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200) Argenta, Inc. is preparing its master budget for the first quarter ending March 31. The
following forecasted data relate to the first quarter:
Unit sales:
January …………………………..
40,000
February …………………………
55,000
March ……………………………
50,000
Unit sales price ……………………….
$25
Cost of goods sold per unit ……………
$13
Expenses:
Commissions ……………………
10% of sales
Rent ………………………………..
$20,000/month
Advertising ………………………..
15% of sales
Office salaries ……………………..
$75,000/month
Depreciation ……………………….
$50,000/month
Interest …………………………..
15% annually on a $250,000 note payable
Tax rate……………………………….
40%
Prepare a budgeted income statement for the first quarter.
$13]
Gross profit ……………………………………
Operating expenses ……………………………
Total operating expenses …………………….…
Income before income taxes …………………….
Net income ……………………………………
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201) The production budget for Greski Company shows the following production volume for the
months of July-September. Each unit produced requires 2.5 hours of direct labor. The direct
labor rate is predicted to be $16 per hour in all months. