chap009
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chap009

Course Number: ACCOUNTING acc, Spring 2010

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Chapter 009, Profit Planning LO6: Manufacturing overhead budget LO7: Selling & administrative budget LO9: Budgeted income statement LO10:Budgeted balance sheet LO4: Direct materials budget 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Question Type T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F Conceptual M/ C Conceptual M/ C Conceptual M/ C Professional Exam Adapted LO5: Direct labor budget...

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009, Chapter Profit Planning LO6: Manufacturing overhead budget LO7: Selling & administrative budget LO9: Budgeted income statement LO10:Budgeted balance sheet LO4: Direct materials budget 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Question Type T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F Conceptual M/ C Conceptual M/ C Conceptual M/ C Professional Exam Adapted LO5: Direct labor budget LO3: Production budget LO1: Budget process LO2: Sales budget LO8: Cash budget Difficulty E M M E E E M M M H M M E H E E E x x x x x x x x x x x x x x x x x x x x x x CMA ID 6/e: 8-4 1/e:Exam#3-I7 New,10/28/97A 6/e: 8-13 1/e:Exam#3-I8 3/e: 8-6 5/e: 8-7 New,10/28/97C 4/e: 8-456 New,10/28/97D New, 12/4/2000, E New, 12/4/2000, C New, 12/4/2000, H New,10/28/97E 4/e: 8-500 CMA,12/95,Part3,Q9 8/e:ATB,9-21 Origin Authors Authors E.N. Authors Authors Authors Authors E.N. Authors E.N. E.N. E.N. E.N. E.N. Authors CMA CMA/CPA origin CMA,12/95,Part3,Q9 David Keyes 9-1 Chapter 009, Profit Planning 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Conceptual M/ C Conceptual M/ C Conceptual M/ C Conceptual M/ C Conceptual M/ C Conceptual M/ C Conceptual M/ C Conceptual M/ C M/C M/C M/C M/C M/C M/C M/C M/C M/C M/C M/C M/C M/C M/C M/C M/C M/C E E E M E E E E M M H M E M H M M M M H H E M E E x x x x x x x x x x x x x x x x x CMA x x x x x x x x CMA CMA CMA CMA CMA,6/94,Part3,Q11 CMA,6/96,Part3,Q8 5/e: 8-48 8/e:ATB,9-17 CMA,12/94,Part3,Q20 11/e: ATB 9-7 CMA,6/95,Part3,Q18 11/e: ATB 9-13 2/e: 7-10 1/e:Exam#3,II,6 8/e:ATB,9-46 CMA,12/93,Part3,Q16 1/e: 8-6 3/e: 8-7 3/e: 8-14 8/e:ATB,9-31 CMA,12/94,Part3,Q19 2/e: 7-7 2/e: 7-9 3/e: 8-15 8/e:ATB,9-37 9/13/2004 Single MC A3 11/e: ATB 9-25 9/14/2004 Single MC C3 9/14/2004 Single MC CMA CMA Authors David Keyes CMA CMA,12/94,Part3,Q20 CMA,6/94,Part3,Q11 CMA,6/96,Part3,Q8 Antoinette Clegg CMA CMA,6/95,Part3,Q18 Antoinette Clegg Authors Authors David Keyes CMA CMA,12/93,Part3,Q16 Authors Authors Authors David Keyes CMA CMA,12/94,Part3,Q19 Authors Authors Authors David Keyes E.N. Antoinette Clegg E.N. E.N. CMA 9-2 Chapter 009, Profit Planning D3 9/14/2004 Single MC E3 9/14/2004 Single MC F3 9/13/2004 Single MC G3 9/13/2004 Single MC H3 1/e: 8-3 9/13/2004 Single MC I3 9/13/2004 Single MC J3 9eLD:CH09Q6 CMA x x x x x x x CMA x x x x 7/e: 9-64 to 66 4/e: 8-475 to 480 EN 3-30-2003 MPG3 EN 3-30-2003 MPH3 CMA,12/94,Part3,Q79 7/e: 9-49 to 50 9eLD:CH09Q7-8 x x x x x x x x CMA 5/e: 8-63 to 64 EN 3-30-2003 MPA3 EN 3-30-2003 MPD3 6/e: 8-53 to 55 9eLD:CH09Q13-15 43 44 45 46 47 48 49 50 91 92 93 94 95 96 97 98 99 910 911 912 51-53 54-58 59-67 68-71 72-74 75-76 77-78 79-80 81-82 83-84 85-87 88-90 M/C M/C M/C M/C M/C M/C M/C M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C E E E E E E E H MH MH H H MH H H E EM EM EM EM x x x x x x x x x x x x x x x x x x x x E.N. E.N. E.N. E.N. Authors E.N. E.N. Larry Deppe CMA Authors E.N. E.N. CMA Authors Larry Deppe CMA E.N. E.N. Authors Larry Deppe CMA,12/94,Part3,Q79 9-3 Chapter 009, Profit Planning 913 914 915 916 917 918 919 920 921 922 923 924 925 926 927 91-92 93-95 96-97 98100 101102 103105 106108 109111 112113 114115 116118 119121 122123 124125 126130 131 132 133 134 135 136 137 Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Problem Problem Problem Problem Problem Problem Problem E M M E EM EM EH EM E E MH EM E E H M H H M H M E x x x x x x x x x x x x x x x CMA x x x x x x x x x x x x x x x x x x x x EN 3-30-2003 MPB3 7/e: 9-30 to 32 EN 3-30-2003 MPC3 6/e: 8-17 to 19 9eLD:CH09Q19-20 5/e: 8-36 to 38 7/e: 9-33 to 35 EN 3-30-2003 MPE3 9/13/2004 Multi MC A3 9/13/2004 Multi MC B3 EN 3-30-2003 MPF3 6/e: 8-34 to 36 9/14/2004 Multi MC C3 9/14/2004 Multi MC D3 EN 3-30-2003 MPI3 7/e: 9-Problem 81 EN 3-30-2003 ProbA3 CMA,12/95,Part3,Q6 EN 3-30-2003 ProbB3 9eLD:CH09P4 7/e: 9-Problem 80 9/13/2004 Problem A3 E.N. Authors E.N. Authors Larry Deppe Authors Authors E.N. E.N. E.N. E.N. Authors E.N. E.N. E.N. Authors E.N. CMA CMA,12/95,Part3,Q6 E.N. Larry Deppe Authors E.N. 9-4 Chapter 009, Profit Planning 138 139 140 141 142 143 144 Problem Problem Problem Problem Problem Problem Problem M E E E E E E x x x x x x x 9/13/2004 Problem B3 9/14/2004 Problem C3 9/14/2004 Problem D3 9/13/2004 Problem E3 9/13/2004 Problem F3 9/14/2004 Problem G3 9/14/2004 Problem H3 E.N. E.N. E.N. E.N. E.N. E.N. E.N. 9-5 Chapter 009, Profit Planning True / False Questions 1. The cash budget is developed from the budgeted income statement. True False 2. The usual starting point in budgeting is to make a forecast of cash receipts and cash disbursements. True False 3. Budgets are used for planning rather than for control of operations. True False 4. Self-imposed budgets are those that are prepared by top management and then assigned to other managers within the organization. True False 5. One of the distinct advantages of a budget is that it can help to uncover potential bottlenecks before they occur. True False 6. A self-imposed budget can be a very effective control device in an organization. True False 7. A production budget is to a manufacturing firm as a merchandise purchases budget is to a merchandising firm. True False 9-6 Chapter 009, Profit Planning 8. In the merchandise purchases budget, the required purchases (in units) for a period can be determined by subtracting the beginning merchandise inventory (in units) from the budgeted sales (in units). True False 9. When preparing a materials purchase budget, desired ending inventory is deducted from total needs of the period to arrive at materials to be purchased. True False 10. In companies that have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate. True False 11. If the expected level of activity is appreciably above or below the company's present capacity, it may be desirable to adjust fixed costs in the budget. True False 12. In the manufacturing overhead budget, the non-cash charges (such as depreciation) are added to the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead. True False 13. In the selling and administrative budget, the non-cash charges (such as depreciation) are deducted from the total budgeted selling and administrative expenses to determine the expected cash disbursements for selling and administrative expenses. True False 9-7 Chapter 009, Profit Planning 14. The beginning cash balance is not included on the cash budget because the cash budget deals exclusively with cash flows rather than with balance sheet amounts. True False Multiple Choice Questions 15. The materials purchase budget: A. is the beginning point in the budget process. B. must provide for desired ending inventory as well as for production. C. is accompanied by a schedule of cash collections. D. is completed after the cash budget. 16. The budget or schedule that provides necessary input data for the direct labor budget is the: A. raw materials purchases budget. B. production budget. C. schedule of cash collections. D. cash budget. 17. Which of the following budgets are prepared before the sales budget? A. Choice A B. Choice B C. Choice C D. Choice D 9-8 Chapter 009, Profit Planning 18. The master budget process usually begins with the: A. production budget. B. operating budget. C. sales budget. D. cash budget. 19. The cash budget must be prepared before you can complete the: A. production budget. B. budgeted balance sheet. C. raw materials purchases budget. D. schedule of cash disbursements. 20. Which of the following is not a benefit of budgeting? A. It uncovers potential bottlenecks before they occur. B. It coordinates the activities of the entire organization by integrating the plans and objectives of the various parts. C. It ensures that accounting records comply with generally accepted accounting principles. D. It provides benchmarks for evaluating subsequent performance. 21. The concept of responsibility accounting means that: A. Budgetary data should be reviewed and approved by the budget committee. B. Budgetary data should be reviewed and approved by all levels of management. C. An employee's performance should be evaluated only on those items under his or her control. D. An employee's performance should be evaluated only by his or her immediate supervisor. 9-9 Chapter 009, Profit Planning 22. Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs. For example, if the sales manager accepts a rush order that will result in higher than normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager. This type of accounting system is known as: A. responsibility accounting. B. contribution accounting. C. absorption accounting. D. operational budgeting. 23. A self-imposed budget or ________________ budget is a budget that is prepared with the full cooperation of managers at all levels. A. perpetual B. master C. participative D. responsibility 24. 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? A. It details the required direct labor hours. B. It details the required raw materials purchases. C. It is calculated based on the sales budget and the desired ending inventory. D. It summarizes the costs of producing units for the budget period. 25. The excess or deficiency of cash available over disbursements on the cash budget is calculated as follows: A. The beginning balance less the expected cash receipts less the expected cash disbursements. B. The cash available less the expected cash receipts plus the expected cash disbursements. C. The beginning balance plus the expected cash receipts less the expected cash disbursements. D. None of these. 9-10 Chapter 009, Profit Planning 26. Parlee Company's sales are 30% in cash and 70% on credit. Sixty % of the credit sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data: Total cash receipts in April would be budgeted to be: A. $38,900 B. $47,900 C. $27,230 D. $36,230 27. The PDQ Company makes collections on credit sales according to the following schedule: 25% in month of sale 70% in month following sale 4% in second month following sale 1% uncollectible The following sales have been budgeted: Cash collections in June would be: A. $113,400 B. $110,000 C. $111,000 D. $115,500 9-11 Chapter 009, Profit Planning 28. Tolla Company is estimating the following sales for the first six months of next year: Sales at Tolla are normally collected as 70% in the month of sale, 25% in the month following the sale, and the remaining 5% being uncollectible. Also, those customers paying in the month of sale are given a 2% discount. Based on this information, how much cash should Tolla expect to collect during the month of April? A. $281,260 B. $361,260 C. $366,010 D. $393,760 9-12 Chapter 009, Profit Planning 29. Orion Corporation is preparing a cash budget for the six months beginning January 1. Shown below are the company's expected collection pattern and the budgeted sales for the period. Expected collection pattern: 65% collected in the month of sale 20% collected in the month after sale 10% collected in the second month after sale 4% collected in the third month after sale 1% uncollectible Budgeted sales: The estimated total cash collections during April from sales and accounts receivables would be: A. $155,900 B. $167,000 C. $171,666 D. $173,400 30. 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? A. 11,500 B. 12,500 C. 12,000 D. 14,000 9-13 Chapter 009, Profit Planning 31. 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: A. 62,000 units B. 70,000 units C. 58,000 units D. 50,000 units 32. Friden Company has budgeted sales and production over the next quarter as follows: The company has 20,000 units of product on hand at April 1. A minimum of 20% of the next month's sales needs in units must be on hand at the end of each month. July sales are expected to be 140,000 units. Budgeted sales for June would be (in units): A. 188,000 B. 160,000 C. 128,000 D. 184,000 9-14 Chapter 009, Profit Planning 33. 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? A. 23,200 mugs B. 26,800 mugs C. 25,900 mugs D. 34,300 mugs 34. Superior Industries' sales budget shows quarterly sales for the next year as follows: Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales. Budgeted production for the second quarter should be: A. 7,200 units B. 8,000 units C. 8,800 units D. 8,400 units 9-15 Chapter 009, Profit Planning 35. The Waverly Company has budgeted sales for next year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. The finished goods inventory at the start of the year is 3,000 units. Scheduled production for the third quarter should be: A. 17,500 B. 18,500 C. 22,000 D. 13,500 36. The Tobler Company has budgeted production for next year as follows: Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 pounds. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs. Budgeted purchases of raw materials in the third quarter would be: A. 63,200 pounds B. 62,400 pounds C. 56,800 pounds D. 50,400 pounds 9-16 Chapter 009, Profit Planning 37. Marple Company's budgeted production in units and budgeted raw materials purchases over the next three months are given below: Two pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 36,000 pounds of raw materials on hand on January 1. Budgeted production for February should be: A. 105,000 units B. 82,500 units C. 150,000 units D. 75,000 units 38. 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? A. 474,000 ounces B. 486,000 ounces C. 490,000 ounces D. 510,000 ounces 9-17 Chapter 009, Profit Planning 39. Brummitt Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.05 direct labor-hours. The direct labor rate is $7.50 per direct laborhour. The production budget calls for producing 9,100 units in May and 8,800 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. $3,300.00 B. $3,412.50 C. $6,712.50 D. $3,356.25 40. 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? A. $73,125 B. $82,875 C. $63,375 D. $78,000 41. 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: A. $67,500 B. $91,260 C. $100,980 D. $23,760 9-18 Chapter 009, Profit Planning 42. Golebiewski Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 4,900 direct labor-hours will be required in November. The variable overhead rate is $8.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $78,400 per month, which includes depreciation of $10,290. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for November should be: A. $22.30 B. $16.00 C. $24.40 D. $8.40 43. The manufacturing overhead budget at Formica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 4,400 direct labor-hours will be required in October. The variable overhead rate is $8.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $86,680 per month, which includes depreciation of $16,280. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for October should be: A. $19.70 B. $24.90 C. $8.90 D. $28.60 44. 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: A. $7,040 B. $19,680 C. $26,720 D. $32,160 9-19 Chapter 009, Profit Planning 45. Roufs Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 7,800 units are planned to be sold in April. The variable selling and administrative expense is $3.20 per unit. The budgeted fixed selling and administrative expense is $95,160 per month, which includes depreciation of $9,360 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be: A. $85,800 B. $24,960 C. $120,120 D. $110,760 46. The selling and administrative expense budget of Spurlock Corporation is based on budgeted unit sales, which are 6,300 units for February. The variable selling and administrative expense is $9.30 per unit. The budgeted fixed selling and administrative expense is $118,440 per month, which includes depreciation of $19,530 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the February selling and administrative expense budget should be: A. $98,910 B. $157,500 C. $58,590 D. $177,030 47. ABC Company has a cash balance of $9,000 on April 1. The company must maintain a minimum cash balance of $6,000. During April expected cash receipts are $45,000. Expected cash disbursements during the month total $52,000. During April the company will need to borrow: A. $2,000 B. $4,000 C. $6,000 D. $8,000 9-20 Chapter 009, Profit Planning 48. 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: A. $31,000 B. $39,000 C. $4,000 D. $201,000 49. Guthridge Inc. is working on its cash budget for February. The budgeted beginning cash balance is $26,000. Budgeted cash receipts total $104,000 and budgeted cash disbursements total $100,000. The desired ending cash balance is $40,000. To attain its desired ending cash balance for February, the company needs to borrow: A. $0 B. $10,000 C. $40,000 D. $70,000 50. 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: A. $133,333 B. $50,000 C. $102,000 D. $78,000 9-21 Chapter 009, Profit Planning Noskey Corporation is a merchandising firm. Information pertaining to the company's sales revenue is presented in the following table. Management estimates that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Purchases of inventory are equal to next month's cost of goods sold. The cost of goods sold is 70% of the selling price. All purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase. 51. Noskey Corporation's budgeted cash collections in July from June credit sales are: A. $144,000 B. $136,800 C. $96,000 D. $91,200 52. Noskey Corporation's budgeted total cash receipts in August are: A. $240,000 B. $294,000 C. $299,400 D. $239,400 53. Noskey Corporation's budgeted total cash payments in July for inventory purchases are: A. $405,000 B. $283,500 C. $240,000 D. $168,000 9-22 Chapter 009, Profit Planning 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. 54. In a budgeted income statement for the month of February, net income would be: A. $9,000 B. $1,800 C. $0 D. $4,200 55. In a budgeted balance sheet, the Merchandise Inventory on February 28: A. $4,800 B. $7,500 C. $9,600 D. $3,200 9-23 Chapter 009, Profit Planning 56. The Accounts Receivable balance that would appear in the March 31 budgeted balance sheet would be: A. $15,000 B. $16,000 C. $8,800 D. $12,400 57. In a cash budget for March, the total cash receipts would be: A. $17,800 B. $8,200 C. $20,200 D. $16,000 58. In a cash budget for March, the total cash disbursements would be: A. $11,200 B. $13,900 C. $22,300 D. $16,900 9-24 Chapter 009, Profit Planning Dilom Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January. Collections are expected to be 55% in the month of sale, 40% in the month following the sale, and 5% uncollectible. The cost of goods sold is 80% of sales. The company purchases 50% of its merchandise in the month prior to the month of sale and 50% 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 $21,700. Monthly depreciation is $17,000. Ignore taxes. 59. Expected cash collections in December are: A. $126,500 B. $230,500 C. $104,000 D. $230,000 9-25 Chapter 009, Profit Planning 60. The cost of December merchandise purchases would be: A. $176,000 B. $208,000 C. $184,000 D. $84,000 61. December cash disbursements for merchandise purchases would be: A. $184,000 B. $196,000 C. $176,000 D. $84,000 62. The excess (deficiency) of cash available over disbursements for December would be: A. $12,800 B. $8,600 C. $17,000 D. $4,200 63. The net income (loss) for December would be: A. $24,300 B. $12,800 C. ($4,200) D. $7,300 64. The cash balance at the end of December would be: A. $40,100 B. $28,000 C. $12,100 D. $40,800 9-26 Chapter 009, Profit Planning 65. The accounts receivable balance, net of uncollectible accounts, at the end of December would be: A. $89,500 B. $92,000 C. $103,500 D. $196,000 66. Accounts payable at the end of December would be: A. $84,000 B. $92,000 C. $184,000 D. $176,000 67. Retained earnings at the end of December would be: A. $342,000 B. $362,600 C. $337,800 D. $338,100 9-27 Chapter 009, Profit Planning Braston Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $350,000 for November, $330,000 for December, and $340,000 for January. Collections are expected to be 70% in the month of sale, 26% in the month following the sale, and 4% uncollectible. The cost of goods sold is 70% of sales. The company purchases 50% of its merchandise in the month prior to the month of sale and 50% 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 $20,100. Monthly depreciation is $22,000. Ignore taxes. 68. Expected cash collections in December are: A. $91,000 B. $330,000 C. $322,000 D. $231,000 9-28 Chapter 009, Profit Planning 69. The cost of December merchandise purchases would be: A. $231,000 B. $119,000 C. $245,000 D. $234,500 70. December cash disbursements for merchandise purchases would be: A. $119,000 B. $234,500 C. $231,000 D. $238,000 71. The excess (deficiency) of cash available over disbursements for December would be: A. $20,200 B. $107,600 C. $43,700 D. $63,900 9-29 Chapter 009, Profit Planning 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. 72. The budgeted cash collections for the upcoming December should be: A. $208,000 B. $520,000 C. $402,000 D. $462,000 9-30 Chapter 009, Profit Planning 73. The balance in accounts payable on the budgeted balance sheet for December 31 should be: A. $161,280 B. $326,400 C. $165,120 D. $403,200 74. The budgeted gross margin for the month ending December 31 would be: A. $416,000 B. $104,000 C. $134,000 D. $536,000 9-31 Chapter 009, Profit Planning 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 75. Assume that the accounts receivable balance on January 1 is $70,000. Of this amount, $60,000 represents uncollected December sales and $10,000 represents uncollected November sales. Given these data, the total cash collected during January would be: A. $270,000 B. $420,000 C. $345,000 D. $360,000 76. What is the budgeted accounts receivable balance on May 31? A. $81,000 B. $68,000 C. $60,000 D. $141,000 9-32 Chapter 009, Profit Planning The LaGrange Company 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. 77. The total cash collected during January by LaGrange Company would be: A. $410,000 B. $254,000 C. $344,000 D. $331,500 78. What is the budgeted accounts receivable balance on June 1 of the current year? A. $56,000 B. $64,000 C. $76,000 D. $132,000 9-33 Chapter 009, Profit Planning 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. 79. If Pardise Company plans to sell 480,000 units during July, the number of units it would have to manufacture during July would be: A. 440,000 units B. 480,000 units C. 510,000 units D. 450,000 units 80. If 500,000 finished units were to be manufactured during July, the units of raw material needed to be purchased would be: A. 1,000,000 units B. 1,020,000 units C. 1,010,000 units D. 990,000 units 9-34 Chapter 009, Profit Planning Sarrazin 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 8 grams of raw material. 81. If the company plans to sell 640,000 units during the year, the number of units it would have to manufacture during the year would be: A. 670,000 units B. 640,000 units C. 690,000 units D. 590,000 units 82. How much of the raw material should the company purchase during the year? A. 4,720,000 grams B. 4,700,000 grams C. 4,730,000 grams D. 4,740,000 grams 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. 83. The budgeted direct labor cost per unit of Product WZ would be: A. $12.50 B. $10.50 C. $21.00 D. $5.25 9-35 Chapter 009, Profit Planning 84. 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: A. $234,150 B. $468,300 C. $462,000 D. $455,700 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. 85. The total number of units needed (i.e., unit sales plus desired ending inventory) in March is: A. 6,120 units B. 6,080 units C. 5,400 units D. 5,940 units 86. The total number of units to be produced in January is: A. 4,480 units B. 3,800 units C. 4,080 units D. 3,500 units 9-36 Chapter 009, Profit Planning 87. The desired ending inventory for April is: A. 460 units B. 540 units C. 720 units D. 680 units 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. 88. The beginning inventory in units for September is: A. 370 units B. 6,700 units C. 530 units D. 670 units 89. The total number of units to be produced in July is: A. 7,630 units B. 7,100 units C. 6,920 units D. 7,280 units 9-37 Chapter 009, Profit Planning 90. The desired ending inventory for August is: A. 530 units B. 670 units C. 710 units D. 370 units 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. 91. The beginning inventory for September should be: A. 900 units B. 1,035 units C. 1,020 units D. 1,050 units 92. The total number of units produced in July should be: A. 6,500 units B. 5,600 units C. 5,660 units D. 5,540 units 9-38 Chapter 009, Profit Planning Coles Company, 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. 93. The total cost of Material K to be purchased in August is: A. $40,970 B. $48,200 C. $33,840 D. $42,300 94. The desired ending inventory of Material K for the month of September is: A. 7,560 yards B. 8,400 yards C. 8,700 yards D. 9,300 yards 95. The total needs (i.e., production requirements plus desired ending inventory) of Material K for the month of November are: A. 37,800 yards B. 44,940 yards C. 37,380 yards D. 45,360 yards 9-39 Chapter 009, Profit Planning Castil Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: The company wants to maintain monthly ending inventories of Jurislon equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 9,700 kilograms of Jurislon were on hand. The cost of Jurislon is $5.00 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. 96. The desired ending inventory of Jurislon for the month of September is: A. $20,900 B. $52,000 C. $52,250 D. $20,800 97. The total cost of Jurislon to be purchased in August is: A. $302,250 B. $451,500 C. $250,000 D. $253,750 9-40 Chapter 009, Profit Planning 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. 98. If the budgeted direct labor cost for April is $201,600, then the budgeted production of Pods for April would be: A. 21,000 units B. 29,400 units C. 18,273 units D. 15,000 units 99. The budgeted direct labor cost per Pod would be: A. $13.44 B. $9.60 C. $7.38 D. $11.00 100. In June the company has budgeted to produce 22,000 Pods. The finished goods inventory on June 1 and June 30 were budgeted at 500 and 800 units, respectively. Budgeted direct labor costs incurred in June would be: A. $470,400 B. $295,680 C. $240,000 D. $211,200 9-41 Chapter 009, Profit Planning 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. 101. The budgeted direct labor cost per unit of Product T would be: A. $9.10 B. $11.83 C. $7.00 D. $10.40 102. The company has budgeted to produce 25,000 units of Product T in June. The finished goods inventories on June 1 and June 30 were budgeted at 500 and 700 units, respectively. Budgeted direct labor costs for June would be: A. $293,384 B. $304,031 C. $295,750 D. $227,500 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. 103. If the budgeted production for July is 6,000 units, then the total budgeted factory overhead for July is: A. $77,000 B. $82,000 C. $85,000 D. $93,000 9-42 Chapter 009, Profit Planning 104. If the budgeted production for August is 5,000 units, then the total budgeted factory overhead per unit is: A. $15 B. $18 C. $20 D. $22 105. If the budgeted cash disbursements for factory overhead for September are $80,000, then the budgeted production for September must be: A. 7,400 units B. 6,200 units C. 6,500 units D. 7,000 units The Charade Company is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable factory overhead is $5.00 per direct labor-hour; the budgeted fixed factory overhead is $75,000 per month, of which $15,000 is factory depreciation. 106. If the budgeted direct labor time for November is 7,000 hours, then the total budgeted factory overhead for November is: A. $95,000 B. $110,000 C. $75,000 D. $125,000 107. If the budgeted cash disbursements for factory overhead for December total $105,000, then the budgeted direct labor-hours for December must be: A. 6,000 hours B. 21,000 hours C. 9,000 hours D. 3,000 hours 9-43 Chapter 009, Profit Planning 108. If the budgeted direct labor time for December is 8,000 hours, then total budgeted factory overhead per direct labor-hour is (rounded): A. $14.38 B. $9.38 C. $12.50 D. $16.25 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. 109. If the budgeted direct labor time for October is 8,000 hours, then the total budgeted factory overhead for October is: A. $140,000 B. $76,000 C. $64,000 D. $124,000 110. If the budgeted direct labor time for November is 9,000 hours, then the total budgeted cash disbursements for November must be: A. $130,000 B. $146,000 C. $70,000 D. $76,000 111. If the budgeted direct labor time for December is 4,000 hours, then the predetermined factory overhead per direct labor-hour for December would be: A. $6.00 B. $29.00 C. $25.00 D. $10.00 9-44 Chapter 009, 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. 112. The December cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. $92,720 B. $121,600 C. $81,320 D. $11,400 113. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for December should be: A. $14.50 B. $12.20 C. $16.00 D. $1.50 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. 114. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for February should be: A. $17.00 B. $13.60 C. $14.00 D. $3.40 9-45 Chapter 009, Profit Planning 115. The February cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. $20,400 B. $63,600 C. $102,000 D. $84,000 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. 116. If the company has budgeted to sell 19,000 Yutes in November, then the total budgeted selling and administrative expenses for November would be: A. $529,100 B. $189,000 C. $340,100 D. $528,100 117. 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: A. $546,000 B. $547,000 C. $189,000 D. $358,000 9-46 Chapter 009, Profit Planning 118. If the total budget for selling and administrative expense for October is $493,300, then how many Yutes does the company plan to sell in October? A. 17,500 units B. 17,000 units C. 17,200 units D. 16,700 units The Adams Company, a merchandising firm, has budgeted its activity for November according to the following information: Sales at $450,000, all for cash Merchandise inventory on October 31 was $200,000. The cash balance November 1 was $18,000. Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash. Budgeted depreciation for November is $25,000. The planned merchandise inventory on November 30 is $230,000. The cost of goods sold is 70% of the selling price. All purchases are paid for in cash. 119. The budgeted cash receipts for November are: A. $315,000 B. $450,000 C. $135,000 D. $475,000 120. The budgeted cash disbursements for November are: A. $345,000 B. $375,000 C. $530,000 D. $405,000 9-47 Chapter 009, Profit Planning 121. The budgeted net income for November is: A. $50,000 B. $68,000 C. $75,000 D. $135,000 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. 122. The excess (deficiency) of cash available over disbursements for November is: A. $34,000 B. ($4,000) C. $26,000 D. $197,000 123. To attain its desired ending cash balance for November, the company should borrow: A. $0 B. $76,000 C. $50,000 D. $24,000 Crose Inc. is working on its cash budget for November. The budgeted beginning cash balance is $22,000. Budgeted cash receipts total $118,000 and budgeted cash disbursements total $116,000. The desired ending cash balance is $40,000. 124. The excess (deficiency) of cash available over disbursements for November will be: A. $2,000 B. $20,000 C. $24,000 D. $140,000 9-48 Chapter 009, Profit Planning 125. To attain its desired ending cash balance for November, the company needs to borrow: A. $16,000 B. $40,000 C. $0 D. $64,000 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: Sales are budgeted at $370,000 for November, $360,000 for December, and $340,000 for January. Collections are expected to be 85% in the month of sale, 13% in the month following the sale, and 2% uncollectible. The cost of goods sold is 70% of sales. 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. Other monthly expenses to be paid in cash are $24,600. Monthly depreciation is $17,000. Ignore taxes. 9-49 Chapter 009, Profit Planning 126. The net income for December would be: A. $59,200 B. $83,400 C. $66,400 D. $72,600 127. The cash balance at the end of December would be: A. $91,600 B. $205,500 C. $186,500 D. $19,000 128. The accounts receivable balance, net of uncollectible accounts, at the end of December would be: A. $94,900 B. $46,800 C. $90,200 D. $54,000 129. Accounts payable at the end of December would be: A. $176,400 B. $252,000 C. $247,800 D. $71,400 130. Retained earnings at the end of December would be: A. $224,500 B. $147,900 C. $88,700 D. $209,900 9-50 Chapter 009, Profit Planning Essay Questions 131. Carter Company has projected sales and production in units for the second quarter of next year as follows: Required: a. Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses (all of which are paid in cash) amount to $120,000 per month. The accounts payable balance on March 31 totals $192,000, all of which will be paid in April. Prepare a schedule for each month showing budgeted cash disbursements for Carter Company. b. Assume that all units will be sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on March 31 totaled $510,000 $(90,000 from February's sales and the remainder from March). Prepare a schedule for each month showing budgeted cash receipts for Carter Company. 9-51 Chapter 009, Profit Planning 132. 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. 9-52 Chapter 009, Profit Planning 133. TabComp Inc. is a retail distributor for MZB-33 computer hardware and related software. TabComp prepares annual sales forecasts of which the first six months of the coming year are presented below. Cash sales account for 25% of TabComp's total sales, 30% of the total sales are paid by bank credit card, and the remaining 45% are on open account (TabComp's own charge accounts). The cash and bank credit card sale payments are received in the month of the sale. Bank credit card sales are subject to a 4 % discount which is deducted immediately. The cash receipts for sales on open account are 70% in the month following the sale, 28% in the second month following the sale, and the remaining are uncollectible. TabComp's month-end inventory requirements for computer hardware units are 30% of the next month's sales. The units must be ordered two months in advance due to long lead times quoted by the manufacturer. Required: a. Calculate the cash that TabComp can expect to collect during April. Show all of your calculations. b. Determine the number of computer hardware units that should be ordered in January. Show all of your calculations. 9-53 Chapter 009, Profit Planning 134. Capid Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: Sales are budgeted at $360,000 for November, $330,000 for December, and $320,000 for January. Collections are expected to be 60% in the month of sale, 36% in the month following the sale, and 4% uncollectible. The cost of goods sold is 75% of sales. The company purchases 40% of its merchandise in the month prior to the month of sale and 60% in the month of sale. Payment for merchandise is made in the month following the purchase. The November beginning balance in the accounts receivable account is $77,000. The November beginning balance in the accounts payable account is $271,000. Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December. 9-54 Chapter 009, Profit Planning 135. Tilson Company has projected sales and production in units for the second quarter of the coming year as follows: Cash-related production costs are budgeted at $7 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $110,000 per month. The accounts payable balance on March 31 totals $193,000, which will be paid in April. All units are sold on account for $16 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $520,000 $(100,000 from February's sales and the remainder from March). Required: a. Prepare a schedule for each month showing budgeted cash disbursements for the Tilson Company. b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Company. 9-55 Chapter 009, Profit Planning 136. A sales budget is given below for one of the products manufactured by the Key Co.: The inventory of finished goods at the end of each month must equal 20% of the next month's sales. On December 31, the finished goods inventory totaled 4,000 units. Each unit of product requires three specialized electrical switches. Since the production of these specialized switches by Key's suppliers is sometimes irregular, the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs. This requirement had been met on January 1 of the current year. Required: Prepare a budget showing the quantity of switches to be purchased each month for January, February, and March and in total for the quarter. 9-56 Chapter 009, Profit Planning 137. Glinski Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.29 direct labor-hours. The direct labor rate is $7.00 per direct laborhour. The production budget calls for producing 5,600 units in June and 6,100 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. 138. Deviney Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.86 direct labor-hours. The direct labor rate is $8.20 per direct laborhour. The production budget calls for producing 6,500 units in July and 6,000 units in August. 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 5,600 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. 9-57 Chapter 009, Profit Planning 139. 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. 140. The manufacturing overhead budget of Inch Corporation is based on budgeted direct labor-hours. The September direct labor budget indicates that 4,400 direct labor-hours will be required in that month. The variable overhead rate is $5.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $59,400 per month, which includes depreciation of $10,560. All other fixed manufacturing overhead costs represent current cash flows. Required: a. Determine the cash disbursement for manufacturing overhead for September. Show your work! b. Determine the predetermined overhead rate for September. Show your work! 9-58 Chapter 009, Profit Planning 141. 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. 142. The selling and administrative expense budget of Hiser Corporation is based on the number of units sold, which are budgeted to be 1,900 units in August. The variable selling and administrative expense is $6.10 per unit. The budgeted fixed selling and administrative expense is $22,420 per month, which includes depreciation of $5,130. The remainder of the fixed selling and administrative expense represents current cash flows. Required: Prepare the selling and administrative expense budget for August. 9-59 Chapter 009, Profit Planning 143. Matuseski Corporation is preparing its cash budget for October. The budgeted beginning cash balance is $17,000. Budgeted cash receipts total $187,000 and budgeted cash disbursements total $177,000. The desired ending cash balance is $40,000. The company can borrow up to $120,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for October in good form. 144. Payment Inc. is preparing its cash budget for February. The budgeted beginning cash balance is $27,000. Budgeted cash receipts total $136,000 and budgeted cash disbursements total $128,000. The desired ending cash balance is $50,000. The company can borrow up to $110,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for February in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance. 9-60 Chapter 009, Profit Planning Key True / False Questions 1. The cash budget is developed from the budgeted income statement. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Learning Objective: 8 Learning Objective: 9 Level: Easy 2. The usual starting point in budgeting is to make a forecast of cash receipts and cash disbursements. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Medium 3. Budgets are used for planning rather than for control of operations. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Medium 4. Self-imposed budgets are those that are prepared by top management and then assigned to other managers within the organization. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Easy 9-61 Chapter 009, Profit Planning Key 5. One of the distinct advantages of a budget is that it can help to uncover potential bottlenecks before they occur. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Easy 6. A self-imposed budget can be a very effective control device in an organization. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Easy 7. A production budget is to a manufacturing firm as a merchandise purchases budget is to a merchandising firm. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium 8. In the merchandise purchases budget, the required purchases (in units) for a period can be determined by subtracting the beginning merchandise inventory (in units) from the budgeted sales (in units). FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium 9-62 Chapter 009, Profit Planning Key 9. When preparing a materials purchase budget, desired ending inventory is deducted from total needs of the period to arrive at materials to be purchased. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Medium 10. In companies that have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Hard 11. If the expected level of activity is appreciably above or below the company's present capacity, it may be desirable to adjust fixed costs in the budget. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Learning Objective: 7 Level: Medium 12. In the manufacturing overhead budget, the non-cash charges (such as depreciation) are added to the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Medium 9-63 Chapter 009, Profit Planning Key 13. In the selling and administrative budget, the non-cash charges (such as depreciation) are deducted from the total budgeted selling and administrative expenses to determine the expected cash disbursements for selling and administrative expenses. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 7 Level: Easy 14. The beginning cash balance is not included on the cash budget because the cash budget deals exclusively with cash flows rather than with balance sheet amounts. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Hard Multiple Choice Questions 15. The materials purchase budget: A. is the beginning point in the budget process. B. must provide for desired ending inventory as well as for production. C. is accompanied by a schedule of cash collections. D. is completed after the cash budget. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Learning Objective: 4 Level: Easy 9-64 Chapter 009, Profit Planning Key 16. The budget or schedule that provides necessary input data for the direct labor budget is the: A. raw materials purchases budget. B. production budget. C. schedule of cash collections. D. cash budget. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Learning Objective: 5 Level: Easy Source: CMA, adapted 17. Which of the following budgets are prepared before the sales budget? A. Choice A B. Choice B C. Choice C D. Choice D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Easy 9-65 Chapter 009, Profit Planning Key 18. The master budget process usually begins with the: A. production budget. B. operating budget. C. sales budget. D. cash budget. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Easy Source: CMA, adapted 19. The cash budget must be prepared before you can complete the: A. production budget. B. budgeted balance sheet. C. raw materials purchases budget. D. schedule of cash disbursements. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Easy Source: CMA, adapted 20. Which of the following is not a benefit of budgeting? A. It uncovers potential bottlenecks before they occur. B. It coordinates the activities of the entire organization by integrating the plans and objectives of the various parts. C. It ensures that accounting records comply with generally accepted accounting principles. D. It provides benchmarks for evaluating subsequent performance. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Easy 9-66 Chapter 009, Profit Planning Key 21. The concept of responsibility accounting means that: A. Budgetary data should be reviewed and approved by the budget committee. B. Budgetary data should be reviewed and approved by all levels of management. C. An employee's performance should be evaluated only on those items under his or her control. D. An employee's performance should be evaluated only by his or her immediate supervisor. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Medium 22. Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs. For example, if the sales manager accepts a rush order that will result in higher than normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager. This type of accounting system is known as: A. responsibility accounting. B. contribution accounting. C. absorption accounting. D. operational budgeting. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Easy Source: CMA, adapted 23. A self-imposed budget or ________________ budget is a budget that is prepared with the full cooperation of managers at all levels. A. perpetual B. master C. participative D. responsibility AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 1 Level: Easy 9-67 Chapter 009, Profit Planning Key 24. 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? A. It details the required direct labor hours. B. It details the required raw materials purchases. C. It is calculated based on the sales budget and the desired ending inventory. D. It summarizes the costs of producing units for the budget period. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Easy Source: CMA, adapted 25. The excess or deficiency of cash available over disbursements on the cash budget is calculated as follows: A. The beginning balance less the expected cash receipts less the expected cash disbursements. B. The cash available less the expected cash receipts plus the expected cash disbursements. C. The beginning balance plus the expected cash receipts less the expected cash disbursements. D. None of these. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 9-68 Chapter 009, Profit Planning Key 26. Parlee Company's sales are 30% in cash and 70% on credit. Sixty % of the credit sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data: Total cash receipts in April would be budgeted to be: A. $38,900 B. $47,900 C. $27,230 D. $36,230 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Medium 9-69 Chapter 009, Profit Planning Key 27. The PDQ Company makes collections on credit sales according to the following schedule: 25% in month of sale 70% in month following sale 4% in second month following sale 1% uncollectible The following sales have been budgeted: Cash collections in June would be: A. $113,400 B. $110,000 C. $111,000 D. $115,500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Medium 9-70 Chapter 009, Profit Planning Key 28. Tolla Company is estimating the following sales for the first six months of next year: Sales at Tolla are normally collected as 70% in the month of sale, 25% in the month following the sale, and the remaining 5% being uncollectible. Also, those customers paying in the month of sale are given a 2% discount. Based on this information, how much cash should Tolla expect to collect during the month of April? A. $281,260 B. $361,260 C. $366,010 D. $393,760 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Hard 9-71 Chapter 009, Profit Planning Key 29. Orion Corporation is preparing a cash budget the for six months beginning January 1. Shown below are the company's expected collection pattern and the budgeted sales for the period. Expected collection pattern: 65% collected in the month of sale 20% collected in the month after sale 10% collected in the second month after sale 4% collected in the third month after sale 1% uncollectible Budgeted sales: The estimated total cash collections during April from sales and accounts receivables would be: A. $155,900 B. $167,000 C. $171,666 D. $173,400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Medium Source: CMA, adapted 9-72 Chapter 009, Profit Planning Key 30. 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? A. 11,500 B. 12,500 C. 12,000 D. 14,000 Units produced = Ending inventory + Units sold - Beginning inventory = 2,000 + 12,000 - 2,500 = 11,500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Easy 31. 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: A. 62,000 units B. 70,000 units C. 58,000 units D. 50,000 units Units produced = Ending inventory + Units sold - Beginning inventory = (20% x 50,000) + 60,000 - (20% x 60,000) = 10,000 + 60,000 - 12,000 = 58,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium 9-73 Chapter 009, Profit Planning Key 32. Friden Company has budgeted sales and production over the next quarter as follows: The company has 20,000 units of product on hand at April 1. A minimum of 20% of the next month's sales needs in units must be on hand at the end of each month. July sales are expected to be 140,000 units. Budgeted sales for June would be (in units): A. 188,000 B. 160,000 C. 128,000 D. 184,000 Units produced in June = Ending inventory + Units sold - Beginning inventory 156,000 = (140,000 x 20%) + X - (X x 20%) where X = June sales in units 156,000 = 28,000 + 0.8 X X = 160,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Hard 9-74 Chapter 009, Profit Planning Key 33. 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? A. 23,200 mugs B. 26,800 mugs C. 25,900 mugs D. 34,300 mugs Units produced = Ending inventory + Units sold - Beginning inventory = (30% x 31,000) + 25,000 - (25,000 x 30%) = 9,300 + 25,000 - 7,500 = 26,800 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium 9-75 Chapter 009, Profit Planning Key 34. Superior Industries' sales budget shows quarterly sales for the next year as follows: Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales. Budgeted production for the second quarter should be: A. 7,200 units B. 8,000 units C. 8,800 units D. 8,400 units Units produced = Ending inventory + Units sold - Beginning inventory = (12,000 x 20%) + 8,000 - (8,000 x 20%) = 2,400 + 8,000 - 1,600 = 8,800 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium Source: CMA, adapted 9-76 Chapter 009, Profit Planning Key 35. The Waverly Company has budgeted sales for next year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. The finished goods inventory at the start of the year is 3,000 units. Scheduled production for the third quarter should be: A. 17,500 B. 18,500 C. 22,000 D. 13,500 Units produced = Ending inventory + Units sold - Beginning inventory = (16,000 x 25%) + 18,000 - (18,000 x 25%) = 4,000 + 18,000 - 4,500 = 17,500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium 9-77 Chapter 009, Profit Planning Key 36. The Tobler Company has budgeted production for next year as follows: Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 pounds. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs. Budgeted purchases of raw materials in the third quarter would be: A. 63,200 pounds B. 62,400 pounds C. 56,800 pounds D. 50,400 pounds Materials to be purchased = Ending inventory + Materials used - Beginning inventory = (14,000 x 10%) + 16,000 - (16,000 x 10%) = 1,400 + 16,000 - 1,600 = 15,800 units 15,800 units x 4 pounds per unit = 63,200 pounds AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Medium 9-78 Chapter 009, Profit Planning Key 37. Marple Company's budgeted production in units and budgeted raw materials purchases over the next three months are given below: Two pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 36,000 pounds of raw materials on hand on January 1. Budgeted production for February should be: A. 105,000 units B. 82,500 units C. 150,000 units D. 75,000 units Budgeted raw material purchases for February (in pounds) = [30% x (100,000 x 2 lbs)] + (February production x 2 lbs) - [30% x (February production x 2 lbs) 165,000 = 60,000 + (1.4 x February production) February production = 75,000 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Hard 9-79 Chapter 009, Profit Planning Key 38. 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? A. 474,000 ounces B. 486,000 ounces C. 490,000 ounces D. 510,000 ounces Carrots purchased (ounces) = Ending inventory + Carrots used - Beginning inventory = [5% x (150,000 x 4)] + (120,000 x 4) - [5% x (120,000 x 4)] = 30,000 + 480,000 - 24,000 = 486,000 ounces AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Hard 9-80 Chapter 009, Profit Planning Key 39. Brummitt Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.05 direct labor-hours. The direct labor rate is $7.50 per direct laborhour. The production budget calls for producing 9,100 units in May and 8,800 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. $3,300.00 B. $3,412.50 C. $6,712.50 D. $3,356.25 May: 9,100 units x 0.05 direct labor-hours x $7.50 per direct labor-hour = $3,412.50 June: 8,800 units x 0.05 direct labor-hours x $7.50 per direct labor-hour = $3,300.00 Total direct labor cost = $6,712.50 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Easy 9-81 Chapter 009, Profit Planning Key 40. 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? A. $73,125 B. $82,875 C. $63,375 D. $78,000 Budgeted direct labor cost = Units produced x Direct labor-hours per unit x Budgeted direct labor cost per unit = 16,000 x 0.75 direct labor-hours x $6.50 per direct labor-hour = $78,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Medium 41. 