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Exam 8: Master Budgeting

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Question 71

Multiple Choice

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Varughese Inc. is working on its cash budget for March. The budgeted beginning cash balance is $33,000. Budgeted cash receipts total $182,000 and budgeted cash disbursements total $191,000. The desired ending cash balance is $40,000. The excess (deficiency) of cash available over disbursements for March will be:

A) $215,000
B) $42,000
C) $24,000
D) ($9,000)

E) A) and B)
F) A) and D)

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Question 72

Multiple Choice

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KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given. Sales are collected 80% in the month of the sale and the balance in the month following the sale. (There are no bad debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month following the sale. The "selling and administrative expenses" are paid in the month of the sale. The cash disbursements during June for goods purchased for sale and for selling and administrative expenses should be:

A) $40,000
B) $41,000
C) $42,500
D) $43,500

E) All of the above
F) A) and D)

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Question 73

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Coles 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 20% of the following month's production needs. On July 31, this requirement was not met since only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. The total needs (i.e., production requirements plus desired ending inventory) of Material K for November are:

Catano Corporation pays for 40% of its raw materials purchases in the month of purchase and 60% in the following month. If the budgeted cost of raw materials purchases in July is $256,550 and in August is $278,050, then in August the total budgeted cash disbursements for raw materials purchases is closest to:

Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected: 30% in the month of the sale 70% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs. The estimated finished goods inventory balance at the end of February is closest to:

Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected: 30% in the month of the sale 70% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs. If the company estimates that it will need 55,480 pounds of raw material to satisfy production needs in March, then the raw materials inventory balance at the end of February should be closest to:

Smith Corporation makes and sells a single product called a Pod. Each Pod requires 1.4 direct labor-hours at $9.60 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. Smith Corporation is preparing 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:

Bustillo Inc. is working on its cash budget for March. The budgeted beginning cash balance is $35,000. Budgeted cash receipts total $142,000 and budgeted cash disbursements total $151,000. The desired ending cash balance is $30,000. To attain its desired ending cash balance for March, the company needs to borrow:

Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected: 30% in the month of the sale 70% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs. If the budgeted cost of raw materials purchases in February is $50,152, then the budgeted accounts payable balance at the end of February is closest to:

Jannusch Corporation makes one product. Budgeted unit sales for July, August, September, and October are 10,000, 11,600, 13,300, and 12,700 units, respectively. The ending finished goods inventory should equal 20% of the following month's sales. The budgeted required production for August is closest to:

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit. B. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. C. The ending finished goods inventory equals 30% of the following month's sales. D. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $4.00 per pound. E. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. F. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours. G. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour. H. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000. The estimated unit product cost is closest to:

Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Each unit of finished goods requires 7 grams of raw material. The company plans to sell 270,000 units during the year. How much of the raw material should the company purchase during the year?

Smith Corporation makes and sells a single product called a Pod. Each Pod requires 1.4 direct labor-hours at $9.60 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. Smith Corporation is preparing a Direct Labor Budget for the second quarter of the year. The budgeted direct labor cost per Pod is closest to:

The LaGrange Corporation had the following budgeted sales for the first half of the current 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 sales: 60% in month of sale 30% in month following sale 10% in second month following sale The accounts receivable balance on January 1 of the current year was $70,000, of which $50,000 represents uncollected December sales and $20,000 represents uncollected November sales. The total cash collected during January by LaGrange Corporation would be:

Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: $\bullet$ Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January. $\bullet$ Collections are expected to be 65% in the month of sale and 35% in the month following the sale. $\bullet$ The cost of goods sold is 80% of sales. $\bullet$ The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next 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 $21,100. $\bullet$ Monthly depreciation is $21,000. $\bullet$ Ignore taxes. December cash disbursements for merchandise purchases would be:

Budgeted sales in Acer Corporation over the next four months are given below: Thirty percent of the company's sales are for cash and 70% 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 20% are collected in the second month following sale. Given these data, cash collections for December should be:

The LFH Corporation makes and sells a single product, Product T. Each unit of Product T requires 1.5 direct labor-hours at a rate of $10.50 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. LFH Corporation needs to prepare a Direct Labor Budget for the second quarter of next year. The budgeted direct labor cost per unit of Product T is closest to:

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 450 units. The company needs to prepare a production budget for the second quarter of the year. The beginning inventory in units for September is:

Carver 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 $350,000 for November, $320,000 for December, and $300,000 for January. $\bullet$ Collections are expected to be 90% in the month of sale and 10% in the month following the sale. $\bullet$ The cost of goods sold is 75% of sales. $\bullet$ The company desires to have an ending merchandise inventory equal to 60% 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 $24,700. $\bullet$ Monthly depreciation is $16,000. $\bullet$ Ignore taxes. Retained earnings at the end of December would be:

Carver 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 $350,000 for November, $320,000 for December, and $300,000 for January. $\bullet$ Collections are expected to be 90% in the month of sale and 10% in the month following the sale. $\bullet$ The cost of goods sold is 75% of sales. $\bullet$ The company desires to have an ending merchandise inventory equal to 60% 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 $24,700. $\bullet$ Monthly depreciation is $16,000. $\bullet$ Ignore taxes. The cash balance at the end of December would be: