Deck 9: Budgeting

Question 1

Modesto Company produces and sells Product AlphaB.To guard against stockouts,the company requires that 20% of the next month's sales be on hand at the end of each month.Budgeted sales of Product AlphaB over the next four months are:
$\begin{array}{|l|r|r|r|r|}\hline & \text { June } & \text { July } & \text { August } & \text { September } \\\hline \begin{array}{l}\text { Budgeted Sales } \\\text { in Units }\end{array} & 30,000 & 40,000 & 60,000 & 50,000 \\\hline\end{array}$
What would be the budgeted production for August?

A) 50,000 units.
B) 58,000 units.
C) 62,000 units.
D) 70,000 units.

Answer 1

58,000 units.

Question 2

Fairmont Inc.uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs.For example,if the sales manager accepts a rush order that will result in higher than normal manufacturing costs,these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager.What best describes this type of an accounting system?

A) Responsibility accounting.
B) Contribution accounting.
C) Absorption accounting.
D) Operational budgeting.

Answer 2

A

Question 3

The master budget process usually begins with which of the following?

A) Production budget.
B) Operating budget.
C) Sales budget.
D) Cash budget.

Answer 3

C

Question 4

What is a continuous (or perpetual)budget?

A) It is prepared for a range of activity so that the budget can be adjusted for changes in activity.
B) It is a plan that is updated monthly or quarterly, dropping one period and adding another.
C) It is a strategic plan that does not change.
D) It is used in companies that experience no change in sales.

Question 5

Orion Corporation is preparing a cash budget for the six months beginning January 1.Shown below are the company's expected collection pattern and the budgeted sales for the period:
Expected collection pattern:
65% collected in the month of sale
20% collected in the month after sale
10% collected in the second month after sale
4% collected in the third month after sale
1% uncollectible
Budgeted Sales:
$\begin{array}{|l|r|}\hline \text { Tanuary } & \$ 160,000 \\\hline \text { February } & 185,000 \\\hline \text { March } & 190,000 \\\hline \text { April } & 170,000 \\\hline \text { May } & 200,000 \\\hline \text { June } & 180,000 \\\hline\end{array}$
What would be the estimated total cash collections during April from sales and accounts receivables?

A) $155,900.
B) $167,000.
C) $171,666.
D) $173,400.

Question 6

Which of the following best describes a method of budgeting in which the cost of each program must be justified every year?

A) Operational budgeting.
B) Zero-based budgeting.
C) Continuous budgeting.
D) Responsibility accounting.

Question 7

Which of the following variances in a comprehensive performance report using the flexible budget concept is the most appropriate for measuring efficiency of operations?

A) Sales volume variance.
B) Contribution margin variance.
C) Flexible budget variance.
D) Total static budget variance.

Question 8

The PDQ Company makes collections on credit sales according to the following schedule:
25% in month of sale
70% in month following sale
4% in second month following sale
1% uncollectible
The following sales have been budgeted:
$\begin{array}{|l|r|}\hline \text { Month } & \text { Sales } \\\hline \text { April } & \$ 100,000 \\\hline \text { May } & 120,000 \\\hline \text { June } & 110,000 \\\hline\end{array}$
What would be the cash collections in June?

A) $110,000.
B) $111,500.
C) $113,400.
D) $115,500.

Question 9

Parlee Company's sales are 30% in cash and 70% on credit.Sixty percent 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 is uncollectible.The following are budgeted sales data:
$\begin{array}{|l|r|r|r|r|}\hline & \text { January } & \text { February } & \text { March } & \text { April } \\\hline \text { Total Sales } & \$ 60,000 & \$ 70,000 & \$ 50,000 & \$ 30,000 \\\hline\end{array}$
What would be the budgeted total cash receipts in April?

A) $27,230.
B) $36,230.
C) $38,900.
D) $47,900.

Question 10

Which of the following best describes the direct materials purchase budget?

A) It is the beginning point in the budget process.
B) It must provide for the desired ending inventory as well as for production.
C) It is accompanied by a schedule of cash collections.
D) It is completed after the cash budget.

Question 11

Which of the following best describes a typical participative budget?

A) It is NOT subject to review by higher levels of management since to do so would contradict the participative aspect of the budgeting processing.
B) It is NOT subject to review by higher levels of management except in specific cases where the input of higher management is required.
C) It is subject to review by higher levels of management in order to prevent the budgets from becoming too loose.
D) It is NOT critical to the success of a budgeting program.

Question 12

The cash budget must be prepared before you can complete which of the following?

A) Production budget.
B) Budgeted balance sheet.
C) Raw materials purchases budget.
D) Schedule of cash disbursements.

Question 13

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?

A) It details the required direct labour hours.
B) It details the required raw materials purchases.
C) It is calculated based on the sales budget and the desired ending inventory.
D) It summarizes the costs of producing units for the budget period.

Question 14

What is the budget or schedule that provides necessary input data for the direct labour budget?

A) Raw materials purchases budget.
B) Production budget.
C) Schedule of cash collections.
D) Cash budget.

Question 15

Walsh Company expects sales of Product W to be 60,000 units in April,75,000 units in May,and 70,000 units in June.The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales.Due to excessive production during March,there were 25,000 units of Product W in the ending inventory on March 31.Given this information,what should be Walsh Company's production of Product W for the month of April?

A) 60,000 units.
B) 65,000 units.
C) 66,000 units.
D) 75,000 units.

Question 16

Friden Company has budgeted sales and production over the next quarter as follows:
$\begin{array}{|l|rr|r|} \hline& \text { Apri } & \text { May } & \text { June } \\\hline \text { Sales in Units } & 100,000 & 120,000 & ? \\\hline \text { Production in Units } & 104,000 & 128,000 & 156,000 \\\hline\end{array}$
On April 1,the company has 20,000 units of product on hand.A minimum of 20% of the next month's sales needs (in units)must be on hand at the end of each month.July sales are expected to be 140,000 units.What would be the budgeted sales for June (in units)?

A) 128,000 units.
B) 160,000 units.
C) 184,000 units.
D) 188,000 units.

Question 17

Budgeted sales in Allen Company over the next four months are given below:
$$\begin{array} { | r | r |r |r| r | } \hline& \text { September } & \text { October } & \text { November } & \text { December } \\\hline \text { Budgeted Sales } & \$ 100,000 & \$ 160,000 & \$ 180,000 & \$ 120,000\\\hline\end{array}$$
Twenty-five percent of the company's sales are for cash,and 75% are on account.Collections for sales on account follow a stable pattern as follows: 50% of a month's sales are collected in the month of sale,30% are collected in the month following sale,and 15% are collected in the second month following sale.The remainder is uncollectible.Given these data,what should be cash collections for December?

A) $133,500.
B) $120,000.
C) $138,000.
D) $153,000.

Question 18

Superior Industries' sales budget shows quarterly sales for the next year as follows:
$\begin{array}{|l|r|}\hline \text { Quarter } & \text { Sales (Units) } \\\hline \text { First } & 10,000 \\\hline \text { Second } & 8,000 \\\hline \text { Third } & 12,000 \\\hline \text { Fourth } & 14,000 \\\hline\end{array}$
Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales.What should be the budgeted production for the second quarter?

A) 7,200 units.
B) 8,000 units.
C) 8,400 units.
D) 8,800 units.

Question 19

Which of the following is NOT a benefit of budgeting?

A) It uncovers potential bottlenecks before they occur.
B) It coordinates the activities of the entire organization by integrating the plans and objectives of the various parts.
C) It ensures that records comply with generally accepted accounting principles.
D) It provides benchmarks for evaluating subsequent performance.

Question 20

Pardee Company plans to sell 12,000 units during the month of August.If the company has 2,500 units on hand at the start of the month,and plans to have 2,000 units on hand at the end of the month,how many units must be produced during the month?

A) 11,500 units.
B) 12,000 units.
C) 12,500 units.
D) 14,000 units.

Question 21

nformation on the actual sales and inventory purchases of the Law Company for the first quarter follow:
$\begin{array} { | l | r | r | } \hline & \text { Inventory Sales } & \text { Purchases } \\\hline \text { January } & \$ 120,000 & \$ 60,000 \\\hline \text { February } & 100,000 & 78,000 \\\hline \text { March } & 130,000 & 90,000 \\\hline\end{array}$
Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.

The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000.




-What would be the expected cash disbursements during April for inventory purchases?

A) $87,300.
B) $90,000.
C) $97,000.
D) $100,000.

Question 22

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below: $\begin{array} { |l | r | } \hline & \text { Expected Sales } \\\hline \text { January } & \$ 10,000 \\\hline \text { February } & 24,000 \\\hline \text { March } & 16,000 \\\hline \text { April } & 25,000 \\\hline\end{array}$ The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred.

-In a budgeted balance sheet,what would be the merchandise inventory on February 28?

A) $3,200.
B) $4,800.
C) $7,500.
D) $9,600.

Question 23

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below: $\begin{array} { |l | r | } \hline & \text { Expected Sales } \\\hline \text { January } & \$ 10,000 \\\hline \text { February } & 24,000 \\\hline \text { March } & 16,000 \\\hline \text { April } & 25,000 \\\hline\end{array}$ The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred.

-In a budget of cash disbursements for March,what would be the total cash disbursements?

A) $11,200.
B) $13,900.
C) $16,900.
D) $22,300.

Question 24

ABC Company has a cash balance of $9,000 on April 1.The company must maintain a minimum cash balance of $6,000.During April,expected cash receipts are $45,000.Expected cash disbursements during the month total $52,000.What amount will the company need to borrow during April?

A) $2,000.
B) $4,000.
C) $6,000.
D) $8,000.

Question 25

The Stacy Company makes and sells a single product: Product R.Budgeted sales for April are $300,000.Gross margin is budgeted at 30% of sales dollars.If the net income for April is budgeted at $40,000,what are the budgeted selling and administrative expenses?

A) $50,000.
B) $78,000.
C) $102,000.
D) $133,333.

Question 26

Marple Company's budgeted production in units and budgeted raw materials purchases over the next three months are given below:
$$\begin{array} { | l | r | r | r | } \hline & \text { January } & \text { February } & \text { March } \\\hline \begin{array} { l } \text { Budgeted Production } \\\text { (in Units) }\end{array} & 60,000 & ?& 100,000 \\\hline \begin{array} { l } \text { Budgeted Raw } \\\text { Materials: Purchases }\end{array} & 129,000 & 165,000 & 188,000 \\\text { (in Kilograrns) } & & & \\\hline\end{array}$$
Two kilograms of raw materials are required to produce one unit of product.The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs.The company is expected to have 36,000 kilograms of raw materials on hand on January 1.What should be the budgeted production for February?

A) 75,000 units.
B) 82,500 units.
C) 105,000 units.
D) 150,000 units.

Question 27

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below: $\begin{array} { |l | r | } \hline & \text { Expected Sales } \\\hline \text { January } & \$ 10,000 \\\hline \text { February } & 24,000 \\\hline \text { March } & 16,000 \\\hline \text { April } & 25,000 \\\hline\end{array}$ The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred.

-In a budgeted income statement for the month of February,what would be the net income?

A) $0.
B) $1,800.
C) $4,200.
D) $9,000.

Question 28

nformation on the actual sales and inventory purchases of the Law Company for the first quarter follow:
$\begin{array} { | l | r | r | } \hline & \text { Inventory Sales } & \text { Purchases } \\\hline \text { January } & \$ 120,000 & \$ 60,000 \\\hline \text { February } & 100,000 & 78,000 \\\hline \text { March } & 130,000 & 90,000 \\\hline\end{array}$
Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.

The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000.




-What would be the expected cash disbursements during April for operating expenses?

A) $15,000.
B) $23,000.
C) $30,000.
D) $38,000.

Question 29

The Tobler Company has budgeted production for next year as follows:
$\begin{array}{|l|r|r|r|r|}\hline \text { Quarter } & \text { First } & \text { Second } & \text { Third } & \text { Fourth } \\\hline \text { Production in } & 10,000 & 12,000 & 16,000 & 14,000 \\\text { Units } & & & & \\\hline\end{array}$
Four kilograms of raw materials are required for each unit produced.At the start of the year,raw materials on hand total 4,000 kilograms.The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs.What would be the budgeted purchases of raw materials in the third quarter?

A) 50,400 kilograms.
B) 56,800 kilograms.
C) 62,400 kilograms.
D) 63,200 kilograms.

Question 30

KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given.
$\begin{array}{|l|r|r|r|}\hline & \text { May (actual) } & \text { June (budget) } & \text { July (budget) } \\\hline \text { Sales } & \$ 42,000 & \$ 40,000 & \$ 45,000 \\\hline \text { Cost of sales } & \underline{21,000} & \underline{20,000} & \underline{22,500} \\\hline \text { Gross margin } & 21,000 & 20,000 & 22,500 \\\hline \text { Operating expenses } & 20,000 & 20,000 & 20,000 \\\hline \text { Operating income } & \$ 1,000 & \$ 0 & \$ 2,500 \\\hline\end{array}$ 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 purchase. The operating expenses are paid in the month of the sale.



-What should be the cash disbursements during the month of June for goods purchased for resale and for operating expenses?

A) $40,000.
B) $41,000.
C) $42,500.
D) $43,500.

Question 31

The LaPann Company has obtained the following sales forecast data:
$\begin{array} { | l | r | r | r | r | } \hline & \text { July } & \text { August } & \text { September } & \text { October } \\\hline \text { Cash Sales } & \$ 80,000 & \$ 70,000 & \$ 50,000 & \$ 60,000 \\\hline \text { Credit Sales } & 240,000 & 220,000 & 180,000 & 200,000 \\\hline\end{array}$
The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts.




-What are the budgeted cash receipts for October?

A) $188,000.
B) $226,000.
C) $248,000.
D) $278,000.

Question 32

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below: $\begin{array} { |l | r | } \hline & \text { Expected Sales } \\\hline \text { January } & \$ 10,000 \\\hline \text { February } & 24,000 \\\hline \text { March } & 16,000 \\\hline \text { April } & 25,000 \\\hline\end{array}$ The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred.

-What would be the accounts receivable balance that would appear in the March 31 budgeted balance sheet?

A) $8,800.
B) $12,400.
C) $15,000.
D) $16,000.

Question 33

Avril Company makes collections on sales according to the following schedule:
30% in the month of sale
60% in the month following sale
8% in the second month following sale
The following sales are expected:
$\begin{array}{|l|r|}\hline & \text { Expected Sales } \\\hline \text { Tanuary } & \$ 100,000 \\\hline \text { February } & 120,000 \\\hline \text { March } & 110,000 \\\hline\end{array}$
What should be the budgeted cash collections in March?

A) $105,000.
B) $110,000.
C) $110,800.
D) $113,000.

Question 34

KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given.
$\begin{array}{|l|r|r|r|}\hline & \text { May (actual) } & \text { June (budget) } & \text { July (budget) } \\\hline \text { Sales } & \$ 42,000 & \$ 40,000 & \$ 45,000 \\\hline \text { Cost of sales } & \underline{21,000} & \underline{20,000} & \underline{22,500} \\\hline \text { Gross margin } & 21,000 & 20,000 & 22,500 \\\hline \text { Operating expenses } & 20,000 & 20,000 & 20,000 \\\hline \text { Operating income } & \$ 1,000 & \$ 0 & \$ 2,500 \\\hline\end{array}$ 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 purchase. The operating expenses are paid in the month of the sale.



-What should be the amount of cash collected during the month of June?

A) $32,000.
B) $40,000.
C) $40,400.
D) $41,000.

Question 35

nformation on the actual sales and inventory purchases of the Law Company for the first quarter follow:
$\begin{array} { | l | r | r | } \hline & \text { Inventory Sales } & \text { Purchases } \\\hline \text { January } & \$ 120,000 & \$ 60,000 \\\hline \text { February } & 100,000 & 78,000 \\\hline \text { March } & 130,000 & 90,000 \\\hline\end{array}$
Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.

The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000.




-What would be the expected cash balance on April 30?

A) $19,700.
B) $28,700.
C) $54,700.
D) $62,700.

Question 36

The Waverly Company has budgeted sales for next year as follows:
$\begin{array}{|c|c|c|c|}\hline \text { Quarter } & \text { First } & \text { Second } & \text { Third } \\\hline \text { Sales in Units } & 12,000 & 14,000 & 18,000 \\\hline\end{array}$

The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units.The finished goods inventory at the start of the year is 3,000 units.What should be the scheduled production for the third quarter?

A) 13,500 units.
B) 17,500 units.
C) 18,500 units.
D) 22,000 units.

Question 37

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below: $\begin{array} { |l | r | } \hline & \text { Expected Sales } \\\hline \text { January } & \$ 10,000 \\\hline \text { February } & 24,000 \\\hline \text { March } & 16,000 \\\hline \text { April } & 25,000 \\\hline\end{array}$ The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred.

-In a budget of cash receipts for March,what would be the total cash receipts?

A) $8,200.
B) $16,000.
C) $17,800.
D) $20,200.

Question 38

nformation on the actual sales and inventory purchases of the Law Company for the first quarter follow:
$\begin{array} { | l | r | r | } \hline & \text { Inventory Sales } & \text { Purchases } \\\hline \text { January } & \$ 120,000 & \$ 60,000 \\\hline \text { February } & 100,000 & 78,000 \\\hline \text { March } & 130,000 & 90,000 \\\hline\end{array}$
Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.

The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000.




-What would be the expected cash collections from customers during April?

A) $117,600.
B) $137,000.
C) $139,000.
D) $150,000.

Question 39

The LaPann Company has obtained the following sales forecast data:
$\begin{array} { | l | r | r | r | r | } \hline & \text { July } & \text { August } & \text { September } & \text { October } \\\hline \text { Cash Sales } & \$ 80,000 & \$ 70,000 & \$ 50,000 & \$ 60,000 \\\hline \text { Credit Sales } & 240,000 & 220,000 & 180,000 & 200,000 \\\hline\end{array}$
The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts.




-What is the budgeted accounts receivable balance on September 30?

A) $126,000.
B) $148,000.
C) $166,000.
D) $190,000.

Question 40

The Willsey Merchandise Company has budgeted $40,000 in sales for the month of December.The company's cost of goods sold is 30% of sales.If the company has budgeted to purchase $18,000 in merchandise during December,what is the budgeted change in inventory levels over the month of December?

A) $6,000 increase.
B) $10,000 decrease.
C) $15,000 increase.
D) $22,000 decrease.

Question 41

Roberts Enterprises has budgeted sales in units for the next five months as follows: $\begin{array} {| l | r | } \hline \text { June } & 4,500 \text { units } \\\hline \text { July } & 7,100 \text { units } \\\hline \text { August } & 5,300 \text { units } \\\hline \text { September } & 6,700 \text { units } \\\hline \text { October } & 3,700 \text { units } \\\hline\end{array}$ 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.





-What is the opening inventory in units for September?

A) 370 units.
B) 530 units.
C) 670 units.
D) 6,700 units.

Question 42

The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available:
$\begin{array}{l}\begin{array} { | l | r | r | } \hline & \text { Variable cost per unit sold } & \text { Monthly fixed cost } \\\hline \text { Sales commissions } & \$ 0.70 & \\\hline \text { Shipping } & 1.10 & \\\hline \text { Advertising } & 0.20 & \$14,000 \\\hline \text { Executive salaries } & &34,000 \\\hline \begin{array} { l r } \text { Depreciation on office } \\\text { equipment }\end{array} & & 11,000 \\\hline \text { Other } & 0.25 & 19,000\\ \hline\end{array}\\\\\\\text { All expenses other than depreciation are paid in cash in the month they are incurred. }\end{array}$


-If the company has budgeted to sell 20,000 units of Product SW in October,what will be the total budgeted variable selling and administrative expenses for October?

A) $40,000.
B) $45,000.
C) $56,250.
D) $78,000.

Question 43

Pardise Company plans the following beginning and ending inventory levels (in units) for July:
$\begin{array} {| l | r | r | } \hline & \text { July 1 } & \text { July 31 } \\\hline \text { Raw material } & 40,000 & \mathbf { 5 0 , 0 0 0 } \\\hline \text { Work in process } & 10,000 & 10,000 \\\hline \text { Finished goods } & 80,000 & 50,000 \\\hline\end{array}$ 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,what would be the units of raw material needed to be purchased?

A) 900,000 units.
B) 1,000,000 units.
C) 1,010,000 units.
D) 1,020,000 units.

Question 44

Roberts Enterprises has budgeted sales in units for the next five months as follows: $\begin{array} {| l | r | } \hline \text { June } & 4,500 \text { units } \\\hline \text { July } & 7,100 \text { units } \\\hline \text { August } & 5,300 \text { units } \\\hline \text { September } & 6,700 \text { units } \\\hline \text { October } & 3,700 \text { units } \\\hline\end{array}$ 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.





-What is the total number of units to be produced in July?

A) 6,920 units.
B) 7,100 units.
C) 7,280 units.
D) 7,630 units.

Question 45

Noel Enterprises has budgeted sales in units for the next five months as follows:
$\begin{array} {| l | r |} \hline \text { January } & 6,800 \text { units } \\\hline \text { February } & 5,400 \text { units } \\\hline \text { March } & 7,200 \text { units } \\\hline \text { April } & 4,600 \text { units } \\\hline \text { May } & 3,800 \text { units } \\\hline\end{array}$ 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 December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year.



-What is the desired ending inventory for March?

A) 380 units.
B) 460 units.
C) 540 units.
D) 720 units.

Question 46

Noel Enterprises has budgeted sales in units for the next five months as follows:
$\begin{array} {| l | r |} \hline \text { January } & 6,800 \text { units } \\\hline \text { February } & 5,400 \text { units } \\\hline \text { March } & 7,200 \text { units } \\\hline \text { April } & 4,600 \text { units } \\\hline \text { May } & 3,800 \text { units } \\\hline\end{array}$ 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 December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year.



-What is the total number of units to be produced in February?

A) 5,220 units.
B) 5,400 units.
C) 5,580 units.
D) 6,120 units.

Question 47

The LFM Company makes and sells a single product: Product T. Each unit of Product T requires 1.3 hours of labour at a labour rate of $9.10 per hour. LFM Company needs to prepare a Direct Labour Budget for the second quarter of next year.

-What would be the budgeted direct labour cost per unit of Product T?

A) $7.00.
B) $9.10.
C) $10.40.
D) $11.83.

Question 48

Noel Enterprises has budgeted sales in units for the next five months as follows:
$\begin{array} {| l | r |} \hline \text { January } & 6,800 \text { units } \\\hline \text { February } & 5,400 \text { units } \\\hline \text { March } & 7,200 \text { units } \\\hline \text { April } & 4,600 \text { units } \\\hline \text { May } & 3,800 \text { units } \\\hline\end{array}$ 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 December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year.



-What is the opening inventory in units for April?

A) 380 units.
B) 460 units.
C) 720 units.
D) 680 units.

Question 49

Barley Enterprises has budgeted unit sales for the next four months as follows:
$\begin{array} { |l | r | } \hline \text { October } & 4,800 \text { units } \\\hline \text { November } & 5,800 \text { units } \\\hline \text { December } & 6,400 \text { units } \\\hline \text { January } & 5,200 \text { units } \\\hline\end{array}$ The ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on September 30 was below this level and contained only 600 units.



-What are the total units to be produced in October?

A) 4,530 units.
B) 5,070 units.
C) 5,670 units.
D) 5,890 units.

Question 50

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,what is the total budgeted factory overhead per unit?

A) $15.
B) $18.
C) $20.
D) $22.

Question 51

The LaGrange Company had the following budgeted sales for the first half of the current year: $\begin{array} { |l | r | r | } \hline & \text { Cash Sales } & \text { Credit Sales } \\\hline \text { January } & \$ 70,000 & \$ 340,000 \\\hline \text { February } & 50,000 & 190,000 \\\hline \text { March } & 40,000 & 135,000 \\\hline \text { April } & 35,000 & 120,000 \\\hline \text { May } & 45,000 & 160,000 \\\hline \text { June } & 40,000 & 140,000 \\\hline\end{array}$ 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 June 1 of the current year?

A) $56,000.
B) $64,000.
C) $76,000.
D) $132,000.

Question 52

The LaGrange Company had the following budgeted sales for the first half of the current year: $\begin{array} { |l | r | r | } \hline & \text { Cash Sales } & \text { Credit Sales } \\\hline \text { January } & \$ 70,000 & \$ 340,000 \\\hline \text { February } & 50,000 & 190,000 \\\hline \text { March } & 40,000 & 135,000 \\\hline \text { April } & 35,000 & 120,000 \\\hline \text { May } & 45,000 & 160,000 \\\hline \text { June } & 40,000 & 140,000 \\\hline\end{array}$ 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 would be the total cash collected by LaGrange Company during January?

A) $261,500.
B) $331,500.
C) $344,000.
D) $274,000.

Question 53

Barley Enterprises has budgeted unit sales for the next four months as follows:
$\begin{array} { |l | r | } \hline \text { October } & 4,800 \text { units } \\\hline \text { November } & 5,800 \text { units } \\\hline \text { December } & 6,400 \text { units } \\\hline \text { January } & 5,200 \text { units } \\\hline\end{array}$ The ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on September 30 was below this level and contained only 600 units.



-What is the desired ending inventory for December?

A) 690 units.
B) 780 units.
C) 870 units.
D) 960 units.

Question 54

Roberts Enterprises has budgeted sales in units for the next five months as follows: $\begin{array} {| l | r | } \hline \text { June } & 4,500 \text { units } \\\hline \text { July } & 7,100 \text { units } \\\hline \text { August } & 5,300 \text { units } \\\hline \text { September } & 6,700 \text { units } \\\hline \text { October } & 3,700 \text { units } \\\hline\end{array}$ 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.





-What is the desired ending inventory for August?

A) 370 units.
B) 530 units.
C) 670 units.
D) 710 units.

Question 55

The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available:
$\begin{array}{l}\begin{array} { | l | r | r | } \hline & \text { Variable cost per unit sold } & \text { Monthly fixed cost } \\\hline \text { Sales commissions } & \$ 0.70 & \\\hline \text { Shipping } & 1.10 & \\\hline \text { Advertising } & 0.20 & \$14,000 \\\hline \text { Executive salaries } & &34,000 \\\hline \begin{array} { l r } \text { Depreciation on office } \\\text { equipment }\end{array} & & 11,000 \\\hline \text { Other } & 0.25 & 19,000\\ \hline\end{array}\\\\\\\text { All expenses other than depreciation are paid in cash in the month they are incurred. }\end{array}$


-If the budgeted cash disbursements for selling and administrative expenses for November total $123,250,then how much was the total selling and administrative budget for November?

A) $123,250.
B) $134,250.
C) $168,250.
D) $187,250.

Question 56

The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available:
$\begin{array}{l}\begin{array} { | l | r | r | } \hline & \text { Variable cost per unit sold } & \text { Monthly fixed cost } \\\hline \text { Sales commissions } & \$ 0.70 & \\\hline \text { Shipping } & 1.10 & \\\hline \text { Advertising } & 0.20 & \$14,000 \\\hline \text { Executive salaries } & &34,000 \\\hline \begin{array} { l r } \text { Depreciation on office } \\\text { equipment }\end{array} & & 11,000 \\\hline \text { Other } & 0.25 & 19,000\\ \hline\end{array}\\\\\\\text { All expenses other than depreciation are paid in cash in the month they are incurred. }\end{array}$


-If the company has budgeted to sell 24,000 units of Product SW in September,what would be the total budgeted fixed selling and administrative expenses for September?

A) $48,000.
B) $54,000.
C) $67,000.
D) $78,000.

Question 57

The LFM Company makes and sells a single product: Product T. Each unit of Product T requires 1.3 hours of labour at a labour rate of $9.10 per hour. LFM Company needs to prepare a Direct Labour Budget for the second quarter of next year.

-The company has budgeted to produce 25,000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 500 and 700 units,respectively.What would be the budgeted direct labour costs incurred in June?

A) $227,500.
B) $293,384.
C) $295,750.
D) $304,031.

Question 58

The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available:
$\begin{array}{l}\begin{array} { | l | r | r | } \hline & \text { Variable cost per unit sold } & \text { Monthly fixed cost } \\\hline \text { Sales commissions } & \$ 0.70 & \\\hline \text { Shipping } & 1.10 & \\\hline \text { Advertising } & 0.20 & \$14,000 \\\hline \text { Executive salaries } & &34,000 \\\hline \begin{array} { l r } \text { Depreciation on office } \\\text { equipment }\end{array} & & 11,000 \\\hline \text { Other } & 0.25 & 19,000\\ \hline\end{array}\\\\\\\text { All expenses other than depreciation are paid in cash in the month they are incurred. }\end{array}$


-If the company has budgeted to sell 25,000 units of Product SW in July,what will be the total budgeted selling and administrative expenses for July?

A) $56,250.
B) $78,000.
C) $123,250.
D) $134,250.

Question 59

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 July is 6,000 units,what is the total budgeted factory overhead for July?

A) $18,000.
B) $75,000.
C) $93,000.
D) $109,000.

Question 60

Pardise Company plans the following beginning and ending inventory levels (in units) for July:
$\begin{array} {| l | r | r | } \hline & \text { July 1 } & \text { July 31 } \\\hline \text { Raw material } & 40,000 & \mathbf { 5 0 , 0 0 0 } \\\hline \text { Work in process } & 10,000 & 10,000 \\\hline \text { Finished goods } & 80,000 & 50,000 \\\hline\end{array}$ 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,what would be the number of units it would have to manufacture during July?

A) 440,000 units.
B) 450,000 units.
C) 480,000 units.
D) 510,000 units.

Question 61

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars.

Carney Corporation
Cash Budget



-What is the cash disbursed for purchases during the second quarter (item c),in thousands of dollars?

A) $9.
B) $13.
C) $21.
D) $55.

Question 62

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars.

Carney Corporation
Cash Budget



-What is the borrowing required during the first quarter to meet the minimum cash balance (item b),in thousands of dollars?

A) $0.
B) $3.
C) $7.
D) $10.

Question 63

Pollitt Potato Packers has a flexible budget for manufacturing overhead that is based on direct labour hours. The following overhead costs appear on the flexible budget at the 200,000-hour level of activity:
$\begin{array} { | l | r | } \hline \text { Variable overhead costs (total): } & \\\hline \text { Packing supplies } & \$ 120,000 \\\hline \text { Indirect labour } & \$ 180,000 \\\hline \text { Fixed overhead costs (total): } &\\\hline \text { Utilities } & \$ 100,000 \\\hline \text { Insurance } & \$ 40,000 \\\hline \text { Rent } & \$ 20,000\\\hline\end{array}$


-At an activity level of 180,000 direct labour hours,what amount would the flexible budget estimate for total budgeted fixed costs?

A) $100,000.
B) $144,000.
C) $150,000.
D) $160,000.

Question 64

Pollitt Potato Packers has a flexible budget for manufacturing overhead that is based on direct labour hours. The following overhead costs appear on the flexible budget at the 200,000-hour level of activity:
$\begin{array} { | l | r | } \hline \text { Variable overhead costs (total): } & \\\hline \text { Packing supplies } & \$ 120,000 \\\hline \text { Indirect labour } & \$ 180,000 \\\hline \text { Fixed overhead costs (total): } &\\\hline \text { Utilities } & \$ 100,000 \\\hline \text { Insurance } & \$ 40,000 \\\hline \text { Rent } & \$ 20,000\\\hline\end{array}$


-What amount would the flexible budget estimate for total variable overhead cost per direct labour hour?

A) $0.60.
B) $0.90.
C) $1.50.
D) $1.80.

Question 65

Mandalay Hotel bases its budgets on guest-days. The hotel's static budget for August appears below:
$\begin{array} { | l | r | } \hline \text { Budgeted number of guest-days } & 4,300 \\\hline \text { Budgeted variable overhead costs: } & \\\hline \text { Supplies (@\$.60 per guest-day) } & \$ 41,280 \\\hline \text { Laundry ( @9.40 per guest-day) } & \underline{ 4 0 , 4 2 0 } \\\hline \text { Total variable overhead cost } & 81,700 \\\hline \text { Budgeted fixed overhead costs: } & \\\hline \text { Wages and salaries } & 57,190 \\\hline \text { Occupancy costs } & \underline { 52,030 } \\\hline \text { Total fixed overhead cost } & 109,220 \\\hline \text { Total budgeted overhead cost } & \$ 190,920 \\\hline\end{array}$


-What is the expected total fixed overhead cost at an activity level of 5,500 guest-days per month?

A) $139,700
B) $190,920
C) $244,200
D) $109,220

Question 66

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars.

Carney Corporation
Cash Budget



-What is the repayment (including interest)of financing during the second quarter (item d),in thousands of dollars?

A) $0.
B) $4.
C) $7.
D) $17.

Question 67

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below:
$\begin{array}{|l|r|}\hline \text { Budgeted number of patient-visits } & 8,300 \\\hline \text { Budgeted variable overhead costs: } & \\\hline \text { Supplies (@\$5.00 per patient-visit) } & \$ 41,500 \\\hline \text { Laundry (@\$7.30 per patient-visit) } &\underline{60,590}\\\hline \text { Total variable overhead cost } & 102,090 \\\hline \text { Budgeted fixed overhead costs: } & \\\hline \text { Wages and salaries } & 60,590 \\\hline \text { Occupancy costs } & \underline{73,040} \\\hline \text { Total fixed overhead cost } & 133,630 \\\hline \text { Total budgeted overhead cost } & \$ 235,720 \\\hline\end{array}$




-What should be the total fixed overhead cost at an activity level of 9,600 patient-visits per month?

A) $133,630.
B) $154,560.
C) $235,720.
D) $272,640.

Question 68

The Bandeiras Company, a merchandising firm, has budgeted its activity for December according to the following information:

I. Sales at $550,000, all for cash.
II. Merchandise inventory on November 30 was $300,000.
III. Budgeted depreciation for December is $35,000.
IV. The cash balance at December 1 was $25,000.
V. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash.
VI. The planned merchandise inventory on December 31 is $270,000.
VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash.


-What are the budgeted cash receipts for December?

A) $137,500.
B) $412,500.
C) $550,000.
D) $585,000.

Question 69

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars.

Carney Corporation
Cash Budget



-What are the total collections from customers for the year,in thousands of dollars?

A) $260.
B) $277.
C) $290.
D) $284.

Question 70

Pollitt Potato Packers has a flexible budget for manufacturing overhead that is based on direct labour hours. The following overhead costs appear on the flexible budget at the 200,000-hour level of activity:
$\begin{array} { | l | r | } \hline \text { Variable overhead costs (total): } & \\\hline \text { Packing supplies } & \$ 120,000 \\\hline \text { Indirect labour } & \$ 180,000 \\\hline \text { Fixed overhead costs (total): } &\\\hline \text { Utilities } & \$ 100,000 \\\hline \text { Insurance } & \$ 40,000 \\\hline \text { Rent } & \$ 20,000\\\hline\end{array}$


-At an activity level of 160,000 direct labour hours,what amount would the flexible budget estimate for the utilities?

A) $80,000.
B) $100,000.
C) $120,000.
D) $160,000.

Question 71

The Bandeiras Company, a merchandising firm, has budgeted its activity for December according to the following information:

I. Sales at $550,000, all for cash.
II. Merchandise inventory on November 30 was $300,000.
III. Budgeted depreciation for December is $35,000.
IV. The cash balance at December 1 was $25,000.
V. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash.
VI. The planned merchandise inventory on December 31 is $270,000.
VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash.


-What are the budgeted cash disbursements for December?

A) $382,500.
B) $442,500.
C) $472,500.
D) $477,500.

Question 72

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below:
$\begin{array}{|l|r|}\hline \text { Budgeted number of patient-visits } & 8,300 \\\hline \text { Budgeted variable overhead costs: } & \\\hline \text { Supplies (@\$5.00 per patient-visit) } & \$ 41,500 \\\hline \text { Laundry (@\$7.30 per patient-visit) } &\underline{60,590}\\\hline \text { Total variable overhead cost } & 102,090 \\\hline \text { Budgeted fixed overhead costs: } & \\\hline \text { Wages and salaries } & 60,590 \\\hline \text { Occupancy costs } & \underline{73,040} \\\hline \text { Total fixed overhead cost } & 133,630 \\\hline \text { Total budgeted overhead cost } & \$ 235,720 \\\hline\end{array}$




-What should be the total variable overhead cost at an activity level of 9,300 patient-visits per month?

A) $114,390.
B) $149,730.
C) $102,090.
D) $133,630.

Question 73

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars.

Carney Corporation
Cash Budget



-What are the collections from customers during the first quarter (item a),in thousands of dollars?

A) $43.
B) $67.
C) $60.
D) $73.

Question 74

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars.

Carney Corporation
Cash Budget



-What are the total disbursements during the third quarter (item f),in thousands of dollars?

A) $59.
B) $78.
C) $82.
D) $84.

Question 75

Mandalay Hotel bases its budgets on guest-days. The hotel's static budget for August appears below:
$\begin{array} { | l | r | } \hline \text { Budgeted number of guest-days } & 4,300 \\\hline \text { Budgeted variable overhead costs: } & \\\hline \text { Supplies (@\$.60 per guest-day) } & \$ 41,280 \\\hline \text { Laundry ( @9.40 per guest-day) } & \underline{ 4 0 , 4 2 0 } \\\hline \text { Total variable overhead cost } & 81,700 \\\hline \text { Budgeted fixed overhead costs: } & \\\hline \text { Wages and salaries } & 57,190 \\\hline \text { Occupancy costs } & \underline { 52,030 } \\\hline \text { Total fixed overhead cost } & 109,220 \\\hline \text { Total budgeted overhead cost } & \$ 190,920 \\\hline\end{array}$


-What is the expected total variable overhead cost at an activity level of 5,000 guest-days per month?

A) $127,000
B) $109,220
C) $95,000
D) $81,700

Question 76

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below:
$\begin{array}{|l|r|}\hline \text { Budgeted number of patient-visits } & 8,300 \\\hline \text { Budgeted variable overhead costs: } & \\\hline \text { Supplies (@\$5.00 per patient-visit) } & \$ 41,500 \\\hline \text { Laundry (@\$7.30 per patient-visit) } &\underline{60,590}\\\hline \text { Total variable overhead cost } & 102,090 \\\hline \text { Budgeted fixed overhead costs: } & \\\hline \text { Wages and salaries } & 60,590 \\\hline \text { Occupancy costs } & \underline{73,040} \\\hline \text { Total fixed overhead cost } & 133,630 \\\hline \text { Total budgeted overhead cost } & \$ 235,720 \\\hline\end{array}$




-What should be the total overhead cost at an activity level of 9,400 patient-visits per month?

A) $235,720
B) $249,250
C) $266,960
D) $250,640

Question 77

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 all cash expenses are paid for in the month incurred what is the budgeted cash disbursements for manufacturing overhead if 5,500 units are produced?

A) $16,500.
B) $75,500.
C) $91,500.
D) $99,000.

Question 78

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars.

Carney Corporation
Cash Budget



-What is the cash balance at the beginning of the second quarter (item e),in thousands of dollars?

A) $0.
B) $7.
C) $10.
D) $14.

Question 79

Pollitt Potato Packers has a flexible budget for manufacturing overhead that is based on direct labour hours. The following overhead costs appear on the flexible budget at the 200,000-hour level of activity:
$\begin{array} { | l | r | } \hline \text { Variable overhead costs (total): } & \\\hline \text { Packing supplies } & \$ 120,000 \\\hline \text { Indirect labour } & \$ 180,000 \\\hline \text { Fixed overhead costs (total): } &\\\hline \text { Utilities } & \$ 100,000 \\\hline \text { Insurance } & \$ 40,000 \\\hline \text { Rent } & \$ 20,000\\\hline\end{array}$


-At an activity level of 180,000 direct labour hours,what amount would the flexible budget estimate for indirect labour cost?

A) $108,000.
B) $144,000.
C) $162,000.
D) $180,000.

Question 80

The Bandeiras Company, a merchandising firm, has budgeted its activity for December according to the following information:

I. Sales at $550,000, all for cash.
II. Merchandise inventory on November 30 was $300,000.
III. Budgeted depreciation for December is $35,000.
IV. The cash balance at December 1 was $25,000.
V. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash.
VI. The planned merchandise inventory on December 31 is $270,000.
VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash.


-What is the budgeted net income for December?

A) $42,500.
B) $77,500.
C) $107,500.
D) $137,500.