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Exam 8: Profit Planning

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Question 31

True/False

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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.

A) True
B) False

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Question 32

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Dilom Farm Supply is located in a small town in the rural west.Data regarding the store's operations follow: $\bullet$ Sales are budgeted at $260,000 for November,$230,000 for December,and $210,000 for January. $\bullet$ Collections are expected to be 55% in the month of sale,40% in the month following the sale,and 5% uncollectible. $\bullet$ The cost of goods sold is 80% of sales. $\bullet$ 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. $\bullet$ Other monthly expenses to be paid in cash are $21,700. $\bullet$ Monthly depreciation is $17,000. $\bullet$ Ignore taxes. -Expected cash collections in December are:

A) $126,500
B) $230,500
C) $104,000
D) $230,000

E) B) and C)
F) A) and C)

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Question 33

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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. -If Pardise Company plans to sell 480,000 units during July,the number of units it would have to manufacture during July would be:

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. -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?

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 labor-hour.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?

Accounts payable at the end of December would be:

In a cash budget for March,the total cash receipts would be:

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: $\bullet$ Sales are budgeted at $370,000 for November,$360,000 for December,and $340,000 for January. $\bullet$ Collections are expected to be 85% in the month of sale,13% in the month following the sale,and 2% uncollectible. $\bullet$ The cost of goods sold is 70% of sales. $\bullet$ 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. $\bullet$ Other monthly expenses to be paid in cash are $24,600. $\bullet$ Monthly depreciation is $17,000. $\bullet$ Ignore taxes. -The net income for December would be:

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?

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. -If the budgeted production for August is 5,000 units,then the total budgeted factory overhead per unit is:

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. -If 500,000 finished units were to be manufactured during July,the units of raw material needed to be purchased would be:

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. -The total number of units produced in July should be:

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. -The beginning inventory in units for September is:

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. -The total number of units needed (i.e. ,unit sales plus desired ending inventory) in March is:

The net income (loss) for December would be:

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: $\bullet$ Sales are budgeted at $370,000 for November,$360,000 for December,and $340,000 for January. $\bullet$ Collections are expected to be 85% in the month of sale,13% in the month following the sale,and 2% uncollectible. $\bullet$ The cost of goods sold is 70% of sales. $\bullet$ 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. $\bullet$ Other monthly expenses to be paid in cash are $24,600. $\bullet$ Monthly depreciation is $17,000. $\bullet$ Ignore taxes. -Retained earnings at the end of December would be:

Braston Corporation is a small wholesaler of gourmet food products.Data regarding the store's operations follow: $\bullet$ Sales are budgeted at $350,000 for November,$330,000 for December,and $340,000 for January. v Collections are expected to be 70% in the month of sale,26% in the month following the sale,and 4% uncollectible. $\bullet$ The cost of goods sold is 70% of sales. $\bullet$ 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. $\bullet$ Other monthly expenses to be paid in cash are $20,100. $\bullet$ Monthly depreciation is $22,000. $\bullet$ Ignore taxes. -December cash disbursements for merchandise purchases would be:

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:

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.

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.