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
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
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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