Exam 1: Master Budgeting

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. -The number of pounds of Material A needed for production during June would be:

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:

Rehmer Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.61 direct labor-hours. The direct labor rate is $8.90 per direct labor-hour. The production budget calls for producing 2,600 units in June and 2,100 units in July. Required: Construct the direct labor budget for the next two months, assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month.

The manufacturing overhead budget is typically prepared before the production budget.

Noel 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 400 units. The company needs to prepare a production budget for the second quarter of the year. -The total number of units to be produced in July is:

Harrti Corporation has budgeted for the following sales: Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?

Bredder Supply Corporation manufactures and sells cotton gauze. Expected sales of gauze (in boxes) for upcoming months are as follows: Management likes to maintain a finished goods inventory equal to 20% of the next month's estimated sales. Required: Prepare the company's production budget for the third quarter of this year (the months of July, August and September). Include a column for each month and a total column for the entire quarter.

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?

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 total cost of Material K to be purchased in August is:

Arakaki Inc. is working on its cash budget for January. The budgeted beginning cash balance is $41,000. Budgeted cash receipts total $114,000 and budgeted cash disbursements total $113,000. The desired ending cash balance is $60,000. The excess (deficiency) of cash available over disbursements for January will 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 following are budgeted data for the Bingham Corporation, a merchandising company: -The desired ending inventory (at cost) for February would be:

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:

A benefit of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack.

The following are budgeted data for the Bingham Corporation, a merchandising company: -Assume that all purchases are paid for in the month following the month of purchase. The cash disbursements for purchases that would appear in the April cash budget would be:

When preparing a direct materials budget, the units of raw material needed to meet production should be added to desired ending inventory and the beginning inventory for raw materials should be subtracted to determine the amount of raw materials to be purchased.

The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory.

Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management.

Chow Corporation manufactures children's chairs made of PVS plastic tubing and heavy canvas material. Each chair requires eight feet of the PVC tubing and three yards of material. Budgeted sales are 20,000 chairs for June, 25,000 chairs for July and 30,000 chairs for August. Ending finished goods inventory is budgeted at 10% of the current month's sales. Ending materials inventories are budgeted at 10% of the current month's production. Required: a. Prepare a production budget for each of the months of June, July and August. Assume the beginning inventory of chairs in June will be 2,500 units. b. Prepare schedules showing purchase requirements for PVC tubing and for material for each of the months of June, July and August. Assume 16,000 feet of PVC tubing and 6,000 yards of material are on hand at the beginning of June.

Poriss 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 budgeted cash disbursements for selling and administrative expenses for April total $144,390, then how many Debs does the company plan to sell in April?