Exam 7: Profit Planning

Walsh Company expects sales of Product W to be 60,000 units in April,75,000 units in May and 70,000 units in June.The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales.Due to excessive production during March,on March 31 there were 25,000 units of Product W in the ending inventory.Given this information,Walsh Company's production of Product W for the month of April should be:

Carpon Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: • Sales are budgeted at $340,000 for November, $350,000 for December, and $370,000 for January. • Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible. • The cost of goods sold is 75% of sales. • The company desires to have an ending merchandise inventory equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. • Other monthly expenses to be paid in cash are $21,100. • Monthly depreciation is $19,000. • Ignore taxes. -The cash balance at the end of December would be:

Porl 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 $409,000,then how many Yutes does the company plan to sell in October?

Which of the following is not a benefit of budgeting?

Budgeted sales in Allen Company over the next four months are given below: Twenty-five percent of the company's sales are for cash and 75% are on account.Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale,30% are collected in the month following sale,and 15% are collected in the second month following sale.The remainder are uncollectible.Given these data,cash collections for December should be:

The following data have been taken from the budget reports of Brandon company,a merchandising company. Forty percent of purchases are paid for in cash at the time of purchase,and 30% are paid for in each of the next two months.Purchases for the previous November and December were $150,000 per month.Employee wages are 10% of sales for the month in which the sales occur.Selling and administrative expenses are 20% of the following month's sales.(July sales are budgeted to be $220,000. )Interest payments of $20,000 are paid quarterly in January and April.Brandon's cash disbursements for the month of April would be:

Hardy, 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 1,640 units. The company needs to prepare a production budget for the next five months. -The total number of units produced in July should be:

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January. • Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible. • The cost of goods sold is 65% of sales. • The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. • Other monthly expenses to be paid in cash are $22,500. • Monthly depreciation is $19,000. • Ignore taxes. -December cash disbursements for merchandise purchases would be:

A sales budget is a detailed schedule showing the expected sales for the budget period;typically,it is expressed in both dollars and units of product.

Deschambault Inc.is working on its cash budget for December.The budgeted beginning cash balance is $14,000.Budgeted cash receipts total $127,000 and budgeted cash disbursements total $126,000.The desired ending cash balance is $40,000.To attain its desired ending cash balance for December,the company needs to borrow:

The Kafusi Company has the following budgeted sales: The regular pattern of collection of credit sales is 30% in the month of sale, 60% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts. -The budgeted accounts receivable balance on May 31 would be:

The manufacturing overhead budget of Lewison Corporation is based on budgeted direct labor-hours.The June direct labor budget indicates that 5,800 direct labor-hours will be required in that month.The variable overhead rate is $7.70 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $111,360 per month,which includes depreciation of $17,400.All other fixed manufacturing overhead costs represent current cash flows. Required: a.Determine the cash disbursement for manufacturing overhead for June.Show your work! b.Determine the predetermined overhead rate for June.Show your work!

Which of the following statements is not correct?

Deshaies Corporation is preparing its cash budget for November. The budgeted beginning cash balance is $10,000. Budgeted cash receipts total $100,000 and budgeted cash disbursements total $104,000. The desired ending cash balance is $30,000. -The excess (deficiency)of cash available over disbursements for November is:

The Yost Company makes and sells a single product, Product A. Each unit of Product A requires 1.2 hours of labor at a labor rate of $8.40 per hour. Yost Company needs to prepare a Direct Labor Budget for the second quarter. -The company has budgeted to produce 20,000 units of Product A in June.The finished goods inventories on June 1 and June 30 were budgeted at 400 and 600 units,respectively.Budgeted direct labor cost for June is:

Avitia Inc.bases its manufacturing overhead budget on budgeted direct labor-hours.The direct labor budget indicates that 3,700 direct labor-hours will be required in September.The variable overhead rate is $5.70 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $48,100 per month,which includes depreciation of $5,550.All other fixed manufacturing overhead costs represent current cash flows.The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for September should be:

Carpon Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: • Sales are budgeted at $340,000 for November, $350,000 for December, and $370,000 for January. • Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible. • The cost of goods sold is 75% of sales. • The company desires to have an ending merchandise inventory equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. • Other monthly expenses to be paid in cash are $21,100. • Monthly depreciation is $19,000. • Ignore taxes. -Accounts payable at the end of December would be:

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.5 hours of direct labor at the rate of $15.00 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:

The selling and administrative expense budget of Breckinridge Corporation is based on budgeted unit sales,which are 5,500 units for June.The variable selling and administrative expense is $1.00 per unit.The budgeted fixed selling and administrative expense is $101,200 per month,which includes depreciation of $6,050 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 June selling and administrative expense budget should be:

Avril Company makes collections on sales according to the following schedule: 30% in the month of sale 60% in the month following sale 8% in the second month following sale The following sales are expected: Cash collections in March should be budgeted to be: