33.
In general, the first budget prepared is the:
34.
In developing a master budget for a manufacturing company, which one of the following
items should be done first?
35.
The forecasting method in which individual forecasts of group members are submitted
anonymously and evaluated by the group as a whole is called:
36.
37.
The statistical method of forecasting that relies heavily on regression models is called:
38.
Acutron is a large securities dealer. Last year, the company made 120,000 trades with an
average commission of $120. Because of the general economic climate, Acutron expects
trade volume to decline by 20%. Fortunately, the average commission per trade is likely to
increase by 10% because trades are expected to be large in the coming year. What are the
estimated commission’s revenues for Acutron in the coming year?
39.
Adair Credit, Inc. has $35.0 million in consumer loans with an average interest rate of
12.0%. The bank also has $30.0 million in home equity loans with an average interest rate
of 8.0%. Finally, the bank owns $5.0 million in corporate securities with an average interest
rate of 6%. Next year, consumer loans will increase to $40.0 million because of a rate
decrease to 10.0%, while home equity loans will increase to $32.0 million at an average
interest rate of 6.5%. Unfortunately, the investment in corporate securities will decrease
by 20% and the average interest rate will be only 9.0%. What is Adair’s estimated change
in revenues next year?
40.
The master budget process usually begins with the: (CMA adapted)
41.
A company has the following annual budget data:
Beginning finished goods inventory
40,000 units
Sales
70,000 units
Ending finished goods inventory
30,000 units
Direct materials
$10 per unit
Direct labor
$20 per unit
Variable factory overhead
$5 per unit
Selling costs
$2 per unit
Fixed factory overhead
$80,000
What are total budgeted production costs for the year? (CIA adapted)
13–28
42.
Rerun Manufacturing Company is in the process of preparing its 2016 budget and is
anticipating the following changes:
30% increase in the number of units sold.
20% increase in the direct material unit cost.
15% increase in the direct labor cost per unit.
10% increase in the manufacturing overhead cost per unit.
14% increase in the marketing price.
7% increase in the administrative expenses.
Rerun does not keep any units in inventory.
The composition of the cost of finished products during 2016 for materials, direct labor,
and factory overhead, respectively, was in the ratio of 3:2:1. The condensed income
statement for 2016 is as follows:
Sales (30,000 units)
$450,000
Less sales returns
13,500
Net sales
436,500
Cost of Goods Sold
306,000
Gross Profit
$130,500
Selling Expenses
$60,000
Admin. Expenses
30,000
90,000
Net Income
$40,500
13–30
43.
Rerun Manufacturing Company is in the process of preparing its 2016 budget and is
anticipating the following changes:
30% increase in the number of units sold.
20% increase in the direct material unit cost.
15% increase in the direct labor cost per unit.
10% increase in the manufacturing overhead cost per unit.
14% increase in the marketing price.
7% increase in the administrative expenses.
Rerun does not keep any units in inventory.
The composition of the cost of finished products during 2016 for materials, direct labor,
and factory overhead, respectively, was in the ratio of 3:2:1. The condensed income
statement for 2016 is as follows:
Sales (30,000 units)
$450,000
Less sales returns
13,500
Net sales
436,500
Cost of Goods Sold
306,000
Gross Profit
$130,500
Selling Expenses
$60,000
Admin. Expenses
30,000
90,000
Net Income
$40,500
44.
Trevor 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, Trevor Company’s production of Product W for the
month of April should be:
45.
13–34
46.
13–35
47.
Pablo Company has budgeted production for next year as follows:
Quarter
First
Second
Third
Fourth
Production in
units
60,000
80,000
90,000
70,000
Production in units
Pounds per unit of production
Pounds of raw material for
13–37
48.
Vargas 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?
13–38
49.
50.
Trini 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
13–40
51.
The manufacturing overhead budget at Levetron 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:
$27.30.
$23.80.
$18.70.
52.
Rack 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