120. Wilson Enterprises expects the following unit sales over the next few months:
Wilson’s goal is to maintain an inventory equal to a 6 day supply. March 31st inventory is projected
to be 18,000 units.
Required:
Prepare a purchases budget (in units) for Wilson for as many months as is possible. Assume a 30–
day month.
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121. Dryden Company has the following sales budget for the coming year.
The marketing price per unit is $15; the cost of sales is 60% of sales. Dryden keeps inventory
equal to the coming month’s budgeted sales requirements. It pays for purchases 55% in the month
of purchase and 45% in the month after purchase. Inventory at the beginning of January is
$172,800. Accounts Payable on January 1 is $83,000.
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.
c. Determine the accounts payable balance as of March 31.
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122. Espo Company has the following sales budget for the coming year.
The marketing price per unit is $20; the cost of sales is 60% of sales. Espo keeps inventory equal
to 50% of the coming month’s budgeted sales requirements. It pays for purchases 35% in the
month of purchase and 65% in the month after purchase. Inventory at the beginning of July is
$78,000. Accounts Payable on July 1 is $100,750.
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.
123. Cumberland Inc. has the following information for its first year of operations:
All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is
expected to increase by 15%, but marketing prices are expected to fall by 4%. Material costs per
unit are expected to decrease by 6%. Other unit variable manufacturing costs are expected to
decrease by 2.5% per unit. Fixed manufacturing costs (other than depreciation) are expected to
increase by 6%.
Variable marketing costs per unit will remain constant. Administrative costs (other than
depreciation) are expected to increase by 10%.
Assume there are no inventories. Cumberland operates on a cash basis.
Required:
Prepare a budgeted income statement for year 2.
124. Cadott Inc. has the following information for its first year of operations:
All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is
expected to increase by 13%, and marketing prices are expected to increase by 4%. Material costs
per unit are expected to increase by 8%. Other unit variable manufacturing costs are expected to
increase by 10% per unit. Fixed manufacturing costs (other than depreciation) are expected to
increase by 6%.
Variable marketing costs per unit will remain constant. Administrative costs (other than
depreciation) are expected to increase by 12%.
Assume there are no inventories. Cadott operates on a cash basis.
Required:
Prepare a budgeted income statement for year 2.
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125. A sales budget is given below for one of the products manufactured by Altoona, Ltd.
The inventory of finished goods at the end of each month must be equal to 20% of the next
month’s sales. On June 30, the finished goods inventory totaled 6,800 units.
Each unit of product requires ten ounces of a special chemical known as AQ-12. Sometimes the
chemical is in short supply; for this reason, the company has a policy of maintaining an inventory
at the end of each month equal to 75% 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 AQ-12 to be purchased for October.
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126. 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 30% of the next
month’s sales. On June 30, the finished goods inventory totaled 16,800 units.
Each unit of product requires four pounds of material. The company has a policy of maintaining a
material inventory at the end of each month equal to 25% 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 material to be purchased for August.
127. Kindschuh Corporation is working on its direct labor budget for the next two months. Each
unit of output requires 0.07 direct labor-hours. The direct labor rate is $8.50 per direct labor-hour.
The production budget calls for producing 4,800 units in June and 5,300 units in July.
Required:
Construct the direct labor budget for the next two months, assuming that the direct labor work
force is fully adjusted to the total direct labor-hours needed each month.
128. Capati Corporation is working on its direct labor budget for the next two months. Each unit
of output requires 0.41 direct labor-hours. The direct labor rate is $8.50 per direct labor-hour. The
production budget calls for producing 2,300 units in August and 2,200 units in September. 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 960 hours in total each month even if there is not enough work to keep
them busy.
Required:
Construct the direct labor budget for the next two months.
129. Mccoo Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The
variable overhead rate is $1.30 per direct labor-hour. The company’s budgeted fixed
manufacturing overhead is $98,900 per month, which includes depreciation of $19,780. All other
fixed manufacturing overhead costs represent current cash flows. The September direct labor
budget indicates that 8,600 direct labor-hours will be required in that month.
Required:
a. Determine the cash disbursement for manufacturing overhead for September.
b. Determine the predetermined overhead rate for September.
130. The manufacturing overhead budget of Lewison Corporation is based on budgeted direct
labor-hours. The June direct labor budget indicates that 5,800 direct labor-hours will be required
in that month. The variable overhead rate is $7.70 per direct labor-hour. The company’s budgeted
fixed manufacturing overhead is $111,360 per month, which includes depreciation of $17,400. All
other fixed manufacturing overhead costs represent current cash flows.
Required:
a. Determine the cash disbursement for manufacturing overhead for June. Show your work!
b. Determine the predetermined overhead rate for June. Show your work!
131. Lahay Inc. bases its marketing and administrative expense budget on the number of units
sold. The variable marketing and administrative expense is $4.30 per unit. The budgeted fixed
marketing and administrative expense is $30,240 per month, which includes depreciation of
$3,510. The remainder of the fixed marketing and administrative expense represents current cash
flows. The sales budget shows 2,700 units are planned to be sold in April.
Required:
Prepare the marketing and administrative expense budget for April.
132. The marketing and administrative expense budget of Fenley Corporation is based on the
number of units sold, which are budgeted to be 2,500 units in January. The variable marketing and
administrative expense is $4.40 per unit. The budgeted fixed marketing and administrative
expense is $35,750 per month, which includes depreciation of $4,000. The remainder of the fixed
marketing and administrative expense represents current cash flows.
Required:
Prepare the marketing and administrative expense budget for January.
133. Enciso Corporation is preparing its cash budget for November. The budgeted beginning
cash balance is $31,000. Budgeted cash receipts total $135,000 and budgeted cash
disbursements total $141,000. The desired ending cash balance is $50,000. The company can
borrow up to $100,000 at any time from a local bank, with interest not due until the following
month.
Required:
Prepare the company’s cash budget for November in good form.
134. Wehr Inc. is preparing its cash budget for April. The budgeted beginning cash balance is
$19,000. Budgeted cash receipts total $105,000 and budgeted cash disbursements total $98,000.
The desired ending cash balance is $50,000. The company can borrow up to $120,000 at any time
from a local bank, with interest not due until the following month.
Required:
Prepare the company’s cash budget for April in good form. Make sure to indicate what borrowing,
if any, would be needed to attain the desired ending cash balance.