Exam 8: Flexible Budgets, Standard Costs, and Variance Analysis

The following are budgeted data for the Bingham Corporation, a merchandising company: Assume that all purchases are paid for in the month following the month of purchase. The cash disbursements for purchases that would appear in the April cash budget would be:

Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: o Sales are budgeted at $380,000 for November, $390,000 for December, and $400,000 for January. O Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible. O The cost of goods sold is 65% of sales. O The company desires to have an ending merchandise inventory equal to 80% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase. O Other monthly expenses to be paid in cash are $22,000. O Monthly depreciation is $20,000. O Ignore taxes. The cash balance at the end of December would be:

The WRT Corporation makes collections on sales according to the following schedule: The following sales have been budgeted: Budgeted cash collections in June would be:

Parsons Corporation plans to sell 18,000 units during August. If the company has 5,500 units on hand at the start of the month, and plans to have 6,000 units on hand at the end of the month, how many units must be produced during the month?

Muecke Inc. is working on its cash budget for April. The budgeted beginning cash balance is $40,000. Budgeted cash receipts total $150,000 and budgeted cash disbursements total $158,000. The desired ending cash balance is $50,000. To attain its desired ending cash balance for April, the company needs to borrow:

Harris 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 20% of the next month's sales in units. The inventory on May 31 contained 1,880 units. The company needs to prepare a production budget for the next five months. The beginning inventory for September should be:

Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January. O Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and 1% uncollectible. O The cost of goods sold is 65% of sales. O The company desires to have an ending merchandise inventory at the end of each month equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. O Other monthly expenses to be paid in cash are $20,300. O Monthly depreciation is $20,000. O Ignore taxes. The difference between cash receipts and cash disbursements for December would be:

The Covey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $4.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $64,000 per month, of which $18,000 is factory depreciation. If the budgeted direct labor time for October is 8,000 hours, then the total budgeted manufacturing overhead for October is:

Harrti Corporation has budgeted for the following sales: Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?

Budgets are used to plan and to control operations.

The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information: • Sales at $450,000, all for cash. • Merchandise inventory on October 31 was $200,000. • The cash balance November 1 was $18,000. • Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash. • Budgeted depreciation for November is $25,000. • The planned merchandise inventory on November 30 is $230,000. • The cost of goods sold is 70% of the selling price. • All purchases are paid for in cash. • There is no interest expense or income tax expense. The budgeted net income for November is:

Sarter Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Each unit of finished goods requires 3 grams of raw material. The company plans to sell 880,000 units during the year. How much of the raw material should the company purchase during the year?

The Khaki Corporation has the following budgeted sales data: The regular pattern of collection of credit sales is 40% in the month of sale, 50% in the month following sale, and the remainder in the second month following the month of sale. There are no bad debts. The budgeted accounts receivable balance on February 28 would be:

The Khaki Corporation has the following budgeted sales data: The regular pattern of collection of credit sales is 40% in the month of sale, 50% in the month following sale, and the remainder in the second month following the month of sale. There are no bad debts. The budgeted cash receipts for April would be:

Richards Corporation has the following budgeted sales for the first half of next 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: The accounts receivable balance on January 1 is $70,000. Of this amount, $60,000 represents uncollected December sales and $10,000 represents uncollected November sales. The total cash collected during January would be:

All of Porter Corporation's sales are on account. Sixty percent of the credit sales are collected in the month of sale, 25% in the month following sale, and 10% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data for the company: Cash receipts in April are expected to be:

Rogers Corporation is preparing its cash budget for July. The budgeted beginning cash balance is $25,000. Budgeted cash receipts total $141,000 and budgeted cash disbursements total $139,000. The desired ending cash balance is $30,000. To attain its desired ending cash balance for July, the company should borrow:

Kouba Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.23 direct labor-hours. The direct labor rate is $11.20 per direct labor-hour. The production budget calls for producing 4,000 units in April and 3,400 units in May. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 920 hours in total each month even if there is not enough work to keep them busy. Required: Construct the direct labor budget for the next two months.

Rhett Corporation manufactures and sells dress shirts. Each shirt (unit) requires 3 yards of cloth. Selected data from Rhett's master budget for next quarter are shown below: How many yards of cloth should Rhett plan on purchasing in May?

The LFG Corporation makes and sells a single product, Product T. Each unit of Product T requires 1.4 direct labor-hours at a rate of $9.80 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. LFG Corporation needs to prepare a Direct Labor Budget for the second quarter of next year. The company has budgeted to produce 24,000 units of Product T in June. The finished goods inventories on June 1 and June 30 were budgeted at 600 and 800 units, respectively. Budgeted direct labor costs for June would be: