Exam 9: Profit Planning

Dano Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $1.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $110,200 per month, which includes depreciation of $28,880. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 7,600 direct labor-hours will be required in December. -The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for December should be:

Modesto Company produces and sells Product AlphaB. To guard against stockouts, the company requires that 20% of the next month's sales be on hand at the end of each month. Budgeted sales of Product AlphaB over the next four months are: Budgeted production for August would be:

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?

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

Porus 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 20,000 Yutes in December, then the budgeted total cash disbursements for selling and administrative expenses for December would be:

Thiel Inc. is working on its cash budget for October. The budgeted beginning cash balance is $35,000. Budgeted cash receipts total $166,000 and budgeted cash disbursements total $162,000. The desired ending cash balance is $50,000. The excess (deficiency) of cash available over disbursements for October will 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 excess (deficiency) of cash available over disbursements for December 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 budgeted gross margin for the month ending December 31 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 balance in accounts payable on the budgeted balance sheet for December 31 should 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 total number of units needed (i.e., unit sales plus desired ending inventory) in March is:

Pardee Company plans to sell 12,000 units during the month of August. If the company has 2,500 units on hand at the start of the month, and plans to have 2,000 units on hand at the end of the month, how many units must be produced during the month?

Borling Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $8.30 per unit. The budgeted fixed selling and administrative expense is $93,870 per month, which includes depreciation of $16,380. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 6,300 units are planned to be sold in July. Required: Prepare the selling and administrative expense budget for July.

Hardin, 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 15% of the next month's sales in units. The inventory on May 31 contained 1,020 units. The company needs to prepare a production budget for the next five months. -The total number of units produced in July should be:

The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. -If the budgeted cash disbursements for factory overhead for September are $80,000, then the budgeted production for September must be:

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 cash disbursements for November are:

Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales at Fab (in units) for the next three months are as follows: Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales. How many mugs should Fab plan on producing during the month of November?

Yumm Dairy Corporation manufactures carrot-flavored ice cream. Yumm's production budget indicated the following units to be produced for the upcoming months: Four (4) ounces of carrots are needed for each gallon of ice cream. Yumm also likes to have enough carrots on hand to cover 5% of the next month's production needs for carrots. How many ounces of carrots should Yumm plan on purchasing during the month of February?

Porus 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 19,000 Yutes in November, then the total budgeted selling and administrative expenses for November would be:

The usual starting point in budgeting is to make a forecast of cash receipts and cash disbursements.

The master budget process usually begins with the: