Deck 7: Profit Planning

Question 1

Budgeted production needs are determined by:

A)adding budgeted sales in units to the desired ending inventory in units and deducting the beginning inventory in units from this total.
B)adding budgeted sales in units to the beginning inventory in units and deducting the desired ending inventory in units from this total.
C)adding budgeted sales in units to the desired ending inventory in units.
D)deducting the beginning inventory in units from budgeted sales in units.

Answer 1

A

Question 2

Both variable and fixed manufacturing overhead costs are included in the manufacturing overhead budget.

Answer 2

True

Question 3

Both planning and control are needed for an effective budgeting system.

Answer 3

True

Question 4

One benefit of budgeting is that it coordinates the activities of the entire organization.

Question 5

The master budget is a network consisting of many separate budgets that are interdependent.

Question 6

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared?

A)Sales budget,cash budget,direct materials budget,direct labor budget
B)Production budget,sales budget,direct materials budget,direct labor budget
C)Sales budget,cash budget,production budget,direct materials budget
D)Selling and administrative expense budget,cash budget,budgeted income statement,budgeted balance sheet

Question 7

Which of the following represents the normal sequence in which the indicated budgets are prepared?

A)Direct Materials,Cash,Sales
B)Production,Cash,Income Statement
C)Sales,Balance Sheet,Direct Labor
D)Production,Manufacturing Overhead,Sales

Question 8

Self-imposed budgets typically are:

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

Question 9

The production budget is typically prepared prior to the sales budget.

Question 10

National Telephone company has been forced by competition to put much more emphasis on planning and controlling its costs.Accordingly,the company's controller has suggested initiating a formal budgeting process.Which of the following steps will NOT help the company gain maximum acceptance by employees of the proposed budgeting system?

A)Implementing the change quickly.
B)Including in departmental responsibility reports only those items that are under the department manager's control.
C)Demonstrating top management support for the budgeting program.
D)Ensuring that favorable deviations of actual results from the budget,as well as unfavorable deviations,are discussed with the responsible managers.

Question 11

Which of the following statements is not correct?

A)The sales budget is the starting point in preparing the master budget.
B)The sales budget is constructed by multiplying the expected sales in units by the sales price.
C)The sales budget generally is accompanied by a computation of expected cash receipts for the forthcoming budget period.
D)The cash budget must be prepared prior to the sales budget because managers want to know the expected cash collections on sales made to customers in prior periods before projecting sales for the current period.

Question 12

A sales budget is a detailed schedule showing the expected sales for the budget period;typically,it is expressed in both dollars and units of product.

Question 13

Sales forecasts are drawn up after the cash budget has been completed because only then are the funds available for marketing known.

Question 14

Planning and control are essentially the same thing.

Question 15

In the selling and administrative budget,the non-cash charges (such as depreciation)are added to the total budgeted selling and administrative expenses to determine the expected cash disbursements for selling and administrative expenses.

Question 16

Which of the following is not a benefit of budgeting?

A)It reduces the need for tracking actual cost activity.
B)It sets benchmarks for evaluation performance.
C)It uncovers potential bottlenecks.
D)It formalizes a manager's planning efforts.

Question 17

A continuous (or perpetual)budget:

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

Question 18

One difficulty with self-imposed budgets is that they are not subject to any type of review.

Question 19

The budgeted amount of raw materials to be purchased is determined by:

A)adding the desired ending inventory of raw materials to the raw materials needed to meet the production schedule.
B)subtracting the beginning inventory of raw materials from the raw materials needed to meet the production schedule.
C)adding the desired ending inventory of raw materials to the raw materials needed to meet the production schedule and subtracting the beginning inventory of raw materials.
D)adding the beginning inventory of raw materials to the raw materials needed to meet the production schedule and subtracting the desired ending inventory of raw materials.

Question 20

Which of the following is not correct regarding the manufacturing overhead budget?

A)Total budgeted cash disbursements for manufacturing overhead is equal to the total of budgeted variable and fixed manufacturing overhead.
B)Manufacturing overhead costs should be broken down by cost behavior.
C)The manufacturing overhead budget should provide a schedule of all costs of production other than direct materials and direct labor.
D)A schedule showing budgeted cash disbursements for manufacturing overhead should be prepared for use in developing the cash budget.

Question 21

Lunderville Inc.bases its selling and administrative expense budget on budgeted unit sales.The sales budget shows 3,200 units are planned to be sold in December.The variable selling and administrative expense is $3.10 per unit.The budgeted fixed selling and administrative expense is $60,800 per month,which includes depreciation of $6,720 per month.The remainder of the fixed selling and administrative expense represents current cash flows.The cash disbursements for selling and administrative expenses on the December selling and administrative expense budget should be:

A)$70,720
B)$54,080
C)$64,000
D)$9,920

Question 22

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: Cash collections in March should be budgeted to be:

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

Question 23

The following data have been taken from the budget reports of Brandon company,a merchandising company. Forty percent of purchases are paid for in cash at the time of purchase,and 30% are paid for in each of the next two months.Purchases for the previous November and December were $150,000 per month.Employee wages are 10% of sales for the month in which the sales occur.Selling and administrative expenses are 20% of the following month's sales.(July sales are budgeted to be $220,000. )Interest payments of $20,000 are paid quarterly in January and April.Brandon's cash disbursements for the month of April would be:

A)$140,000
B)$254,000
C)$200,000
D)$248,000

Question 24

The manufacturing overhead budget at Cutchin Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 2,800 direct labor-hours will be required in September.The variable overhead rate is $7.00 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $43,120 per month,which includes depreciation of $3,640.All other fixed manufacturing overhead costs represent current cash flows.The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

A)$59,080
B)$62,720
C)$19,600
D)$39,480

Question 25

The selling and administrative expense budget of Breckinridge Corporation is based on budgeted unit sales,which are 5,500 units for June.The variable selling and administrative expense is $1.00 per unit.The budgeted fixed selling and administrative expense is $101,200 per month,which includes depreciation of $6,050 per month.The remainder of the fixed selling and administrative expense represents current cash flows.The cash disbursements for selling and administrative expenses on the June selling and administrative expense budget should be:

A)$100,650
B)$106,700
C)$5,500
D)$95,150

Question 26

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.


-Expected cash collections in December are:

A)$59,400
B)$140,000
C)$199,400
D)$200,000

Question 27

Hagos Corporation is working on its direct labor budget for the next two months.Each unit of output requires 0.84 direct labor-hours.The direct labor rate is $9.40 per direct labor-hour.The production budget calls for producing 2,100 units in June and 1,900 units in July.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?

A)$15,792.00
B)$15,002.40
C)$16,581.60
D)$31,584.00

Question 28

Budgeted sales in Allen Company over the next four months are given below: 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 credit 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 are uncollectible.Given these data,cash collections for December should be:

A)$138,000
B)$133,500
C)$120,000
D)$103,500

Question 29

Shuck Inc.bases its manufacturing overhead budget on budgeted direct labor-hours.The direct labor budget indicates that 8,100 direct labor-hours will be required in May.The variable overhead rate is $1.40 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $100,440 per month,which includes depreciation of $8,910.All other fixed manufacturing overhead costs represent current cash flows.The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

A)$102,870
B)$11,340
C)$91,530
D)$111,780

Question 30

Berol Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in sales of 5% per month.The desired monthly ending inventory in units of finished product is 80% of the next month's estimated sales.There are 150,000 finished units in inventory on June 30. Berol Company's production requirement in units of finished product for the three-month period ending September 30 is:

A)712,025 units
B)630,500 units
C)664,000 units
D)665,720 units

Question 31

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.


-The cost of December merchandise purchases would be:

A)$133,250
B)$68,250
C)$130,000
D)$143,000

Question 32

The Carlquist Company makes and sells a product called Product K.Each unit of Product K sells for $24 dollars and has a unit variable cost of $18.The company has budgeted the following data for November:

$\bullet$ Sales of $1,152,200,all in cash.
$\bullet$ A cash balance on November 1 of $48,000.
$\bullet$ Cash disbursements (other than interest)during November of $1,160,000.
$\bullet$ A minimum cash balance on November 30 of $60,000.

If necessary,the company will borrow cash from a bank.The borrowing will be in multiples of $1,000 and will bear interest at 2% per month.All borrowing will take place at the beginning of the month.The November interest will be paid in cash during November.

The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is:

A)$20,000
B)$21,000
C)$37,000
D)$38,000

Question 33

Avitia Inc.bases its manufacturing overhead budget on budgeted direct labor-hours.The direct labor budget indicates that 3,700 direct labor-hours will be required in September.The variable overhead rate is $5.70 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $48,100 per month,which includes depreciation of $5,550.All other fixed manufacturing overhead costs represent current cash flows.The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for September should be:

A)$5.70
B)$13.00
C)$18.70
D)$17.20

Question 34

Veltri Corporation is working on its direct labor budget for the next two months.Each unit of output requires 0.77 direct labor-hours.The direct labor rate is $11.20 per direct labor-hour.The production budget calls for producing 7,100 units in October and 6,900 units in November.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 5,480 hours in total each month even if there is not enough work to keep them busy.What would be the total combined direct labor cost for the two months?

A)$122,752.00
B)$120,736.00
C)$120,881.60
D)$122,606.40

Question 35

Deschambault Inc.is working on its cash budget for December.The budgeted beginning cash balance is $14,000.Budgeted cash receipts total $127,000 and budgeted cash disbursements total $126,000.The desired ending cash balance is $40,000.To attain its desired ending cash balance for December,the company needs to borrow:

A)$25,000
B)$0
C)$55,000
D)$40,000

Question 36

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,on March 31 there were 25,000 units of Product W in the ending inventory.Given this information,Walsh Company's production of Product W for the month of April should be:

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

Question 37

The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 7,100 direct labor-hours will be required in August.The variable overhead rate is $8.60 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $132,770 per month,which includes depreciation of $24,850.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:

A)$8.60
B)$27.30
C)$23.80
D)$18.70

Question 38

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,then the budgeted change in inventory levels over the month of December is:

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

Question 39

Mosbey Inc.is working on its cash budget for June.The budgeted beginning cash balance is $16,000.Budgeted cash receipts total $188,000 and budgeted cash disbursements total $187,000.The desired ending cash balance is $40,000.The excess (deficiency)of cash available over disbursements for June will be:

A)$15,000
B)$1,000
C)$17,000
D)$204,000

Question 40

Shown below is the sales forecast for Cooper Inc.for the first four months of the coming year. On average,50% of credit sales are paid for in the month of the sale,30% in the month following sale,and the remainder are paid two months after the month of the sale.Assuming there are no bad debts,the expected cash inflow in March is:

A)$138,000
B)$122,000
C)$119,000
D)$108,000

Question 41

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.5 hours of direct labor at the rate of $15.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.

-The company plans to sell 38,000 units of Product WZ in June.The finished goods inventories on June 1 and June 30 are budgeted to be 600 and 100 units,respectively.Budgeted direct labor costs for June would be:

A)$562,500
B)$1,425,000
C)$1,406,250
D)$1,443,750

Question 42

Sartain 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 2 grams of raw material.

-If the company plans to sell 670,000 units during the year,the number of units it would have to manufacture during the year would be:

A)670,000 units
B)720,000 units
C)740,000 units
D)620,000 units

Question 43

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

• Sales are budgeted at $340,000 for November, $360,000 for December, and $350,000 for January.
• Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible.
• The cost of goods sold is 80% of sales.
• The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $23,100.
• Monthly depreciation is $21,000.
• Ignore taxes.


-The cost of December merchandise purchases would be:

A)$272,000
B)$288,000
C)$196,000
D)$282,400

Question 44

Hardy, 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 1,640 units. The company needs to prepare a production budget for the next five months.

-The beginning inventory for September should be:

A)940 units
B)720 units
C)1,640 units
D)520 units

Question 45

Mitchell Company had the following budgeted sales for the last half of last 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 credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale

-What is the budgeted accounts receivable balance on December 1?

A)$80,000
B)$140,000
C)$94,500
D)$131,300

Question 46

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

• Sales are budgeted at $340,000 for November, $360,000 for December, and $350,000 for January.
• Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible.
• The cost of goods sold is 80% of sales.
• The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $23,100.
• Monthly depreciation is $21,000.
• Ignore taxes.


-The difference between cash receipts and cash disbursements in December would be:

A)$17,000
B)$24,300
C)$41,300
D)$65,600

Question 47

Mitchell Company had the following budgeted sales for the last half of last 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 credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale

-Assume that the accounts receivable balance on July 1 was $75,000.Of this amount,$60,000 represented uncollected June sales and $15,000 represented uncollected May sales.Given these data,the total cash collected during July would be:

A)$150,000
B)$235,000
C)$215,000
D)$200,000

Question 48

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.


-The difference between cash receipts and cash disbursements for December would be:

A)$17,900
B)$22,500
C)$40,400
D)$62,900

Question 49

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.


-The accounts receivable balance,net of uncollectible accounts,at the end of December would be:

A)$82,000
B)$113,400
C)$60,000
D)$54,000

Question 50

The Kafusi Company has the following budgeted sales: The regular pattern of collection of credit sales is 30% in the month of sale, 60% 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.

-The budgeted cash receipts for July would be:

A)$400,000
B)$430,000
C)$435,000
D)$390,000

Question 51

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.


-Retained earnings at the end of December would be:

A)$132,500
B)$155,000
C)$196,500
D)$183,900

Question 52

The Kafusi Company has the following budgeted sales: The regular pattern of collection of credit sales is 30% in the month of sale, 60% 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.

-The budgeted accounts receivable balance on May 31 would be:

A)$210,000
B)$212,000
C)$180,000
D)$242,000

Question 53

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.


-Accounts payable at the end of December would be:

A)$65,000
B)$68,250
C)$130,000
D)$133,250

Question 54

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.


-The net income for December would be:

A)$40,400
B)$22,500
C)$47,500
D)$28,500

Question 55

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

• Sales are budgeted at $340,000 for November, $360,000 for December, and $350,000 for January.
• Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible.
• The cost of goods sold is 80% of sales.
• The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $23,100.
• Monthly depreciation is $21,000.
• Ignore taxes.


-December cash disbursements for merchandise purchases would be:

A)$283,200
B)$196,000
C)$288,000
D)$282,400

Question 56

Sartain 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 2 grams of raw material.

-How much of the raw material should the company purchase during the year?

A)1,430,000 grams
B)1,450,000 grams
C)1,480,000 grams
D)1,440,000 grams

Question 57

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.


-December cash disbursements for merchandise purchases would be:

A)$136,500
B)$68,250
C)$133,250
D)$130,000

Question 58

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
• Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,500.
• Monthly depreciation is $19,000.
• Ignore taxes.


-The cash balance at the end of December would be:

A)$116,900
B)$16,000
C)$100,900
D)$56,400

Question 59

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.5 hours of direct labor at the rate of $15.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.

-The budgeted direct labor cost per unit of Product WZ would be:

A)$37.50
B)$6.00
C)$15.00
D)$17.50

Question 60

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

• Sales are budgeted at $340,000 for November, $360,000 for December, and $350,000 for January.
• Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible.
• The cost of goods sold is 80% of sales.
• The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $23,100.
• Monthly depreciation is $21,000.
• Ignore taxes.


-Expected cash collections in December are:

A)$360,000
B)$149,600
C)$198,000
D)$347,600

Question 61

Davol Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $6.80 per direct labor-hour; the budgeted fixed manufacturing overhead is $72,000 per month, of which $20,000 is factory depreciation.

-If the budgeted direct labor time for October is 5,000 hours,then the total budgeted manufacturing overhead for October is:

A)$52,000
B)$106,000
C)$54,000
D)$86,000

Question 62

Young Enterprises 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 10% of the next month's sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months.

-The beginning inventory in units for September should be:

A)460 units
B)6,800 units
C)540 units
D)680 units

Question 63

Salge Inc. bases its manufacturing overhead budget on budgeted direct labor- hours. The variable overhead rate is $8.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $74,730 per month, which includes depreciation of $20,670. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 5,300 direct labor-hours will be required in September.

-The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for September should be:

A)$18.30
B)$14.10
C)$8.10
D)$22.20

Question 64

Davol Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $6.80 per direct labor-hour; the budgeted fixed manufacturing overhead is $72,000 per month, of which $20,000 is factory depreciation.

-If the budgeted direct labor time for December is 4,000 hours,then the predetermined manufacturing overhead per direct labor-hour for December would be:

A)$6.80
B)$11.80
C)$19.80
D)$24.80

Question 65

Davol Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $6.80 per direct labor-hour; the budgeted fixed manufacturing overhead is $72,000 per month, of which $20,000 is factory depreciation.

-If the budgeted direct labor time for November is 5,000 hours,then the total budgeted cash disbursements for November must be:

A)$54,000
B)$52,000
C)$106,000
D)$86,000

Question 66

The manufacturing overhead budget at Mahapatra Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,900 direct labor-hours will be required in May. The variable overhead rate is $9.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $112,970 per month, which includes depreciation of $18,170. All other fixed manufacturing overhead costs represent current cash flows.

-The company recomputes its predetermined overhead rate every month.The predetermined overhead rate for May should be:

A)$14.30
B)$21.50
C)$9.50
D)$23.80

Question 67

Balmforth Products, Inc. makes and sells a single product called a Bik. It takes three yards of Material A to make one Bik. Budgeted production of Biks for the next five months is as follows: The company wants to maintain monthly ending inventories of Material A equal to 20% of the following month's production needs. On January 31, this target had not been attained since only 2,000 yards of Material A were on hand. The cost of Material A is $0.80 per yard. The company wants to prepare a Direct Materials Purchases Budget.

-The total needs (i.e. ,production requirements plus desired ending inventory)of Material A for the month of May are:

A)37,800 yards
B)45,360 yards
C)46,500 yards
D)38,940 yards

Question 68

The Yost Company makes and sells a single product, Product A. Each unit of Product A requires 1.2 hours of labor at a labor rate of $8.40 per hour. Yost Company needs to prepare a Direct Labor Budget for the second quarter.

-If the budgeted direct labor cost for May is $161,280,then the budgeted production of Product A for May is:

A)16,000 units
B)19,200 units
C)23,040 units
D)16,800 units

Question 69

Porl 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 22,000 Yutes in November,then the total budgeted selling and administrative expenses for November would be:

A)$426,800
B)$231,000
C)$413,800
D)$195,800

Question 70

Salge Inc. bases its manufacturing overhead budget on budgeted direct labor- hours. The variable overhead rate is $8.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $74,730 per month, which includes depreciation of $20,670. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 5,300 direct labor-hours will be required in September.

-The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

A)$42,930
B)$54,060
C)$96,990
D)$117,660

Question 71

Young Enterprises 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 10% of the next month's sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months.

-The total number of units to be produced in July is:

A)7,740 units
B)7,200 units
C)7,020 units
D)7,280 units

Question 72

Balmforth Products, Inc. makes and sells a single product called a Bik. It takes three yards of Material A to make one Bik. Budgeted production of Biks for the next five months is as follows: The company wants to maintain monthly ending inventories of Material A equal to 20% of the following month's production needs. On January 31, this target had not been attained since only 2,000 yards of Material A were on hand. The cost of Material A is $0.80 per yard. The company wants to prepare a Direct Materials Purchases Budget.

-The total cost of Material A to be purchased in February is:

A)$45,200
B)$42,900
C)$39,440
D)$34,320

Question 73

Casper Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 3.5 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 10% of the following month's production needs. On July 31, this requirement was not met since only 6,900 kilograms of Jurislon were on hand. The cost of Jurislon is $3.00 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months.

-The desired ending inventory of Jurislon for the month of September is:

A)$5,550
B)$21,315
C)$6,090
D)$19,425

Question 74

The Yost Company makes and sells a single product, Product A. Each unit of Product A requires 1.2 hours of labor at a labor rate of $8.40 per hour. Yost Company needs to prepare a Direct Labor Budget for the second quarter.

-The budgeted direct labor cost per unit of Product A is:

A)$8.40
B)$7.00
C)$10.08
D)$9.60

Question 75

Casper Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 3.5 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 10% of the following month's production needs. On July 31, this requirement was not met since only 6,900 kilograms of Jurislon were on hand. The cost of Jurislon is $3.00 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:

A)$233,625
B)$407,700
C)$214,200
D)$212,925

Question 76

Young Enterprises 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 10% of the next month's sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months.

-The desired ending inventory for August is:

A)540 units
B)680 units
C)720 units
D)380 units

Question 77

The Yost Company makes and sells a single product, Product A. Each unit of Product A requires 1.2 hours of labor at a labor rate of $8.40 per hour. Yost Company needs to prepare a Direct Labor Budget for the second quarter.

-The company has budgeted to produce 20,000 units of Product A in June.The finished goods inventories on June 1 and June 30 were budgeted at 400 and 600 units,respectively.Budgeted direct labor cost for June is:

A)$207,648
B)$168,000
C)$199,584
D)$201,600

Question 78

Hardy, 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 1,640 units. The company needs to prepare a production budget for the next five months.

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

A)7,240 units
B)6,620 units
C)6,300 units
D)5,980 units

Question 79

The manufacturing overhead budget at Mahapatra Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,900 direct labor-hours will be required in May. The variable overhead rate is $9.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $112,970 per month, which includes depreciation of $18,170. All other fixed manufacturing overhead costs represent current cash flows.

-The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

A)$75,050
B)$188,020
C)$94,800
D)$169,850

Question 80

Balmforth Products, Inc. makes and sells a single product called a Bik. It takes three yards of Material A to make one Bik. Budgeted production of Biks for the next five months is as follows: The company wants to maintain monthly ending inventories of Material A equal to 20% of the following month's production needs. On January 31, this target had not been attained since only 2,000 yards of Material A were on hand. The cost of Material A is $0.80 per yard. The company wants to prepare a Direct Materials Purchases Budget.

-The desired ending inventory of Material A for the month of March is:

A)9,300 yards
B)7,140 yards
C)3,100 yards
D)8,400 yards