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103. 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:
• Sales of $1,152,000, all in cash.
• A cash balance on November 1 of $48,000.
• Cash disbursements (other than interest) during November of $1,160,000.
• 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:
104. 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:
105. Avril Company makes collections on sales according to the following schedule:
The following sales are expected:
Cash collections in March should be budgeted to be:
106. 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:
107. Eppes Plating Company plans to sell 120,000 units of a certain product line at a price of
$6. There are 10,000 units of the product in the inventory at January 1 and the inventory is to be
increased 20% during the year.
Two types of materials are used to make the product. Four units of Material A each costing 30
cents are required for each unit of product, and two units of Material B each costing 40 cents are
required for each unit of product. On January 1 there are 10,000 units of Material A in inventory
and 5,000 units of Material B. Plans for the year indicate that 12,000 units of Material A and 6,000
units of Material B are to be in the inventory on December 31.
Each unit of product can be produced in 15 minutes of direct labor time. Direct labor is paid at the
rate of $8.00 an hour. The variable manufacturing overhead varies at the rate of $0.50 per direct
labor hour and the fixed manufacturing overhead for the year is estimated at $140,000.
Required:
a. Prepare a production budget for the year.
b. Prepare a materials purchases budget for the year.
c. Prepare a labor cost budget for the year.
d. Prepare a budget for manufacturing overhead for the year.
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108. Greatday, Inc. makes a product that has peak sales in September of each year. The
company has prepared a sales budget for the third quarter as shown below:
The company is in the process of preparing a cash budget for the third quarter and must
determine the expected cash collections by month. To this end, the following information has
been assembled:
The company gives a 3% cash discount to customers paying in the month of their sale. The
company charges 2% interest to customers who pay in the second month following their sales.
The accounts receivable balance to start the quarter is $150,000: $35,000 from May’s sales and
$115,000 from June’s sales.
Required:
Prepare a cash receipts budget for the third quarter.
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109. A sales budget is given below for one of the products manufactured by Vincent, Ltd.
The inventory of finished goods at the end of each month must be equal to 5,000 units plus 10% of
the next month’s sales. On June 30, the finished goods inventory totaled 6,800 units.
Each unit of product requires three ounces of a special liquid extract known as SV-6. Sometimes
the extract is in short supply; for this reason, the company has a policy of maintaining an inventory
at the end of each month equal to one half of the next month’s production needs. This
requirement was met on July 1 of the current year.
Required:
Prepare a budget showing the quantity of SV-6 to be purchased for September.
110. The production manager of Miller Enterprises plans to have an inventory on hand at the
end of each month that will equal 150% of the next month’s sales. This requirement was met at
the end of February. A sales budget for the four months ending June 30th is as follows:
Required:
Prepare a production budget for April and May.
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111. Past experience has demonstrated that 55% of the net sales billed in a month are
collected during the month, 35% are collected in the following month and 9% are collected in the
second following month. Customers are allowed a 3% discount if payment is made within 5 days
after the billing date. 65% of the customers that pay in the month of the sale, pay within 5 days
and take the discount. A sales budget for the four months ending June 30th is as follows:
Required:
Prepare a cash receipts budget for May and June.
112. Calloway Enterprises expects the following unit sales over the next five months:
Calloway’s goal is to maintain an inventory equal to 10% of next month’s sales requirements.
March 31st inventory is projected to be 18,000 units.
Required:
Prepare a purchases budget (in units) for Calloway for as many months as is possible. Assume a
30-day month.
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113. Emma Company has forecast its sales as follows:
Emma has experienced collections of 40% during the month of sale, 50% the month after the sale,
and 10% the second month after the sale.
Required:
a. Prepare a schedule of cash receipts for the 3 month period October – December.
b. What will the Accounts Receivable balance be on December 31?
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114. Amelia Company has forecast its sales as follows:
Amelia has experienced collections of 55% during the month of sale, 38% the month after the sale,
and 7% the second month after the sale.
Required:
a. Prepare a schedule of cash receipts for the 4 month period January – April.
b. What will the Accounts Receivable balance be on April 30?
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115. Odanah Company plans to sell 90,000 units of a certain product line at a price of $16.
There are 7,500 units of the product in the inventory at January 1 and the inventory is to be
increased 15% during the year.
Two types of materials are used to make the product. Three units of Material A, each costing 40
cents, are required for each unit of product, and two units of Material B, each costing 36 cents,
are required for each unit of product. On January 1, there are 10,000 units of Material A in
inventory and 5,000 units of Material B. Plans for the year indicate both Material A and B
inventories will increase 10%.
Each unit of product can be produced in 20 minutes of direct labor time. Direct labor is paid at the
rate of $12.00 an hour. The variable manufacturing overhead varies at the rate of $2.60 per direct
labor hour and the fixed manufacturing overhead for the year is estimated at $175,000.
Required:
a. Prepare a production budget for the year.
b. Prepare a materials purchases budget for the year.
c. Prepare a labor cost budget for the year.
d. Prepare a budget for manufacturing overhead for the year.
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116. Crandon, Inc has prepared a sales budget for the second quarter as shown below:
The company is in the process of preparing a cash budget for the second quarter. To this end, the
following information has been assembled:
The company gives a 1% cash discount to customers paying in the month of their sale. Records
show past sales to be: January $300,000, February $340,000, and March $360,000.
Required:
Prepare a cash receipts budget for the third quarter.
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117. Brodeur Company has the following sales budget for the coming year.
The marketing price per unit is $10; the cost of sales is 70% of sales. Brodeur keeps inventory
equal to double the coming month’s budgeted sales requirements. It pays for purchases 65% in
the month of purchase and 35% in the month after purchase. Inventory at the beginning of January
is $204,400. Accounts Payable on January 1 is $43,000.
Required:
a. Prepare a schedule of purchases, in units and in dollars, for the first three months of the year.
b. Prepare a schedule of cash disbursements on account for the first three months of the year.
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118. Sutter Company has the following sales projections for the coming months:
Sutter collects 20% of its sales in the month of sale, 45% in the month following the sale, and 35%
in the second month following the sale.
Required:
a. Prepare a schedule of cash receipts for the three months April through June.
b. What would be the accounts receivable balance on June 30?
119. Irwin Enterprises expects the following unit sales over the next five months:
Irwin’s goal is to maintain an inventory equal to 20% of next month’s sales requirements. March
31st inventory is projected to be 70,000 units.
Required:
Prepare a purchases budget (in units) for Irwin for as many months as is possible. Assume a 30–
day month.