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The WRT Corporation makes collections on sales according to the following schedule:

1.

The WRT Corporation makes collections on sales according to the following schedule:

 

30% in month of sale
64% in month following sale
6% in second month following sale

 

The following sales have been are expected:

 

 Expected Sales
  April$100,000    
  May$110,000    
  June$100,000    

 

Budgeted cash collections in June should be budgeted to be:
$100,400$100,600$106,400$100,000

2.

The manufacturing overhead budget at Amrein Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 3,900 direct labor-hours will be required in August. The variable overhead rate is $7 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,230 per month, which includes depreciation of $3,530. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

$67,000$70,530$27,300$39,700

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3.

Richards Corporation has the following budgeted sales for the first half of next year:

  

 Cash SalesCredit Sales
  January$80,000       $180,000     
  February$85,000       $200,000     
  March$36,000       $160,000     
  April$41,000       $136,000     
  May$51,000       $230,000     
  June$110,000       $260,000     

  

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:
  55% in month of sales
  30% in month of following sales
  15.0% in second month following sales

  

The accounts receivable balance on January 1 is $68,000. Of this amount, $54,000 represents uncollected December sales and $14,000 represents uncollected November sales.

 

The total cash collected during January would be:

 

$241,000$300,000$120,000$229,000

4.

Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

  

Sales are budgeted at $380,000 for November, $400,000 for December, and $400,000 for January.

Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and 1% uncollectible.

The cost of goods sold is 75% of sales.

The company would like to maintain ending merchandise inventories equal to 65% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

Other monthly expenses to be paid in cash are $22,200.
Monthly depreciation is $19,400.
Ignore taxes.

 

Balance Sheet
October 31
  Assets 
  Cash$32,000  
  Accounts receivable, net of allowance for uncollectible accounts80,000  
  Merchandise inventory185,250  
  Property, plant and equipment, net of $608,000 accumulated depreciation1,190,000  
  Total assets

$1,487,250  

  
  Liabilities and Stockholders' Equity 
  Accounts payable$250,000  
  Common stock880,000  
  Retained earnings357,250  
  Total liabilities and stockholders' equity

$1,487,250  

  
December cash disbursements for merchandise purchases would be:

$275,250$294,750$300,000$195,000 

5.

Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

  

Sales are budgeted at $350,000 for November, $370,000 for December, and $370,000 for January.

Collections are expected to be 80% in the month of sale, 18% in the month following the sale, and 2% uncollectible.

The cost of goods sold is 75% of sales.

The company would like to maintain ending merchandise inventories equal to 80% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

Other monthly expenses to be paid in cash are $21,900.
Monthly depreciation is $19,100.
Ignore taxes.

 

Balance Sheet
October 31
  Assets 
  Cash$29,000  
  Accounts receivable, net of allowance for uncollectible accounts77,000  
  Merchandise inventory210,000  
  Property, plant and equipment, net of $605,000 accumulated depreciation1,175,000  
  Total assets

$1,491,000  

  
  Liabilities and Stockholders' Equity 
  Accounts payable$287,500  
  Common stock850,000  
  Retained earnings353,500  
  Total liabilities and stockholders' equity

$1,491,000  

  
The difference between cash receipts and cash disbursements in December would be:

$16,000$132,100$62,600$30,550

6.

LFM Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.6 hours of direct labor at the rate of $15.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.

  
The budgeted direct labor cost per unit of Product WZ would be:

$15.00 per unit

$31.80 per unit

$8.20 per unit

$54.00 per unit

7.

Skeete Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $4.10 per unit. The budgeted fixed selling and administrative expense is $30,150 per month, which includes depreciation of $3,420. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 4,000 units are planned to be sold in November.

 

Required:
Prepare the selling and administrative expense budget for November.


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Solution to Budgets.xlsx

Q1 Q2 Budgeted cash collections in June should be budgeted to be:
Month
Expected Sales
Collection
Apr
May April
100000
30000
64000 May
110000
33000 June
100000 June
6000
70400
30000
106400 The...

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