Exam 8: Profit Planning

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. December cash disbursements for merchandise purchases would be:

Parliman Corporation is preparing its cash budget for August.The budgeted beginning cash balance is $12, 000.Budgeted cash receipts total $159, 000 and budgeted cash disbursements total $162, 000.The desired ending cash balance is $20, 000.The company can borrow up to $160, 000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for August in good form.

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 budgeted direct labor cost per unit of Product WZ would be:

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 beginning inventory for September should be:

Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry.Data regarding the store's operations follow: o Sales are budgeted at $360, 000 for November, $380, 000 for December, and $350, 000 for January. o Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible. o The cost of goods sold is 65% of sales. o The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month. o Payment for merchandise is made in the month following the purchase. o Other monthly expenses to be paid in cash are $21, 900. o Monthly depreciation is $20, 000. o Ignore taxes. Required: a.Prepare a Schedule of Expected Cash Collections for November and December. b.Prepare a Merchandise Purchases Budget for November and December. c.Prepare Cash Budgets for November and December. d.Prepare Budgeted Income Statements for November and December. e.Prepare a Budgeted Balance Sheet for the end of December.

Sioux Corporation is estimating the following sales for the first four months of next year: Sales are normally collected 60% in the month of sale, 35% in the month following the sale, and the remaining 5% being uncollectible.Based on this information, how much cash should Sioux expect to collect during the month of April?

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. In a cash budget for April, the total cash receipts will be:

Roberts Corporation manufactures home cleaning products.One of the products, Quickclean, requires 2 pounds of Material A and 5 pounds of Material B per unit manufactured.Material A is purchased from the supplier for $0.30 per pound and Material B is purchased for $0.50 per pound.The finished goods inventory on hand at the end of each month should equal 4, 000 units plus 25% of the next month's sales.The raw materials inventory on hand at the end of each month (for either Material A or Material B)should equal 80% of the following month's production needs. The production budget calls for 26, 000 units of Quickclean to be manufactured in June and 32, 000 units of Quickclean to be manufactured in July.On May 31 there will be 41, 600 pounds of Material A and 104, 000 pounds of Material B in inventory. Assume that on January 1 the inventory of Quickclean was 8, 000 units.Expected sales in January are 14, 000 units and expected sales in February are 18, 000 units.The number of units needed to be produced in January would be:

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. The net income for December would be:

Sarter Corporation is in the process of preparing its annual budget.The following beginning and ending inventory levels are planned for the year. Each unit of finished goods requires 3 grams of raw material.The company plans to sell 880, 000 units during the year. The number of units the company would have to manufacture during the year would 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. The accounts receivable balance, net of uncollectible accounts, at the end of December would 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 desired ending inventory of Material K for September is:

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 cash receipts for April 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. What is the budgeted accounts receivable balance on May 30?

Triste Corporation manufactures and sells women's skirts.Each skirt (unit)requires 2.6 yards of cloth.Selected data from Triste's master budget for next quarter are shown below: Each unit requires 1.6 hours of direct labor, and the average hourly cost of Triste's direct labor is $15.What is the cost of Triste Corporation's direct labor in September?

The direct labor budget of Faier Corporation for the upcoming year contains the following details concerning budgeted direct labor-hours. The company's variable manufacturing overhead rate is $3.50 per direct labor-hour, and the company's fixed manufacturing overhead is $65, 000 per quarter.The only noncash item included in the fixed manufacturing overhead is depreciation which is $22, 000 per quarter. Required: Prepare Faier Corporation's manufacturing overhead budget for the upcoming fiscal year.Show both manufacturing overhead expense and cash disbursements for manufacturing overhead.

Parsons Corporation plans to sell 18, 000 units during August.If the company has 5, 500 units on hand at the start of the month, and plans to have 6, 000 units on hand at the end of the month, how many units must be produced during the month?

Laurey Inc.is working on its cash budget for May.The budgeted beginning cash balance is $45, 000.Budgeted cash receipts total $129, 000 and budgeted cash disbursements total $124, 000.The desired ending cash balance is $60, 000.To attain its desired ending cash balance for May, the company needs to borrow:

The LFG Corporation makes and sells a single product, Product T.Each unit of Product T requires 1.4 direct labor-hours at a rate of $9.80 per direct labor-hour.The direct labor workforce is fully adjusted each month to the required workload.LFG Corporation needs to prepare a Direct Labor Budget for the second quarter of next year. The company has budgeted to produce 24, 000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 600 and 800 units, respectively.Budgeted direct labor costs for June would be:

G Products, Inc.manufactures garlic gravy.G's production budget indicated the following units (jars)of gravy to be produced for the upcoming months indicated: Five grams of garlic are needed for every jar of gravy.G also likes to have enough garlic on hand at the end of the month to cover 10% of the next month's production requirements for garlic.How many grams of garlic should G plan on purchasing during the month of May?