Cal Poly - Fall 2009 - Practice Final with Solutions

Cal Poly - Fall 2009 - Practice Final with Solutions - Fall...

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Fall 2009 Accounting 208 Practice Final Exam Page 1 of 28 PROBLEM #1: Part A. Dodero Company’s production budget for the next four months is given below: July August September October Required Production 15,000 18,000 20,000 16,000 Each unit of product uses five ounces of raw materials. At the end of June, 11,250 ounces of material were on hand. The company wants to maintain an inventory of materials equal to 15% of the following month’s production needs. Complete the following materials purchases budget for the third quarter: July August September Quarter Required production (units) 15,000 18,000 20,000 53,000 Raw materials needed per unit (ounces) x 5 oz x 5 oz x 5 oz x 5 oz Production Needs (ounces) 75,000 90,000 100,000 265,000 Add desired ending inventory (ounces) 13,500 15,000 12,000* 12,000 Total needs (ounces) 88,500 105,000 112,000 277,000 Less beginning inventory (ounces) 11,250 13,500 15,000 11,250 Raw materials to be purchased (ounces) 77,250 91,500 97,000 265,750 * 16,000 units for October x 5 oz = 80,000 oz 80,000 oz x 15 % = 12,000 oz Part B. Actual sales in Plain White Ts were $50,000 in April, $60,000 in May, and $40,000 in June. Budgeted sales in July are $90,000. Forty percent (40%) of a month’s sales are collected in the month of sale, Forty-five percent (45%) in the first month after sale, Ten percent (10%) in the second month after sale, and the remaining 5% are uncollectible. Budgeted cash receipts for July should be:
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Fall 2009 Accounting 208 Practice Final Exam Page 2 of 28 July Sales ($90,000 x 40%) $ 36,000 June Sales ($40,000 x 45%) 18,000 May Sales ($60,000 x 10%) 6,000 April Sales ($50,000 x 0%)* 0 Total Cash Sales $ 60,000 * Remaining April Sales of 5% are uncollectible. Part C Eye Care Company, a distributor of eye care products, is ready to begin its third quarter, in which peak sales occur. The company has requested a $20,000, 90-day loan from its bank to help meet cash requirements during the quarter. Since Eye Care Company has experienced difficulty in paying off its loans in the past, the loan officer at the bank has asked the company to prepare a cash budget for the quarter. In response to this request, the following data has been assembled: a. A cash balance of $30,000. b. Actual sales for the last two months and budgeted sales for the third quarter follow (all sales are on account). a. May (actual) $ 180,000 b. June (actual 220,000 c. July (budgeted) 300,000 d. August (budgeted) 380,000 e. September (budgeted) 350,000 f. Past experience shows that 25% of a month’s sales are collected in the month of the sale, 65% in the month following the sale and 5% in the second month following the sale. The remainder is uncollectible. c.
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This note was uploaded on 06/05/2010 for the course ACC Acc208 taught by Professor Acc208 during the Fall '09 term at Cal Poly Pomona.

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Cal Poly - Fall 2009 - Practice Final with Solutions - Fall...

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