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Exam 8: Master Budgeting

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Question 101

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In the merchandise purchases budget, the required purchases (in units) for a period can be determined by subtracting the beginning merchandise inventory (in units) from the budgeted sales (in units) and desired ending merchandise inventory (in units).

A) True
B) False

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Question 102

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Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit. B. Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month. C. The ending finished goods inventory equals 20% of the following month's sales. D. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound. E. Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month. F. The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours. G. The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000. The expected cash collections for May is closest to:

A) $262,500
B) $1,022,500
C) $760,000
D) $950,000

E) B) and C)
F) None of the above

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Question 103

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Porter 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 company has budgeted to sell 14,000 Yutes in November, then the total budgeted selling and administrative expenses for November would be:

The LaGrange Corporation had the following budgeted sales for the first half of the current year: 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 sales: 60% in month of sale 30% in month following sale 10% in second month following sale The accounts receivable balance on January 1 of the current year was $70,000, of which $50,000 represents uncollected December sales and $20,000 represents uncollected November sales. What is the budgeted accounts receivable balance on May 31?

Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: The company wants to maintain monthly ending inventories of Jurislon equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 10,800 kilograms of Jurislon were on hand. The cost of Jurislon is $18.00 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. The total cost of Jurislon to be purchased in August is:

KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given. Sales are collected 80% in the month of the sale and the balance in the month following the sale. (There are no bad debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month following the sale. The "selling and administrative expenses" are paid in the month of the sale. The amount of cash collected during June should be:

Rokosz Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $104. Budgeted unit sales for October, November, December, and January are 6,900, 7,100, 11,300, and 15,300 units, respectively. All sales are on credit. B.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. C.The ending finished goods inventory equals 20% of the following month's sales. D.The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound. E. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. The budgeted required production for November is closest to:

Wala Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $8.20 per unit. The budgeted fixed selling and administrative expense is $132,800 per month, which includes depreciation of $14,400. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 8,000 units are planned to be sold in July. Required: Prepare the selling and administrative expense budget for July.

Hennagir Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected: 40% in the month of the sale 60% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 10% of the following month's sales. The ending raw materials inventory should equal 40% of the following month's raw materials production needs. Required: a. What are the budgeted sales for February? b. What are the expected cash collections for February? c. What is the budgeted accounts receivable balance at the end of February? d. According to the production budget, how many units should be produced in February? e. If 32,400 pounds of raw materials are needed for production in March, how many pounds of raw materials should be purchased in February? f. What is the estimated cost of raw materials purchases for February? g. If the cost of raw material purchases in January is $145,680, then in February what are the total estimated cash disbursements for raw materials purchases? h. What is the estimated accounts payable balance at the end of February? i. What is the estimated raw materials inventory balance at the end of February? j. What is the total estimated direct labor cost for February assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?

Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. * Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 510,000 units during next year, the number of units it would have to manufacture during the year would be:

Knappert Corporation makes one product and has provided the following information: a. Each unit of finished goods requires 3 pounds of raw materials. The raw materials cost $5.00 per pound. B. The direct labor wage rate is $24.00 per hour. Each unit of finished goods requires 2.8 direct labor-hours. C. Manufacturing overhead is entirely variable and is $11.00 per direct labor-hour. D.The variable selling and administrative expense per unit sold is $3.80. The fixed selling and administrative expense per month is $50,000. The unit product cost is closest to:

Coles Corporation, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows: The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. The desired ending inventory of Material K for September is:

On October 1, Gala Corporation has 300 units of Product XYZ on hand. The company plans to sell 1,200 units of Product XYZ during October, and plans to have 500 units on hand October 31. How many units of Product XYZ must be produced during October?

Hesterman Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected: 40% in the month of the sale 60% in the following month The ending finished goods inventory should equal 40% of the following month's sales. The ending raw materials inventory should equal 20% of the following month's raw materials production needs. The estimated direct labor cost for May is closest to:

The direct labor budget begins with the required production in units from the production budget.

Murie Corporation makes one product and has provided the following information: The estimated net operating income (loss) for February is closest to:

Luchini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit. B. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. C. The ending finished goods inventory equals 10% of the following month's sales. D. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $5.00 per pound. E. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. F. The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct labor-hours. G. Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing overhead is zero. The estimated finished goods inventory balance at the end of May is closest to:

Rokosz Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $104. Budgeted unit sales for October, November, December, and January are 6,900, 7,100, 11,300, and 15,300 units, respectively. All sales are on credit. B. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. C. The ending finished goods inventory equals 20% of the following month's sales. D. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound. E. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. The expected cash collections for November is closest to:

Sill Corporation makes one product. Budgeted unit sales for January, February, March, and April are 9,900, 11,400, 11,900, and 13,400 units, respectively. The ending finished goods inventory equals 20% of the following month's sales. The ending raw materials inventory equals 40% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. If 61,000 pounds of raw materials are required for production in March, then the budgeted raw material purchases for February is closest to:

Fiwrt Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales Fiwrt (in units) for the next three months are as follows: Fiwrt likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales. How many mugs should Fiwrt plan on producing during the month of November?