Exam 9: Profit Planning

Mouw Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 5,400 direct labor-hours will be required in January. The variable overhead rate is $4.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $77,220 per month, which includes depreciation of $9,720. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Richards Company 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: Collections on credit sales: 60% in month of sale 30% in month following sale 10% in second month following sale -What is the budgeted accounts receivable balance on May 31?

Palmerin Corporation is preparing its cash budget for November. The budgeted beginning cash balance is $30,000. Budgeted cash receipts total $167,000 and budgeted cash disbursements total $171,000. The desired ending cash balance is $50,000. -To attain its desired ending cash balance for November, the company should borrow:

Roberts 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 410 units. The company needs to prepare a production budget for the second quarter of the year. -The desired ending inventory for August is:

Smith Company makes and sells a single product called a Pod. Each Pod requires 1.4 hours of labor at a labor rate of $9.60 per hour. Smith Company needs to prepare a Direct Labor Budget for the second quarter of the year. -If the budgeted direct labor cost for April is $201,600, then the budgeted production of Pods for April would be:

Super Drive is a computer hard drive manufacturer. The company's balance sheet for the fiscal year ended on November 30 appears below: Additional information regarding Super Drive's operations appear below: • Sales are budgeted at $520,000 for December and $500,000 for January. • Collections are expected to be 60% in the month of sale and 40% in the month following sale. There are no bad debts. • 80% of the disk drive components are purchased in the month prior to the month of the sale, and 20% are purchased in the month of the sale. Purchased components comprise 40% of the cost of goods sold. • Payment for components purchased is made in the month following the purchase. • Assume that the cost of goods sold is 80% of sales. -The cost of December merchandise purchases would be:

Detmer Enterprises has budgeted sales 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 December 31 contained 400 units, which was in excess of the desired level of inventory. The company needs to prepare a Production Budget for the first quarter of the year. -The desired ending inventory for April is:

The LFM Company makes and sells a single product, Product T. Each unit of Product T requires 1.3 hours of direct labor at a rate of $9.10 per direct labor-hour. LFM Company needs to prepare a Direct Labor Budget for the second quarter of next year. -The budgeted direct labor cost per unit of Product T would be:

Carner Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: $\bullet$ Sales are budgeted at $370,000 for November, $360,000 for December, and $340,000 for January. $\bullet$ Collections are expected to be 85% in the month of sale, 13% in the month following the sale, and 2% uncollectible. $\bullet$ The cost of goods sold is 70% of sales. $\bullet$ The company purchases 30% of its merchandise in the month prior to the month of sale and 70% in the month of sale. Payment for merchandise is made in the month following the purchase. $\bullet$ Other monthly expenses to be paid in cash are $24,600. $\bullet$ Monthly depreciation is $17,000. $\bullet$ Ignore taxes. -The cash balance at the end of December would be:

The manufacturing overhead budget at Waycaster Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,000 direct labor-hours will be required in February. The variable overhead rate is $3.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $81,600 per month, which includes depreciation of $18,000. All other fixed manufacturing overhead costs represent current cash flows. -The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for February should be:

Weltin Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: Sales are budgeted at $390,000 for November, $370,000 for December, and $380,000 for January. Collections are expected to be 90% in the month of sale, 5% in the month following the sale, and 5% uncollectible. The cost of goods sold is 60% of sales. The company purchases 70% of its merchandise in the month prior to the month of sale and 30% in the month of sale. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $21,800. Monthly depreciation is $18,000. 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.

LDG Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.0 hours of direct labor at the rate of $10.50 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. -The company plans to sell 22,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 100 and 400 units, respectively. Budgeted direct labor costs for June would be:

The manufacturing overhead budget at Ferrucci Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 1,600 direct labor-hours will be required in December. The variable overhead rate is $4.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $25,120 per month, which includes depreciation of $5,440. All other fixed manufacturing overhead costs represent current cash flows. The December cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Davie Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable factory overhead rate is $6.00 per direct labor-hour; the budgeted fixed factory overhead is $92,000 per month, of which $16,000 is factory depreciation. -If the budgeted direct labor time for November is 9,000 hours, then the total budgeted cash disbursements for November must be:

Pardise Company plans the following beginning and ending inventory levels (in units) for July: Two units of raw material are needed to produce each unit of finished product. -What is the budgeted accounts receivable balance on June 1 of the current year?

Gokey Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $5.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $78,840 per month, which includes depreciation of $20,520. All other fixed manufacturing overhead costs represent current cash flows. The November direct labor budget indicates that 5,400 direct labor-hours will be required in that month. Required: a. Determine the cash disbursement for manufacturing overhead for November. b. Determine the predetermined overhead rate for November.

The following are budgeted data: Each unit requires 0.75 hours of direct labor at a cost of $6.50 per hour. What is the cost of direct labor for May?

The Stacy Company makes and sells a single product, Product R. Budgeted sales for April are $300,000. Gross Margin is budgeted at 30% of sales dollars. If the net income for April is budgeted at $40,000, the budgeted selling and administrative expenses are:

The Adams Company, a merchandising firm, has budgeted its activity for November according to the following information: $\bullet$ Sales at $450,000, all for cash $\bullet$ Merchandise inventory on October 31 was $200,000. $\bullet$ The cash balance November 1 was $18,000. $\bullet$ Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash. $\bullet$ Budgeted depreciation for November is $25,000. $\bullet$ The planned merchandise inventory on November 30 is $230,000. $\bullet$ The cost of goods sold is 70% of the selling price. $\bullet$ All purchases are paid for in cash. -The budgeted net income for November is:

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below. The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable selling and administrative expenses should be 10% of sales and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable selling and administrative expenses are made during the month the expenses are incurred. -In a cash budget for March, the total cash receipts would be: