B From the above accounts receivable history information receipts from accounts

B from the above accounts receivable history

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B. From the above accounts receivable history information, receipts from accounts receivable do not equal 100 percent Why not? Does this amount appear on the cash budget? ANS: A. Total cash expected in June = $16,000 + $12,000 + $48,000 + (0.8)($80,000) (0.30) = $95,200 B. 30% + 50% + 15% = 95% The remaining 5% is uncollectible. It does not appear on the cash budget because there is no cash involved. Page 10 of 12
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10. Acme Brick Company uses the following rule to determine whether materials usage variances should be investigated: A materials usage variance will be investigated when the variance is greater than either $5,000 or 8 percent of the standard cost. During June, the company purchased and used 9,500 pounds of concrete for $5 per pound. It was able to make 20,000 bricks. Its standard quantity of materials allowed is 0.45 pound of concrete per brick at a standard price of $7 per pound. A. Determine Acme's material usage variance and whether it is favorable or unfavorable. B. Should the variance be investigated? ANS: A. MUV = (AQ – SQ)SP = (9,500 – 9,000)$7 = $3,500 U B. Standard Materials Cost = 9,000 × $7 = $63,000, and 8% of it = $63,000× 8% = $5,040. The unfavorable MUV of $3,500 is not greater than the $5,000 rule or greater than 8% of the standard cost. Hence, the variance should not be investigated. 11. Favor Company budgeted the following amounts: Variable costs of production: Direct labor .80 hours @ $15.00 per hour Direct materials 5 pounds @ $1.50 per pound Variable overhead .75 hours @ $2.60 Fixed overhead: Page 11 of 12
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Materials handling $8,000 Depreciation $2,500 Required: Prepare a flexible budget for 1,200 units, 1,500 units and 1,800 units. ANS: 1,200 units 1,500 units 1,800 units Direct materials $9,0 00 $11,25 0 $13,50 0 Direct labor $14,4 00 $18,00 0 $21,60 0 Variable overhead $2,3 40 $2,92 5 $3,51 0 Fixed overhead: Materials handling $8,0 00 $8,00 0 $8,00 0 Depreciation $2,5 00 $2,50 0 $2,50 0 Total $36,2 40 $42,67 5 $49,11 0 Page 12 of 12
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