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: A. $67,500 B. $91,260 C. $100,980 D. $23,760 Variable overhead = 5,400 direct labor-hours x $4.40 = $23,760 Cash portion of fixed manufacturing overhead = $77,220 - $9,720 = $67,500 Total cash disbursement for overhead in January = $23,760 + $67,500 = $91,260 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 9-82 Chapter 009, Profit Planning Key 42. Golebiewski Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 4,900 direct labor-hours will be required in November. The variable overhead rate is $8.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $78,400 per month, which includes depreciation of $10,290. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for November should be: A. $22.30 B. $16.00 C. $24.40 D. $8.40 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 9-83 Chapter 009, Profit Planning Key 43. The manufacturing overhead budget at Formica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 4,400 direct labor-hours will be required in October. The variable overhead rate is $8.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $86,680 per month, which includes depreciation of $16,280. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for October should be: A. $19.70 B. $24.90 C. $8.90 D. $28.60 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 9-84 Chapter 009, Profit Planning Key 44. 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: A. $7,040 B. $19,680 C. $26,720 D. $32,160 Cash disbursements for April = (Variable overhead rate x Number of direct-labor hours) + (Fixed manufacturing overhead less depreciation) = ($4.40 x 1,600) + ($25,120 - $5,440) = $7,040 + $19,680 = $26,720 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 45. Roufs Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 7,800 units are planned to be sold in April. The variable selling and administrative expense is $3.20 per unit. The budgeted fixed selling and administrative expense is $95,160 per month, which includes depreciation of $9,360 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be: A. $85,800 B. $24,960 C. $120,120 D. $110,760 Cash disbursements for December = (Variable selling and administrative cost x Number of direct-labor hours) + (Fixed manufacturing overhead less depreciation) = (7,800 x $3.20) + ($95,160 - $9,360) = $24,960 + $85,800 = $110,760 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 7 Level: Easy 9-85 Chapter 009, Profit Planning Key 46. The selling and administrative expense budget of Spurlock Corporation is based on budgeted unit sales, which are 6,300 units for February. The variable selling and administrative expense is $9.30 per unit. The budgeted fixed selling and administrative expense is $118,440 per month, which includes depreciation of $19,530 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the February selling and administrative expense budget should be: A. $98,910 B. $157,500 C. $58,590 D. $177,030 Cash disbursements for December = (Variable selling and administrative cost x Number of direct-labor hours) + (Fixed manufacturing overhead less depreciation) = (6,300 x $9.30) + ($118,440 - $19,530) = $58,590 + $98,910 = $157,500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 7 Level: Easy 47. ABC Company has a cash balance of $9,000 on April 1. The company must maintain a minimum cash balance of $6,000. During April expected cash receipts are $45,000. Expected cash disbursements during the month total $52,000. During April the company will need to borrow: A. $2,000 B. $4,000 C. $6,000 D. $8,000 Excess cash available over disbursements = Beginning cash balance + Budgeted cash receipts - Budgeted cash disbursements = $9,000 + $45,000 - $52,000 = $2,000 Borrowing = Desired ending cash balance - Excess cash available over disbursements = $6,000 - $2,000 = $4,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 9-86 Chapter 009, Profit Planning Key 48. 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: A. $31,000 B. $39,000 C. $4,000 D. $201,000 Excess cash available over disbursements = Beginning cash balance + Budgeted cash receipts - Budgeted cash disbursements = $35,000 + $166,000 - $162,000 = $39,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 49. Guthridge Inc. is working on its cash budget for February. The budgeted beginning cash balance is $26,000. Budgeted cash receipts total $104,000 and budgeted cash disbursements total $100,000. The desired ending cash balance is $40,000. To attain its desired ending cash balance for February, the company needs to borrow: A. $0 B. $10,000 C. $40,000 D. $70,000 Excess cash available over disbursements = Beginning cash balance + Budgeted cash receipts - Budgeted cash disbursements = $26,000 + $104,000 - $100,000 = $30,000 Borrowing = Desired ending cash balance - Excess cash available over disbursements = $40,000 - $30,000 = $10,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 9-87 Chapter 009, Profit Planning Key 50. 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: A. $133,333 B. $50,000 C. $102,000 D. $78,000 * Solve backwards for this figure: $90,000 - $40,000 = $50,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 9 Level: Hard Noskey Corporation is a merchandising firm. Information pertaining to the company's sales revenue is presented in the following table. Management estimates that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Purchases of inventory are equal to next month's cost of goods sold. The cost of goods sold is 70% of the selling price. All purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase. 9-88 Chapter 009, Profit Planning Key 51. Noskey Corporation's budgeted cash collections in July from June credit sales are: A. $144,000 B. $136,800 C. $96,000 D. $91,200 Cash collections in July from June credit sales = ($240,000 x 95% collectible portion) x 40% = $91,200 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Medium 52. Noskey Corporation's budgeted total cash receipts in August are: A. $240,000 B. $294,000 C. $299,400 D. $239,400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Hard 9-89 Chapter 009, Profit Planning Key 53. Noskey Corporation's budgeted total cash payments in July for inventory purchases are: A. $405,000 B. $283,500 C. $240,000 D. $168,000 Purchases of inventory for June = Next month's total sales x 70% cost of goods sold = $460,000 x 70% = $322,000 Purchases of inventory for July = Next month's total sales x 70% cost of goods sold = $240,000 x 70% = $168,000 July cash payments for inventory purchases: June purchases: $322,000 x 75% = $241,500 July purchases: $168,000 x 25% = $42,000 Total cash payments in July for inventory = $283,500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Learning Objective: 3 Learning Objective: 4 Level: Hard 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. 9-90 Chapter 009, Profit Planning Key 54. In a budgeted income statement for the month of February, net income would be: A. $9,000 B. $1,800 C. $0 D. $4,200 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 9 Level: Medium 55. In a budgeted balance sheet, the Merchandise Inventory on February 28: A. $4,800 B. $7,500 C. $9,600 D. $3,200 Merchandise Inventory on February 28 = 50% of next month's sales at cost = 50% x ($16,000 x 60%) = $4,800 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Learning Objective: 2 Level: Medium 9-91 Chapter 009, Profit Planning Key 56. The Accounts Receivable balance that would appear in the March 31 budgeted balance sheet would be: A. $15,000 B. $16,000 C. $8,800 D. $12,400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Learning Objective: 2 Learning Objective: 8 Level: Medium 57. In a cash budget for March, the total cash receipts would be: A. $17,800 B. $8,200 C. $20,200 D. $16,000 Cash receipts in March: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Learning Objective: 8 Level: Medium 9-92 Chapter 009, Profit Planning Key 58. In a cash budget for March, the total cash disbursements would be: A. $11,200 B. $13,900 C. $22,300 D. $16,900 Cash disbursements in March: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Learning Objective: 8 Level: Hard 9-93 Chapter 009, Profit Planning Key Dilom Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January. Collections are expected to be 55% in the month of sale, 40% in the month following the sale, and 5% uncollectible. The cost of goods sold is 80% of sales. The company purchases 50% of its merchandise in the month prior to the month of sale and 50% 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 $21,700. Monthly depreciation is $17,000. Ignore taxes. 9-94 Chapter 009, Profit Planning Key 59. Expected cash collections in December are: A. $126,500 B. $230,500 C. $104,000 D. $230,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Hard 60. The cost of December merchandise purchases would be: A. $176,000 B. $208,000 C. $184,000 D. $84,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Learning Objective: 4 Level: Hard 9-95 Chapter 009, Profit Planning Key 61. December cash disbursements for merchandise purchases would be: A. $184,000 B. $196,000 C. $176,000 D. $84,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Learning Objective: 4 Level: Hard 9-96 Chapter 009, Profit Planning Key 62. The excess (deficiency) of cash available over disbursements for December would be: A. $12,800 B. $8,600 C. $17,000 D. $4,200 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Hard 9-97 Chapter 009, Profit Planning Key 63. The net income (loss) for December would be: A. $24,300 B. $12,800 C. ($4,200) D. $7,300 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 9 Level: Hard 9-98 Chapter 009, Profit Planning Key 64. The cash balance at the end of December would be: A. $40,100 B. $28,000 C. $12,100 D. $40,800 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Hard 65. The accounts receivable balance, net of uncollectible accounts, at the end of December would be: A. $89,500 B. $92,000 C. $103,500 D. $196,000 Sales in December not yet collected ($230,000 x 40%) = $92,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Level: Hard 9-99 Chapter 009, Profit Planning Key 66. Accounts payable at the end of December would be: A. $84,000 B. $92,000 C. $184,000 D. $176,000 Merchandise purchases in December not yet paid [($230,000 x 50%) + ($210,000 x 50%)] x 80% = $176,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Level: Hard 9-100 Chapter 009, Profit Planning Key 67. Retained earnings at the end of December would be: A. $342,000 B. $362,600 C. $337,800 D. $338,100 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Level: Hard 9-101 Chapter 009, Profit Planning Key Braston Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at $350,000 for November, $330,000 for December, and $340,000 for January. Collections are expected to be 70% in the month of sale, 26% in the month following the sale, and 4% uncollectible. The cost of goods sold is 70% of sales. The company purchases 50% of its merchandise in the month prior to the month of sale and 50% 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 $20,100. Monthly depreciation is $22,000. Ignore taxes. 9-102 Chapter 009, Profit Planning Key 68. Expected cash collections in December are: A. $91,000 B. $330,000 C. $322,000 D. $231,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Hard 69. The cost of December merchandise purchases would be: A. $231,000 B. $119,000 C. $245,000 D. $234,500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Learning Objective: 4 Level: Hard 9-103 Chapter 009, Profit Planning Key 70. December cash disbursements for merchandise purchases would be: A. $119,000 B. $234,500 C. $231,000 D. $238,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Learning Objective: 4 Level: Hard 9-104 Chapter 009, Profit Planning Key 71. The excess (deficiency) of cash available over disbursements for December would be: A. $20,200 B. $107,600 C. $43,700 D. $63,900 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Hard Source: CMA, adapted 9-105 Chapter 009, Profit Planning Key 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. 9-106 Chapter 009, Profit Planning Key 72. The budgeted cash collections for the upcoming December should be: A. $208,000 B. $520,000 C. $402,000 D. $462,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Medium 73. The balance in accounts payable on the budgeted balance sheet for December 31 should be: A. $161,280 B. $326,400 C. $165,120 D. $403,200 * 32% = Cost of goods sold percent for purchases. If the overall cost of goods sold is 80% of sales and purchased components are 40% of the total cost of goods sold, then the cost of goods sold percentage for the purchased components must be 40% x 80%, or 32%. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Level: Hard 9-107 Chapter 009, Profit Planning Key 74. The budgeted gross margin for the month ending December 31 would be: A. $416,000 B. $104,000 C. $134,000 D. $536,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 9 Level: Medium 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 9-108 Chapter 009, Profit Planning Key 75. Assume that the accounts receivable balance on January 1 is $70,000. Of this amount, $60,000 represents uncollected December sales and $10,000 represents uncollected November sales. Given these data, the total cash collected during January would be: A. $270,000 B. $420,000 C. $345,000 D. $360,000 * December credit sales must be calculated as follows: $60,000 = (30% + 10%) x November sales, or $150,000. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Hard 76. What is the budgeted accounts receivable balance on May 31? A. $81,000 B. $68,000 C. $60,000 D. $141,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Hard 9-109 Chapter 009, Profit Planning Key The LaGrange Company 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. 9-110 Chapter 009, Profit Planning Key 77. The total cash collected during January by LaGrange Company would be: A. $410,000 B. $254,000 C. $344,000 D. $331,500 * December credit sales must be calculated as follows: $50,000 = (30% + 10%) x November sales, or $125,000. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Hard 78. What is the budgeted accounts receivable balance on June 1 of the current year? A. $56,000 B. $64,000 C. $76,000 D. $132,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Level: Hard Source: CMA, adapted 9-111 Chapter 009, Profit Planning Key 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. 79. If Pardise Company plans to sell 480,000 units during July, the number of units it would have to manufacture during July would be: A. 440,000 units B. 480,000 units C. 510,000 units D. 450,000 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Easy 9-112 Chapter 009, Profit Planning Key 80. If 500,000 finished units were to be manufactured during July, the units of raw material needed to be purchased would be: A. 1,000,000 units B. 1,020,000 units C. 1,010,000 units D. 990,000 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Easy Sarrazin 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 8 grams of raw material. 9-113 Chapter 009, Profit Planning Key 81. If the company plans to sell 640,000 units during the year, the number of units it would have to manufacture during the year would be: A. 670,000 units B. 640,000 units C. 690,000 units D. 590,000 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Easy 82. How much of the raw material should the company purchase during the year? A. 4,720,000 grams B. 4,700,000 grams C. 4,730,000 grams D. 4,740,000 grams AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Medium 9-114 Chapter 009, Profit Planning Key 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. 83. The budgeted direct labor cost per unit of Product WZ would be: A. $12.50 B. $10.50 C. $21.00 D. $5.25 Budgeted direct labor cost per unit = Direct labor-hours per unit x Direct labor rate = 2.0 x $10.50 = $21.00 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Learning Objective: 5 Level: Easy 84. 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: A. $234,150 B. $468,300 C. $462,000 D. $455,700 Units produced = Ending inventory + Units sold - Beginning inventory = 22,000 + 400 - 100 = 22,300 Budgeted direct labor cost per unit = Direct labor-hours per unit x Direct labor rate = 2.0 x $10.50 = $21.00 Budgeted direct labor cost = Units produced x Budgeted direct labor cost per unit = 22,300 x $21.00 = $468,300 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Learning Objective: 5 Level: Medium 9-115 Chapter 009, Profit Planning Key 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. 85. The total number of units needed (i.e., unit sales plus desired ending inventory) in March is: A. 6,120 units B. 6,080 units C. 5,400 units D. 5,940 units Total number of units needed = Ending inventory + Units sold = (7,200 x 10%) + 5,400 = 6,120 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium 9-116 Chapter 009, Profit Planning Key 86. The total number of units to be produced in January is: A. 4,480 units B. 3,800 units C. 4,080 units D. 3,500 units Units produced = Ending inventory + Units sold - Beginning inventory = (6,800 x 10%) + 3,800 - 400 = 4,080 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium 87. The desired ending inventory for April is: A. 460 units B. 540 units C. 720 units D. 680 units Desired ending inventory for April = 10% of May sales = 10% x 4,600 = 460 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Easy 9-117 Chapter 009, Profit Planning Key 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. 88. The beginning inventory in units for September is: A. 370 units B. 6,700 units C. 530 units D. 670 units Beginning inventory for September = Ending inventory for August Ending inventory for August = 10% x September sales = 10% x 6,700 = 670 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium 9-118 Chapter 009, Profit Planning Key 89. The total number of units to be produced in July is: A. 7,630 units B. 7,100 units C. 6,920 units D. 7,280 units Units produced = Ending inventory + Units sold - Beginning inventory = (5,300 x 10%) + 7,100 - (7,100 x 10%) = 6,920 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Medium 90. The desired ending inventory for August is: A. 530 units B. 670 units C. 710 units D. 370 units Ending inventory for August = 10% of September sales = 10% x 6,700 = 670 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Easy 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. 9-119 Chapter 009, Profit Planning Key 91. The beginning inventory for September should be: A. 900 units B. 1,035 units C. 1,020 units D. 1,050 units Beginning inventory for September = Ending inventory for August Ending inventory for August = 15% x September sales = 15% x 7,000 = 1,050 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Easy 92. The total number of units produced in July should be: A. 6,500 units B. 5,600 units C. 5,660 units D. 5,540 units Units produced = Ending inventory + Units sold - Beginning inventory = (6,000 x 15%) + 5,600 - (5,600 x 15%) = 5,660 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Level: Easy 9-120 Chapter 009, Profit Planning Key Coles Company, 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. 93. The total cost of Material K to be purchased in August is: A. $40,970 B. $48,200 C. $33,840 D. $42,300 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Medium 9-121 Chapter 009, Profit Planning Key 94. The desired ending inventory of Material K for the month of September is: A. 7,560 yards B. 8,400 yards C. 8,700 yards D. 9,300 yards AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Medium 95. The total needs (i.e., production requirements plus desired ending inventory) of Material K for the month of November are: A. 37,800 yards B. 44,940 yards C. 37,380 yards D. 45,360 yards AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Medium 9-122 Chapter 009, Profit Planning Key Castil Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: The company wants to maintain monthly ending inventories of Jurislon equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 9,700 kilograms of Jurislon were on hand. The cost of Jurislon is $5.00 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. 96. The desired ending inventory of Jurislon for the month of September is: A. $20,900 B. $52,000 C. $52,250 D. $20,800 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Medium 9-123 Chapter 009, Profit Planning Key 97. The total cost of Jurislon to be purchased in August is: A. $302,250 B. $451,500 C. $250,000 D. $253,750 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 4 Level: Medium 9-124 Chapter 009, Profit Planning Key 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. 98. If the budgeted direct labor cost for April is $201,600, then the budgeted production of Pods for April would be: A. 21,000 units B. 29,400 units C. 18,273 units D. 15,000 units Budgeted labor cost per Pod = Direct labor hours required per Pod x Direct labor rate per hour = 1.4 x $9.60 = $13.44 Budgeted production in units = Total budgeted direct labor cost Per unit budgeted cost = $201,600 $13.44 = 15,000 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Easy 99. The budgeted direct labor cost per Pod would be: A. $13.44 B. $9.60 C. $7.38 D. $11.00 Budgeted labor cost per Pod = Direct labor hours required per Pod x Direct labor rate per hour = 1.4 x $9.60 = $13.44 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Easy 9-125 Chapter 009, Profit Planning Key 100. In June the company has budgeted to produce 22,000 Pods. The finished goods inventory on June 1 and June 30 were budgeted at 500 and 800 units, respectively. Budgeted direct labor costs incurred in June would be: A. $470,400 B. $295,680 C. $240,000 D. $211,200 Budgeted labor cost per Pod = Direct labor hours required per Pod x Direct labor rate per hour = 1.4 x $9.60 = $13.44 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Easy 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. 101. The budgeted direct labor cost per unit of Product T would be: A. $9.10 B. $11.83 C. $7.00 D. $10.40 Budgeted labor cost per Product T = Direct labor-hour required per T x Direct labor rate per hour = 1.3 x $9.10 = $11.83 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Easy 9-126 Chapter 009, Profit Planning Key 102. The company has budgeted to produce 25,000 units of Product T in June. The finished goods inventories on June 1 and June 30 were budgeted at 500 and 700 units, respectively. Budgeted direct labor costs for June would be: A. $293,384 B. $304,031 C. $295,750 D. $227,500 Budgeted labor cost per Product T = Direct labor-hour required per T x Direct labor rate per hour = 1.3 x $9.10 = $11.83 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Medium 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. 9-127 Chapter 009, Profit Planning Key 103. If the budgeted production for July is 6,000 units, then the total budgeted factory overhead for July is: A. $77,000 B. $82,000 C. $85,000 D. $93,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 104. If the budgeted production for August is 5,000 units, then the total budgeted factory overhead per unit is: A. $15 B. $18 C. $20 D. $22 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 9-128 Chapter 009, Profit Planning Key 105. If the budgeted cash disbursements for factory overhead for September are $80,000, then the budgeted production for September must be: A. 7,400 units B. 6,200 units C. 6,500 units D. 7,000 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Medium The Charade Company is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable factory overhead is $5.00 per direct labor-hour; the budgeted fixed factory overhead is $75,000 per month, of which $15,000 is factory depreciation. 9-129 Chapter 009, Profit Planning Key 106. If the budgeted direct labor time for November is 7,000 hours, then the total budgeted factory overhead for November is: A. $95,000 B. $110,000 C. $75,000 D. $125,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 107. If the budgeted cash disbursements for factory overhead for December total $105,000, then the budgeted direct labor-hours for December must be: A. 6,000 hours B. 21,000 hours C. 9,000 hours D. 3,000 hours AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Hard 9-130 Chapter 009, Profit Planning Key 108. If the budgeted direct labor time for December is 8,000 hours, then total budgeted factory overhead per direct labor-hour is (rounded): A. $14.38 B. $9.38 C. $12.50 D. $16.25 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Medium 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. 9-131 Chapter 009, Profit Planning Key 109. If the budgeted direct labor time for October is 8,000 hours, then the total budgeted factory overhead for October is: A. $140,000 B. $76,000 C. $64,000 D. $124,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 110. If the budgeted direct labor time for November is 9,000 hours, then the total budgeted cash disbursements for November must be: A. $130,000 B. $146,000 C. $70,000 D. $76,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Medium 9-132 Chapter 009, Profit Planning Key 111. If the budgeted direct labor time for December is 4,000 hours, then the predetermined factory overhead per direct labor-hour for December would be: A. $6.00 B. $29.00 C. $25.00 D. $10.00 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Medium 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. 9-133 Chapter 009, Profit Planning Key 112. The December cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. $92,720 B. $121,600 C. $81,320 D. $11,400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 113. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for December should be: A. $14.50 B. $12.20 C. $16.00 D. $1.50 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 9-134 Chapter 009, Profit Planning Key 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. 114. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for February should be: A. $17.00 B. $13.60 C. $14.00 D. $3.40 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 9-135 Chapter 009, Profit Planning Key 115. The February cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. $20,400 B. $63,600 C. $102,000 D. $84,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 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. 9-136 Chapter 009, Profit Planning Key 116. If the company has budgeted to sell 19,000 Yutes in November, then the total budgeted selling and administrative expenses for November would be: A. $529,100 B. $189,000 C. $340,100 D. $528,100 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 7 Level: Medium 117. 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: A. $546,000 B. $547,000 C. $189,000 D. $358,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 7 Level: Medium 9-137 Chapter 009, Profit Planning Key 118. If the total budget for selling and administrative expense for October is $493,300, then how many Yutes does the company plan to sell in October? A. 17,500 units B. 17,000 units C. 17,200 units D. 16,700 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 7 Level: Hard The Adams Company, a merchandising firm, has budgeted its activity for November according to the following information: Sales at $450,000, all for cash Merchandise inventory on October 31 was $200,000. The cash balance November 1 was $18,000. Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash. Budgeted depreciation for November is $25,000. The planned merchandise inventory on November 30 is $230,000. The cost of goods sold is 70% of the selling price. All purchases are paid for in cash. 9-138 Chapter 009, Profit Planning Key 119. The budgeted cash receipts for November are: A. $315,000 B. $450,000 C. $135,000 D. $475,000 Budgeted cash receipts for November: Sales = $450,000 (All sales are cash) AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 120. The budgeted cash disbursements for November are: A. $345,000 B. $375,000 C. $530,000 D. $405,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Medium 9-139 Chapter 009, Profit Planning Key 121. The budgeted net income for November is: A. $50,000 B. $68,000 C. $75,000 D. $135,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 9 Level: Medium 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. 9-140 Chapter 009, Profit Planning Key 122. The excess (deficiency) of cash available over disbursements for November is: A. $34,000 B. ($4,000) C. $26,000 D. $197,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 123. To attain its desired ending cash balance for November, the company should borrow: A. $0 B. $76,000 C. $50,000 D. $24,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 9-141 Chapter 009, Profit Planning Key Crose Inc. is working on its cash budget for November. The budgeted beginning cash balance is $22,000. Budgeted cash receipts total $118,000 and budgeted cash disbursements total $116,000. The desired ending cash balance is $40,000. 124. The excess (deficiency) of cash available over disbursements for November will be: A. $2,000 B. $20,000 C. $24,000 D. $140,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 125. To attain its desired ending cash balance for November, the company needs to borrow: A. $16,000 B. $40,000 C. $0 D. $64,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 9-142 Chapter 009, Profit Planning Key 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: Sales are budgeted at $370,000 for November, $360,000 for December, and $340,000 for January. Collections are expected to be 85% in the month of sale, 13% in the month following the sale, and 2% uncollectible. The cost of goods sold is 70% of sales. 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. Other monthly expenses to be paid in cash are $24,600. Monthly depreciation is $17,000. Ignore taxes. 9-143 Chapter 009, Profit Planning Key 126. The net income for December would be: A. $59,200 B. $83,400 C. $66,400 D. $72,600 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 9 Level: Hard 9-144 Chapter 009, Profit Planning Key 127. The cash balance at the end of December would be: A. $91,600 B. $205,500 C. $186,500 D. $19,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Level: Hard 9-145 Chapter 009, Profit Planning Key 128. The accounts receivable balance, net of uncollectible accounts, at the end of December would be: A. $94,900 B. $46,800 C. $90,200 D. $54,000 Sales in December not yet collected ($360,000 x 13%) = $46,800 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Level: Hard 129. Accounts payable at the end of December would be: A. $176,400 B. $252,000 C. $247,800 D. $71,400 Merchandise purchases in December not yet paid [($340,000 x 30%) + ($360,000 x 70%)] x 70% = $247,800 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Level: Hard 9-146 Chapter 009, Profit Planning Key 130. Retained earnings at the end of December would be: A. $224,500 B. $147,900 C. $88,700 D. $209,900 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Level: Hard 9-147 Chapter 009, Profit Planning Key Essay Questions 131. Carter Company has projected sales and production in units for the second quarter of next year as follows: Required: a. Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses (all of which are paid in cash) amount to $120,000 per month. The accounts payable balance on March 31 totals $192,000, all of which will be paid in April. Prepare a schedule for each month showing budgeted cash disbursements for Carter Company. b. Assume that all units will be sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on March 31 totaled $510,000 $(90,000 from February's sales and the remainder from March). Prepare a schedule for each month showing budgeted cash receipts for Carter Company. 9-148 Chapter 009, Profit Planning Key AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Learning Objective: 3 Learning Objective: 4 Learning Objective: 7 Level: Medium 9-149 Chapter 009, Profit Planning Key 132. 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. 9-150 Chapter 009, Profit Planning Key 9-151 Chapter 009, Profit Planning Key AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 10 Learning Objective: 2 Learning Objective: 3 Learning Objective: 8 Learning Objective: 9 Level: Hard 9-152 Chapter 009, Profit Planning Key 133. TabComp Inc. is a retail distributor for MZB-33 computer hardware and related software. TabComp prepares annual sales forecasts of which the first six months of the coming year are presented below. Cash sales account for 25% of TabComp's total sales, 30% of the total sales are paid by bank credit card, and the remaining 45% are on open account (TabComp's own charge accounts). The cash and bank credit card sale payments are received in the month of the sale. Bank credit card sales are subject to a 4 % discount which is deducted immediately. The cash receipts for sales on open account are 70% in the month following the sale, 28% in the second month following the sale, and the remaining are uncollectible. TabComp's month-end inventory requirements for computer hardware units are 30% of the next month's sales. The units must be ordered two months in advance due to long lead times quoted by the manufacturer. Required: a. Calculate the cash that TabComp can expect to collect during April. Show all of your calculations. b. Determine the number of computer hardware units that should be ordered in January. Show all of your calculations. 9-153 Chapter 009, Profit Planning Key a. The cash that TabComp can expect to collect during April is calculated below. b. The number of units that TabComp should order in January is calculated as follows. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Learning Objective: 3 Level: Hard 9-154 Chapter 009, Profit Planning Key 134. Capid Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow: Sales are budgeted at $360,000 for November, $330,000 for December, and $320,000 for January. Collections are expected to be 60% in the month of sale, 36% in the month following the sale, and 4% uncollectible. The cost of goods sold is 75% of sales. The company purchases 40% of its merchandise in the month prior to the month of sale and 60% in the month of sale. Payment for merchandise is made in the month following the purchase. The November beginning balance in the accounts receivable account is $77,000. The November beginning balance in the accounts payable account is $271,000. Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Learning Objective: 3 Level: Medium 9-155 Chapter 009, Profit Planning Key 135. Tilson Company has projected sales and production in units for the second quarter of the coming year as follows: Cash-related production costs are budgeted at $7 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $110,000 per month. The accounts payable balance on March 31 totals $193,000, which will be paid in April. All units are sold on account for $16 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $520,000 $(100,000 from February's sales and the remainder from March). Required: a. Prepare a schedule for each month showing budgeted cash disbursements for the Tilson Company. b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Company. 9-156 Chapter 009, Profit Planning Key Payments relating to the prior month (March) in April represent the balance of accounts payable at March 31. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 2 Learning Objective: 4 Level: Hard 9-157 Chapter 009, Profit Planning Key 136. A sales budget is given below for one of the products manufactured by the Key Co.: The inventory of finished goods at the end of each month must equal 20% of the next month's sales. On December 31, the finished goods inventory totaled 4,000 units. Each unit of product requires three specialized electrical switches. Since the production of these specialized switches by Key's suppliers is sometimes irregular, the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs. This requirement had been met on January 1 of the current year. Required: Prepare a budget showing the quantity of switches to be purchased each month for January, February, and March and in total for the quarter. The company's production budget is as follows: The materials purchases budget (based on the above production budget) would be as follows: *69,000 x 0.30 =20,700 **38,000 x 3 = 114,000; 114,000 x 0.30 = 34,200 9-158 Chapter 009, Profit Planning Key AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 3 Learning Objective: 4 Level: Medium 137. Glinski Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.29 direct labor-hours. The direct labor rate is $7.00 per direct laborhour. The production budget calls for producing 5,600 units in June and 6,100 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. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Easy 9-159 Chapter 009, Profit Planning Key 138. Deviney Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.86 direct labor-hours. The direct labor rate is $8.20 per direct laborhour. The production budget calls for producing 6,500 units in July and 6,000 units in August. 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 5,600 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. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 5 Level: Medium 9-160 Chapter 009, Profit Planning Key 139. 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. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 9-161 Chapter 009, Profit Planning Key 140. The manufacturing overhead budget of Inch Corporation is based on budgeted direct labor-hours. The September direct labor budget indicates that 4,400 direct labor-hours will be required in that month. The variable overhead rate is $5.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $59,400 per month, which includes depreciation of $10,560. All other fixed manufacturing overhead costs represent current cash flows. Required: a. Determine the cash disbursement for manufacturing overhead for September. Show your work! b. Determine the predetermined overhead rate for September. Show your work! AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 6 Level: Easy 9-162 Chapter 009, Profit Planning Key 141. 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. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 7 Level: Easy 9-163 Chapter 009, Profit Planning Key 142. The selling and administrative expense budget of Hiser Corporation is based on the number of units sold, which are budgeted to be 1,900 units in August. The variable selling and administrative expense is $6.10 per unit. The budgeted fixed selling and administrative expense is $22,420 per month, which includes depreciation of $5,130. The remainder of the fixed selling and administrative expense represents current cash flows. Required: Prepare the selling and administrative expense budget for August. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 7 Level: Easy 9-164 Chapter 009, Profit Planning Key 143. Matuseski Corporation is preparing its cash budget for October. The budgeted beginning cash balance is $17,000. Budgeted cash receipts total $187,000 and budgeted cash disbursements total $177,000. The desired ending cash balance is $40,000. The company can borrow up to $120,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for October in good form. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 9-165 Chapter 009, Profit Planning Key 144. Payment Inc. is preparing its cash budget for February. The budgeted beginning cash balance is $27,000. Budgeted cash receipts total $136,000 and budgeted cash disbursements total $128,000. The desired ending cash balance is $50,000. The company can borrow up to $110,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for February in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Learning Objective: 8 Level: Easy 9-166

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S. Alabama - ACCOUNTING - acc
Chapter 010, Flexible Budgets and Performance AnalysisLO4: Flexible budget performance reportLO3: Revenue and spending variancesLO5: More than one cost driverLO1: Prepare a flexible budgetProfessional Exam AdaptedLO2: Activity variancesLO6: Common
S. Alabama - ACCOUNTING - acc
Chapter 011, Standard Costs and Operating Performance MeasuresLO6: Fixed overhead variances (App 11A)LO4: Variable overhead variancesLO7: Journal entries (App 11B)LO5: Performance measures1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16Question Type T/F T/F T
S. Alabama - ACCOUNTING - acc
Chapter 012, Segment Reporting, Decentralization, and the Balanced ScorecardLO6: Service department charges (App. 12B)LO1: Segment income statementLO5: Transfer prices (App. 12A)1 2 3 4 5 6 7 8 9 10 11 12 13 14Question Type T/F T/F T/F T/F T/F T/F T/
S. Alabama - ACCOUNTING - acc
Chapter 013, Relevant Costs for Decision MakingLO5: Utilization of constrained resourceLO2: Adding or dropping a segmentLO1: Relevant cost conceptsProfessional Exam AdaptedLO6: Sell or process furtherLO4: Special ordersLO3: Make or buyOther topics
S. Alabama - ACCOUNTING - acc
Chapter 014, Capital Budgeting DecisionsLO7: (Appendix 14A) Present value conceptsLO8: (Appendix 14C) Income tax1 2 3 4 5 6 7 8 9 10 11 12 13 14Question Type T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F Conceptual M/C Conceptual M/C Conceptual M/C Conceptu
S. Alabama - ACCOUNTING - acc
Chapter 015, "How Well Am I Doing?" Statement of Cash FlowsLO5: Direct method (Appendix 15A)LO2: Operating, investing, financing1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18Question Type T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F Conceptua
S. Alabama - ACCOUNTING - acc
Chapter 016, "How Well Am I Doing?" Financial Statement AnalysisLO1: Trend and common-size analysesLO2: Ratios for common stockholdersLO3: Ratios for short-term creditorsLO4: Ratios for long-term creditors1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
S. Alabama - ACCOUNTING - acc
Ch 11-18 Build a Model Solution3/6/2001Chapter 11. Solution for Ch 11-18 Build a ModelINPUTS USED IN THE MODEL P0 Net Ppf Dpf D0 g B-T kd Skye's beta Market risk premium, MRP Risk free rate, kRF Target capital structure from debt Target capital structu
S. Alabama - ACCOUNTING - acc
Chapter 006, Cost-Volume-Profit RelationshipLO4: Effects of changes in parameters1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18Question Type T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F Conceptual M/ C Conceptual M/ C Conceptual M/ C Conceptua
S. Alabama - ACCOUNTING - acc
Chapter 007, Variable Costing: A Tool for ManagementLO3: Reconciliation of net operating incomesLO2: Prepare income statementsLO4: Evaluation of methods1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19Question Type T/F T/F T/F T/F T/F T/F T/F T/F T/F T
S. Alabama - ACCOUNTING - acc
Chapter 009, Profit PlanningLO6: Manufacturing overhead budgetLO7: Selling & administrative budgetLO9: Budgeted income statementLO10:Budgeted balance sheetLO4: Direct materials budget1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17Question Type T/F T/F T/
S. Alabama - ACCOUNTING - acc
Chapter 011, Standard Costs and Operating Performance MeasuresLO6: Fixed overhead variances (App 11A)LO4: Variable overhead variancesLO7: Journal entries (App 11B)LO5: Performance measures1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16Question Type T/F T/F T
S. Alabama - ACCOUNTING - acc
4/16/2010Chapter 11. Ch 11-18 Build a ModelWebmasters.com has developed a powerful new server that would be used for corporations Internet activities. It would cost $10 million at Year 0 to buy the equipment necessary to manufacture the server. The proj
S. Alabama - FIN - 434
4/11/2010Chapter 11 Mini CaseSituation Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The production line would be set up i
S. Alabama - ACCOUNTING - acc
Chapter 005, Cost Behavior Analysis and Use5A)LO5: Least-squares regression (AppendixLO4: Contribution format income statementLO1: Understand fixed and variable costs1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16Question Type T/F T/F T/F T/F T/F T/F T/F T/F
UCSC - COMPUTER S - 101
CMPS 101 Algorithms and Abstract Data Types Fall 2010 Midterm Exam 1 Solutions1. (20 Points) Prove that O ( f (n) O ( g (n) = O ( f (n) g (n) . In other words, if h1 (n) = O( f (n) and h2 (n) = O( g (n) , then h1 (n) h2 (n) = O( f (n) g (n) . Proof: Assu
UCSC - CMPS - 101
CMPS 101 Fall 2010 Homework Assignment 51. (3 Points) p. 538: 22.2-2 Show the d and values that result from running breadth-first search on the undirected graph below using the following vertices as source. For each source, show the order in which vertic
UCSC - CMPS - 101
CMPS 101 Algorithms and Abstract Data TypesRecurrence RelationsIteration Method Recall the following example from the induction handout.0 T ( n) = T ( n / 2 ) + 1 n =1 n2We begin by illustrating a solution technique called iteration, which consists of
UCSC - CMPS - 20
UCSantaCruzComputerScienceGameDesignCMPS 20: Game Design ExperienceCourseOverview Introduc;ontoXNA Introduc;ontoC#UCSantaCruzComputerScienceGameDesignAdministrivia IfyoudidnotsignforCMPS20,heresyour chancetoleave Permissioncodes:Classisalreadyovero
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UC Santa CruzComputer Science Game DesignCMPS 20: Game Design ExperienceClick to edit Master subtitle style Course Overview Introduction to XNA Introduction to C#11/10/10UC Santa CruzComputer Science Game DesignAdministriviaIf you did not sign for
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UCSantaCruzComputerScienceGameDesignSwitchstatementswitch (expression) cfw_ case constant-expression: statement(s); jump-statement [default: statement(s);] Example: const int raining = 1; const int snowing = 0; int weather = snowing; switch (weather) c
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UCSantaCruzComputerScienceGameDesignCMPS 20: Game Design ExperienceXNAGameStudioJanuary12,2010 ArnavJhalaAdaptedfromJimWhiteheadsslidesUCSantaCruzComputerScienceGameDesignAnnouncements Sessionschedulesbeingnalized Homework#1(HunttheWumpus) DueTh
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UC Santa CruzComputer Science Game DesignCMPS 20: Game Design ExperienceClick to edit Master subtitle styleXNA Game StudioJanuary 12, 2010 Arnav Jhala Adapted from Jim Whiteheads slides11/10/10UC Santa CruzComputer Science Game DesignAnnouncement
UCSC - CMPS - 20
UCSantaCruzComputerScienceGameDesignCMPS 20: Game Design ExperienceImagineCup TeamForma9on XNAInputJanuary14,2010 ArnavJhalaAdaptedfromJimWhiteheadsslidesUCSantaCruzComputerScienceGameDesignAnnouncements TeamForma9on(Detailsareonthewebsite) Team
UCSC - CMPS - 20
UC Santa CruzComputer Science Game DesignCMPS 20: Game Design ExperienceClick to edit Master subtitle styleImagine Cup Team Formation XNA InputJanuary 14, 2010 Arnav Jhala11/10/10UC Santa CruzComputer Science Game DesignAnnouncementsTeam Formati
UCSC - CMPS - 20
UCSantaCruzComputerScienceGameDesignCMPS 20: Game Design ExperienceInheritance Polymorphism CollisionDetec;onJanuary21,2010 ArnavJhalaAdaptedfromJimWhiteheadsslidesUCSantaCruzComputerScienceGameDesignClassica;on Classica;onistheactofassigningthin
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UC Santa CruzComputer Science Game DesignCMPS 20: Game Design ExperienceClick to edit Master subtitle styleInheritance Polymorphism Collision Detection11/10/10UC Santa CruzComputer Science Game DesignClassificationClassification is the act of ass
UCSC - CMPS - 20
UCSC - CMPS - 20
UCSC - CMPS - 101
UCSC - CMPS - 101
using System; class ChainofResponsibilityPattern cfw_ / Chain of responsibility pattern Judith Bishop June 2007 class Handler cfw_ Handler next; int id; public int Limit cfw_get; set; public Handler (int id, Handler handler) cfw_ this.id =
UCSC - CMPS - 101
UCSC - CMPS - 101
using System; /Decorator Pattern Judith Bishop Dec 2006 / Shows two decorators and the output of various / combinations of the decorators on the basic component interface IComponent cfw_ string Operation(); class Component : IComponent cfw_
UCSC - CMPS - 101
Introduction to HLSL Shaders in XNAGame Design Experience Modified from Jim Whiteheads slidesCreative Commons Attribution 3.0 (Except copyrighted images and example Shader)creativecommons.org/licenses/by/3.0What is a Shader? Recall that all 3D drawin
UCSC - CMPS - 101
UC Santa Cruz Computer Science Game Design CMPS 20: Game Design Experience2D Movement Pathnding UC Santa Cruz Computer Science Game Design Path Following at Constant Speed In previous lecture showed path following
UCSC - CMPS - 101
UC Santa CruzComputer Science Game DesignCMPS 20: Game Design ExperienceClick to edit Master subtitle style 2D Movement Pathfinding11/10/10UC Santa CruzComputer Science Game DesignPath Following at ConstantIn previous lecture showed path following
UCSC - CMPS - 101
UC Santa Cruz Computer Science Game Design Sound in games Think about truly memorable games They almost always have excellent background music and sound eects Legend of Zelda, PacMan, Katamari Damacy, LiLle Big Pla
UCSC - CMPS - 101
UC Santa CruzComputer Science Game DesignSound in gamesThink about truly memorable gamesThey almost always have excellent background music and sound effects Legend of Zelda, PacMan, Katamari Damacy, Little Big Planet, Radiant Silvergun Music and artwo
UCSC - CMPS - 101
Transformations And ColorStuffSlides modified from Andries Van Dams Intro to Graphics at Brown U2D TranslationY dx = 2 dy = 36 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 10(Points designate origin of object's local coordinate system)XComponent-wise addition of
UCSC - CMPS - 101
UCSC - CMPS - 101
UCSC - CMPS - 101
UC Santa CruzComputer Science Game DesignCommon Bounding VolumesCircle/Spher eAxis-Aligned Bounding Box (AABB)Oriented Bounding Box (OBB)Convex HullBetter bounds, better culling Faster test, less memoryMost introductory game programming texts call
UCSC - CMPS - 101
UC Santa CruzComputer Science Game DesignAnnouncementsWebsiteReadings and sample code updated Last years mid-term exam with answer key Mid-term exam date11/10/10UC Santa CruzComputer Science Game DesignVertically scrolling 2D space shooters have a
UCSC - CMPS - 101
using System; class SingletonPattern cfw_ / Singleton Pattern Judith Bishop Dec 2006 / The public property protects the private constructor public sealed class Singleton cfw_ / Private Constructor Singleton() cfw_ / Private object instantia
UCSC - CMPS - 101
UCSC - CMPS - 101
using System; / Strategy Pattern by Judith Bishop Oct 2007 / Shows two strategies and a random switch between them / The Context class Context cfw_ / Context state public const int start = 5; public int Counter = 5; / Strategy aggregation IS
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship Homework 1: Due Wednesday, March 31Spring 20101. Introduction Card: Due Wed, March 31 (50 coipes) & Mon, April 5 (50 copies) 1. Create 100 copies of introduction card that you will hand over t
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship Homework 2Spring 2010Group Homework: Due, Monday, April 5 in class Color Team Slogan, Logo, and Problem Solving Approach Decide on your color team TODAY. Meet with your team members and discus
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringHomework 3 (Due Wednesday, APRIL 7, on or before the beginning of the class) 1. Read the following two articles on Long Tail: A. Wikipedia; http:/en.wikipedia.org/wiki/Long_Tail B. C
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringHomework 4 (Due Monday, April 12 on or before the beginning of the class) 1. Group Activity: Problem/Stakeholders/Persona/Innovative Solutions As a group, A. Define the Problem B. Cr
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringHomework 5 (Due Wednesday, April 14 on or before the beginning of the class) 1. Fortune at the Bottom of the Pyramid A. Read the article on the moodle. B. Attempt to identify (perhap
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringHomework 6 (Due Monday, April 19 on or before the beginning of the class) 1. Group Activity: Need Assessment and Entrepreneurs Solution Problem as defined in the class. 2. Social Ent
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringHomework 7 (Due Wednesday, April 21 on or before the beginning of the class) 1. Co-Creation A. Read the article on the moodle. B. Think about the problem/need/demand that you worked
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship Homework 82010 Spring3+ Innovative Ideas on Moodle (Due Monday, April 26, 5:00pm) Create 3 innovative ideas for social entrepreneurship. Describe the idea as simply and clearly as possible. Fo
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringHomework 9 (Due Wednesday, April 28 on or before the beginning of the class) Read, Vote, Join, and Constructive Feedback 1. Read on Moodle what your peers have proposed. 2. Communica
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringHomework 10 (Due Monday, May 3 on or before the beginning of the class) Logistical Tasks: 1. Class Attendance: You are required to report all your class absences with reasons on mood
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringHomework 11 (Due Wednesday, May 5 on or before the beginning of the class) 1. Read the following article on the web on The Strength of Weak Ties: http:/sociology.stanford.edu/people/
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringHomework 11 (Due Wednesday, May 5 on or before the beginning of the class) 1. Read the following article on the web on "The Strength of Weak Ties": http:/sociology.stanford.edu/peopl
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringFirst some announcements: Expected major deliverables till the end of the class are: 1. Stakeholders: A. Community Engagement (provide information on moodle) B. Stakeholders Group Re
UCSC - CMPS - 80S
CMPS 80S From Software Innovation to Social Entrepreneurship2010 SpringFirst some announcements: Expected major deliverables till the end of the class are: 1. Stakeholders: A. Community Engagement (provide information on moodle) B. Stakeholders Group Re
UCSC - CMPS - 80S
CMPS 80S: Need Assessment and Product/Service Design Problem/Need/Demand _ Stakeholder Categories 1_ 2_ 3_ 4_ 5_ _ _ Product/Service that stakeholder wants/needs _ _ _ _ _ _ _ Is this new? Innovative? _ _ _ _ _ _ _ Does this connect? Value to Stakeholder