed selling and administrative expense is $57, 720 per month, which includes depreciation of $9, 360.The remainder of the fixed selling and administrative expense represents current cash flows.The sales budget shows 3, 900 units are planned to be sold in November. Required: Prepare the selling and administrative expense budget for November.

Rehmer Corporation is working on its direct labor budget for the next two months.Each unit of output requires 0.61 direct labor-hours.The direct labor rate is $8.90 per direct labor-hour.The production budget calls for producing 2, 600 units in June and 2, 100 units in July. 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.

Harris, Inc. , has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units.The inventory on May 31 contained 1, 880 units.The company needs to prepare a production budget for the next five months. The total number of units produced in July should be:

Frodic Corporation has budgeted sales and production over the next quarter as follows: The company has 4, 000 units of product on hand at July 1.10% of the next month's sales in units should be on hand at the end of each month.October sales are expected to be 71, 500 units.Budgeted sales for September would be (in units):

The production department of Tadris Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year. Each unit requires 0.25 direct labor-hours at $18.00 per hour. Required: Prepare a direct labor budget for the upcoming fiscal year, assuming that the direct labor work force is adjusted each quarter to match the number of hours required to produce the budgeted production.

The Covey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year.The budgeted variable manufacturing overhead rate is $4.00 per direct labor-hour;the budgeted fixed manufacturing overhead is $64, 000 per month, of which $18, 000 is factory depreciation. If the budgeted direct labor time for October is 8, 000 hours, then the total budgeted manufacturing overhead for October is:

Harrti Corporation has budgeted for the following sales: Sales are collected as follows: 10% in the month of sale;60% in the month following the sale;and the remaining 30% in the second month following the sale.In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?

Muecke Inc.is working on its cash budget for April.The budgeted beginning cash balance is $40, 000.Budgeted cash receipts total $150, 000 and budgeted cash disbursements total $158, 000.The desired ending cash balance is $50, 000. To attain its desired ending cash balance for April, the company needs to borrow:

The Fraley Corporation, a merchandising firm, has planned the following sales for the next four months: Sales are made 40% for cash and 60% on account.From experience, the company has learned that a month's sales on account are collected according to the following pattern: The company requires a minimum cash balance of $4, 000 to start a month. Required: a.Compute the budgeted cash receipts for June. b.Assume the following budgeted data for June:

The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and administrative expense per unit.

Which of the following represents the normal sequence in which the below budgets are prepared?

Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below: Two pounds of raw materials are required to produce one unit of product.The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs.The company is expected to have 30, 000 pounds of raw materials on hand on January 1.Budgeted production for February should be: