82. Lynndorf Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and
other institutions. The table tops are manufactured by Lynndorf, but the table legs are purchased
from an outside supplier. The Assembly Department takes a manufactured table top and attaches
the four purchased table legs. It takes 20 minutes of labor to assemble a table. The company
follows a policy of producing enough tables to insure that 40% of next month’s sales are in the
finished goods inventory. Lynndorf also purchases sufficient raw materials (legs) to insure that
raw materials (legs) inventory is 60% of the following month’s scheduled production needs.
Lynndorf’s sales budget in units for the next quarter is as follows: (CMA adapted)
Lynndorf’s ending inventories in units for June 30 are:
Disregarding your response to the previous question, assume the required production for August
and September is 1,600 and 1,800 units, respectively, and the July 31 raw materials (legs)
inventory is 4,200 units. The number of table legs to be purchased in August is:
83. Lynndorf Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and
other institutions. The table tops are manufactured by Lynndorf, but the table legs are purchased
from an outside supplier. The Assembly Department takes a manufactured table top and attaches
the four purchased table legs. It takes 20 minutes of labor to assemble a table. The company
follows a policy of producing enough tables to insure that 40% of next month’s sales are in the
finished goods inventory. Lynndorf also purchases sufficient raw materials (legs) to insure that
raw materials (legs) inventory is 60% of the following month’s scheduled production needs.
Lynndorf’s sales budget in units for the next quarter is as follows: (CMA adapted)
Lynndorf’s ending inventories in units for June 30 are:
Assume that Lynndorf Corporation will produce 1,800 units in the month of September. How many
employees will be required for the Assembly Department? (Fractional employees are acceptable
since employees can be hired on a part-time basis. Assume a 40-hour week and a 4-week
month.)
84. 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? (CMA adapted)
85. Which of the following statements is not correct?
86. Budgeted production needs are determined by:
87. Which of the following is not correct regarding the manufacturing overhead budget?
88. 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: (CMA adapted)
89. 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 is uncollectible. Given these data, cash collections
for December should be:
90. 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. Marketing
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: (CMA adapted)
91. 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:
92. 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: (CMA adapted)
93. 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:
94. Prestwich Company has budgeted production for next year as follows:
Two pounds of material A are required for each unit produced. The company has a policy of
maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next
quarter’s production needs for material A. A total of 30,000 pounds of material A are on hand to
start the year. Budgeted purchases of material A for the second quarter would be:
95. 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?
96. 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?
97. 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:
98. 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:
99. 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:
100. 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:
101. The marketing and administrative expense budget of Breckinridge Corporation is based on
budgeted unit sales, which are 5,500 units for June. The variable marketing and administrative
expense is $1.00 per unit. The budgeted fixed marketing and administrative expense is $101,200
per month, which includes depreciation of $6,050 per month. The remainder of the fixed marketing
and administrative expense represents current cash flows. The cash disbursements for marketing
and administrative expenses on the June marketing and administrative expense budget should
be:
102. Lunderville Inc. bases its marketing and administrative expense budget on budgeted unit
sales. The sales budget shows 3,200 units are planned to be sold in December. The variable
marketing and administrative expense is $3.10 per unit. The budgeted fixed marketing and
administrative expense is $60,800 per month, which includes depreciation of $6,720 per month.
The remainder of the fixed marketing and administrative expense represents current cash flows.
The cash disbursements for marketing and administrative expenses on the December marketing
and administrative expense budget should be: