Exam 7: Profit Planning

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. -The cash balance at the end of December would be:

Salge Inc. bases its manufacturing overhead budget on budgeted direct labor- hours. The variable overhead rate is $8.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $74,730 per month, which includes depreciation of $20,670. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 5,300 direct labor-hours will be required in September. -The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for September should be:

Lahay Inc.bases its selling and administrative expense budget on the number of units sold.The variable selling and administrative expense is $4.30 per unit.The budgeted fixed selling and administrative expense is $30,240 per month,which includes depreciation of $3,510.The remainder of the fixed selling and administrative expense represents current cash flows.The sales budget shows 2,700 units are planned to be sold in April. Required: Prepare the selling and administrative expense budget for April.

Mccoo Inc.bases its manufacturing overhead budget on budgeted direct labor-hours.The variable overhead rate is $1.30 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $98,900 per month,which includes depreciation of $19,780.All other fixed manufacturing overhead costs represent current cash flows.The September direct labor budget indicates that 8,600 direct labor-hours will be required in that month. Required: a.Determine the cash disbursement for manufacturing overhead for September. b.Determine the predetermined overhead rate for September.

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 beginning inventory for September should be:

Dengel Inc. is working on its cash budget for November. The budgeted beginning cash balance is $24,000. Budgeted cash receipts total $177,000 and budgeted cash disbursements total $167,000. The desired ending cash balance is $50,000. -To attain its desired ending cash balance for November,the company needs to borrow:

The budgeted amount of raw materials to be purchased is determined by:

Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry.Data regarding the store's operations follow: $\bullet$ Sales are budgeted at $320,000 for November,$340,000 for December,and $330,000 for January. $\bullet$ Collections are expected to be 75% in the month of sale,20% in the month following the sale,and 5% uncollectible. $\bullet$ The cost of goods sold is 65% of sales. $\bullet$ The company desires ending merchandise inventory to equal 80% of the following month's cost of goods sold.Payment for merchandise is made in the month following the purchase. $\bullet$ Other monthly expenses to be paid in cash are $21,000. $\bullet$ Monthly depreciation is $16,000. $\bullet$ 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.

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

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

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 cash receipts for July would be:

Randall Company is a merchandising company that sells a single product.The company's inventories,production,and sales in units for the next three months have been forecasted as follows: Units are sold for $12 each.One fourth of all sales are paid for in the month of sale and the balance are paid for in the following month.Accounts receivable at September 30 totaled $450,000. Merchandise is purchased for $7 per unit.Half of the purchases are paid for in the month of the purchase and the remainder are paid for in the month following purchase.Selling and administrative expenses are expected to total $120,000 each month.One half of these expenses will be paid in the month in which they are incurred and the balance will be paid in the following month.There is no depreciation.Accounts payable at September 30 totaled $290,000. Cash at September 30 totaled $80,000.A payment of $300,000 for purchase of equipment is scheduled for November,and a dividend of $200,000 is to be paid in December. Required: a.Prepare a schedule of expected cash collections for each of the months of October,November,and December. b.Prepare a schedule showing expected cash disbursements for merchandise purchases and selling and administrative expenses for each of the months October,November,and December. c.Prepare a cash budget for each of the months October,November,and December.There is no minimum required ending cash balance.

Dengel Inc. is working on its cash budget for November. The budgeted beginning cash balance is $24,000. Budgeted cash receipts total $177,000 and budgeted cash disbursements total $167,000. The desired ending cash balance is $50,000. -The excess (deficiency)of cash available over disbursements for November will be:

The Carlquist Company makes and sells a product called Product K.Each unit of Product K sells for $24 dollars and has a unit variable cost of $18.The company has budgeted the following data for November: $\bullet$ Sales of $1,152,200,all in cash. $\bullet$ A cash balance on November 1 of $48,000. $\bullet$ Cash disbursements (other than interest)during November of $1,160,000. $\bullet$ A minimum cash balance on November 30 of $60,000. If necessary,the company will borrow cash from a bank.The borrowing will be in multiples of $1,000 and will bear interest at 2% per month.All borrowing will take place at the beginning of the month.The November interest will be paid in cash during November. The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is:

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. -Accounts payable at the end of December would be:

Self-imposed budgets typically are:

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 budgeted direct labor cost per unit of Product A is:

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 company has budgeted to sell 22,000 Yutes in November,then the total budgeted selling and administrative expenses for November would 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. -The accounts receivable balance,net of uncollectible accounts,at the end of December would be:

Young Enterprises 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 10% of the next month's sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months. -The desired ending inventory for August is: