Exam 8: Activity-Based Costing: a Tool to Aid Decision Making

The cash budget is usually prepared after the budgeted income statement.

LFM Corporation makes and sells a product called Product WZ.Each unit of Product WZ requires 3.5 hours of direct labor at the rate of $16.00 per direct labor-hour.Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 31,000 units of Product WZ in June.The finished goods inventories on June 1 and June 30 are budgeted to be 100 and 600 units,respectively.Budgeted direct labor costs for June 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:

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?

For July,White Corporation has budgeted production of 6,000 units.Each unit requires 0.10 direct labor-hours at a cost of $8.50 per direct labor-hour.How much will White Corporation budget for labor in July?

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:

The direct labor budget shows the direct labor-hours required to produce the desired ending inventory.

Davey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year.The budgeted variable manufacturing overhead rate is $3.00 per direct labor-hour;the budgeted fixed manufacturing overhead is $66,000 per month,of which $10,000 is factory depreciation. If the budgeted direct labor time for October is 6,000 hours,then the total budgeted manufacturing overhead for October is:

The following information was taken from the production budget of Paeke Corporation for next quarter: How many units is the company expecting to sell in the month of February?

The manufacturing overhead budget at Pendley Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 8,900 direct labor-hours will be required in August.The variable overhead rate is $5.50 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $133,500 per month,which includes depreciation of $30,260.All other fixed manufacturing overhead costs represent current cash flows.The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for August should be:

The manufacturing overhead budget is typically prepared before the production budget.

The direct labor budget of Faier Corporation for the upcoming year contains the following details concerning budgeted direct labor-hours. The company's variable manufacturing overhead rate is $3.50 per direct labor-hour,and the company's fixed manufacturing overhead is $65,000 per quarter.The only noncash item included in the fixed manufacturing overhead is depreciation which is $22,000 per quarter. Required: Prepare Faier Corporation's manufacturing overhead budget for the upcoming fiscal year.Show both manufacturing overhead expense and cash disbursements for manufacturing overhead.

Sparks Corporation has a cash balance of $7,500 on April 1.The company must maintain a minimum cash balance of $6,000.During April,expected cash receipts are $48,000.Cash disbursements during the month are expected to total $52,000.Ignoring interest payments,during April the company will need to borrow:

The manufacturing overhead budget at Cardera Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 2,300 direct labor-hours will be required in January.The variable overhead rate is $1.00 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $28,060 per month,which includes depreciation of $4,600.All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for January should be:

Noel 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 400 units.The company needs to prepare a production budget for the second quarter of the year. The total number of units to be produced in July is:

The following are budgeted data for the Bingham Corporation,a merchandising company: The desired ending inventory (at cost)for February would be:

The following are budgeted data for the Bingham Corporation,a merchandising company: Assuming that the Bingham Corporation had inventory on hand of $70,000 (at cost)on January 1,the purchases for January (at cost)would be:

Noel 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 400 units.The company needs to prepare a production budget for the second quarter of the year. The beginning inventory in units for September is:

Roberts Corporation manufactures home cleaning products.One of the products,Quickclean,requires 2 pounds of Material A and 5 pounds of Material B per unit manufactured.Material A is purchased from the supplier for $0.30 per pound and Material B is purchased for $0.50 per pound.The finished goods inventory on hand at the end of each month should equal 4,000 units plus 25% of the next month's sales.The raw materials inventory on hand at the end of each month (for either Material A or Material B)should equal 80% of the following month's production needs. The production budget calls for 26,000 units of Quickclean to be manufactured in June and 32,000 units of Quickclean to be manufactured in July.On May 31 there will be 41,600 pounds of Material A and 104,000 pounds of Material B in inventory. Assume that on January 1 the inventory of Quickclean was 8,000 units.Expected sales in January are 14,000 units and expected sales in February are 18,000 units.The number of units needed to be produced in January would be:

Poriss 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 19,000 Yutes in November,then the total budgeted selling and administrative expenses for November would be: