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Exam 8: Master Budgeting

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Question 21

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Depasquale Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.41 direct labor-hours. The direct labor rate is $8.10 per direct labor-hour. The production budget calls for producing 5,000 units in May and 5,400 units in June. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months?

A) $16,605.00
B) $17,933.40
C) $17,269.20
D) $34,538.40

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

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Question 22

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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 selling and administrative expense for February is closest to:

A) $70,000
B) $58,680
C) $88,020
D) $18,020

E) A) and B)
F) None of the above

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Question 23

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Michard 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 $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit. B. Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month. C. The ending finished goods inventory equals 20% of the following month's sales. D. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound. E. Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month. F. The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours. G. The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000. The budgeted required production for May is closest to:

Sirignano Corporation produces and sells one product. The budgeted selling price per unit is $84. Budgeted unit sales for October, November, December, and January are 8,400, 12,000, 13,800, and 14,300 units, respectively. All sales are on credit with 40% collected in the month of the sale and 60% in the following month. The expected cash collections for November 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 budgeted required production for February is closest to:

Tracie Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.2 yards of cloth. Selected data from Tracie's master budget for next quarter are shown below: Each unit requires 0.8 hours of direct labor, and the average hourly cost of Tracie's direct labor is $18. What is the cost of Tracie Corporation's direct labor in September?

Marty's Merchandise has budgeted sales as follows for the second quarter of the year: Cost of goods sold is equal to 70% of sales. The company wants to maintain a monthly ending inventory equal to 120% of the cost of goods sold for the following month. The inventory on March 31 was below this target and was only $22,000. The company is now preparing a Merchandise Purchases Budget for April, May, and June. The desired beginning inventory for June is:

The direct labor budget shows the direct labor-hours required to satisfy the production budget.

The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 1,600 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 $28,320 per month, which includes depreciation of $3,680. 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:

Sevenbergen 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: 40% in the month of the sale 60% 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 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production needs. The estimated direct labor cost for August is closest to:

Which of the following statements is NOT correct concerning the Manufacturing Overhead Budget?

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 expected cash collections for February is closest to:

The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next 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 15,000 Debs in February, then the total budgeted fixed selling and administrative expenses for February is:

The LaPann Corporation has obtained the following sales forecast data: The regular pattern of collection of credit sales is 20% in the month of sale, 70% 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 accounts receivable balance on September 30 would be:

Sthilaire Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.34 direct labor-hours. The direct labor rate is $11.10 per direct labor-hour. The production budget calls for producing 8,000 units in April and 8,300 units in May. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 2,840 hours in total each month even if there is not enough work to keep them busy. Required: Construct the direct labor budget for the next two months.

Bux Corporation produces and sells one product. In November it expects to sell 10,600 units of this product. The company's variable selling and administrative expense is $3.70 per unit sold and its fixed selling and administrative expense is $50,000 per month. The estimated selling and administrative expense for November 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 budgeted accounts receivable balance at the end of February is closest to:

Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period.

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. Retained earnings at the end of December would be:

Harrti Corporation has budgeted for the following sales: $\begin{array}{lcc}\text { July } & \$ & 445,000 \\\text { August } & \$ & 580,000 \\\text { September } & \$ & 615,000 \\\text { October } & \$ & 890,000 \\\text { November } & \$ & 730,000 \\\text { December } & \$ & 690,000\end{array}$ 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 Harrti's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?