77. Fresplanade Co. had the following historical collection pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after month of sale
8% collected in the second month after month of sale
3% collected in the third month after month of sale
2% uncollectible
The sales on open account (credit sales) have been budgeted for the last six months of the year
as shown below:
July $72,000
August $84,000
September $96,000
October $108,000
November $120,000
December $102,000
The estimated cash collection by Fresplanade Co. during September from credit sales in July,
August, and September is:
78. Fresplanade Co. had the following historical collection pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after month of sale
8% collected in the second month after month of sale
3% collected in the third month after month of sale
2% uncollectible
The sales on open account (credit sales) have been budgeted for the last six months of the year
as shown below:
July $72,000
August $84,000
September $96,000
October $108,000
November $120,000
December $102,000
The estimated cash collection by Fresplanade Co. during August from July and August credit
sales is:
79. Fresplanade Co. had the following historical collection pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after month of sale
8% collected in the second month after month of sale
3% collected in the third month after month of sale
2% uncollectible
The sales on open account (credit sales) have been budgeted for the last six months of the year
as shown below:
July $72,000
August $84,000
September $96,000
October $108,000
November $120,000
December $102,000
The estimated cash collections during July from credit sales made in July by Fresplanade Co. is:
80. Brownsville Novelty Store prepared the following budget information for the month of
May:
• Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is made
for each month at three percent of sales for the month.
• Inventory was $84,000 on April 30; an inventory increase of $12,000 is planned for May 31.
• All inventory is marked to sell at cost plus 50 percent.
• Estimated cash disbursements for selling and administrative expenses for the month are
$48,000.
• Depreciation for May is projected at $6,000.
Brownsville’s budgeted cost of goods sold (CGS) in May is:
81. Brownsville Novelty Store prepared the following budget information for the month of
May:
• Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is made
for each month at three percent of sales for the month.
• Inventory was $84,000 on April 30; an inventory increase of $12,000 is planned for May 31.
• All inventory is marked to sell at cost plus 50 percent.
• Estimated cash disbursements for selling and administrative expenses for the month are
$48,000.
• Depreciation for May is projected at $6,000.
Brownsville’s budgeted cost of inventory purchases for May is:
82. Brownsville Novelty Store prepared the following budget information for the month of
May:
• Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is made
for each month at three percent of sales for the month.
• Inventory was $84,000 on April 30; an inventory increase of $12,000 is planned for May 31.
• All inventory is marked to sell at cost plus 50 percent.
• Estimated cash disbursements for selling and administrative expenses for the month are
$48,000.
• Depreciation for May is projected at $6,000.
Brownsville’s budgeted gross profit for May is:
83. Brownsville Novelty Store prepared the following budget information for the month of
May:
• Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is made
for each month at three percent of sales for the month.
• Inventory was $84,000 on April 30; an inventory increase of $12,000 is planned for May 31.
• All inventory is marked to sell at cost plus 50 percent.
• Estimated cash disbursements for selling and administrative expenses for the month are
$48,000.
• Depreciation for May is projected at $6,000.
Brownsville’s budgeted bad debts expense for May is:
84. Brownsville Novelty Store prepared the following budget information for the month of
May:
• Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is made
for each month at three percent of sales for the month.
• Inventory was $84,000 on April 30; an inventory increase of $12,000 is planned for May 31.
• All inventory is marked to sell at cost plus 50 percent.
• Estimated cash disbursements for selling and administrative expenses for the month are
$48,000.
• Depreciation for May is projected at $6,000.
Brownsville’s budgeted operating income for May is:
85. Graham Corporation’s budgeted production schedule, by quarters, for the coming year is
as follows:
Quarter 1 = 22,500 units
Quarter 2 = 19,000 units
Quarter 3 = 17,000 units
Quarter 4 = 24,000 units
Each unit of product requires three pounds of direct material. The company’s policy is to begin
each quarter with 30% of that quarter’s direct materials production requirements.
Graham expects to have 50,000 pounds of direct materials on hand at the beginning of Quarter 1.
What would be Graham’s budgeted direct materials purchases (in pounds) for the first quarter?
86. Graham Corporation’s budgeted production schedule, by quarters, for the coming year is
as follows:
Quarter 1 = 22,500 units
Quarter 2 = 19,000 units
Quarter 3 = 17,000 units
Quarter 4 = 24,000 units
Each unit of product requires three pounds of direct material. The company’s policy is to begin
each quarter with 30% of that quarter’s direct materials production requirements.
Graham expects to have 50,000 pounds of direct materials on hand at the beginning of Quarter 1.
What would be Graham’s budgeted direct materials purchases for the second quarter of the
year?
87. Graham Corporation’s budgeted production schedule, by quarters, for the coming year is
as follows:
Quarter 1 = 22,500 units
Quarter 2 = 19,000 units
Quarter 3 = 17,000 units
Quarter 4 = 24,000 units
Each unit of product requires three pounds of direct material. The company’s policy is to begin
each quarter with 30% of that quarter’s direct materials production requirements.
Graham expects to have 50,000 pounds of direct materials on hand at the beginning of Quarter 1.
What would be Graham’s budgeted direct materials purchases (in pounds) for the third quarter?
88. General Manufacturing expects to have 40,000 pounds of raw materials inventory on
hand on June 30, the end of the current year. The company has budgeted the following
production for the first four months of the coming year:
July August September October
Production (units) 100,000 120,000 150,000 110,000
General Manufacturing desires each month’s ending raw materials inventory to be 20% of the
following month’s production needs. A finished unit requires two pounds of raw materials.
General Manufacturing’s budgeted purchases of raw materials during
July
(in lbs.) should be:
89. General Manufacturing expects to have 40,000 pounds of raw materials inventory on
hand on June 30, the end of the current year. The company has budgeted the following
production for the first four months of the coming year:
July August September October
Production (units) 100,000 120,000 150,000 110,000
General Manufacturing desires each month’s ending raw materials inventory to be 20% of the
following month’s production needs. A finished unit requires two pounds of raw materials.
General Manufacturing’s budgeted purchases of materials for
September
is:
90. Which of the following best describes the process of sales forecasting?
91. _________ is a process of varying key estimates to identify those variables that are most
critical to a decision (or a model, such as a budget).
92. Assume only the specified parameters (that is, variables) change in a sensitivity analysis.
If the contribution margin increases by $2 per unit, then operating profits will:
93. Assume that only the specified parameters (that is, variables) change in a sensitivity
analysis. The contribution margin ratio increases when:
94. The process of examining how a change in a single item in a budget (for example, sales
volume) affects one or more items in the budget (for example, budgeted sales revenue and
budgeted operating income) is generally referred to as:
95. Which one of the following choices represents alternatives to traditional budgeting
approaches?
96. Capital One produces a single product, which it sells for $8.00 per unit. Variable costs per
unit equal $3.20. The company expects short-term fixed costs to be $7,200 for the coming month,
at the projected sales level of 20,000 units. Management is considering several alternative
actions designed to improve operating results. In conjunction with this, they have created a
profit-planning (that is, a CVP) model, which can be used to evaluate different scenarios.
What is Capital One’s current break-even point in terms of number of units for the month?
97. Capital One produces a single product, which it sells for $8.00 per unit. Variable costs per
unit equal $3.20. The company expects short-term fixed costs to be $7,200 for the coming month,
at the projected sales level of 20,000 units. Management is considering several alternative
actions designed to improve operating results. In conjunction with this, they have created a
profit-planning (that is, a CVP) model, which can be used to evaluate different scenarios.
Suppose that Capital One’s management believes that a $1,600 increase in the monthly
promotion costs will provide a boost to sales. By what amount must sales increase during the
month to justify the contemplated expenditure? Round answer
up
to the nearest whole number.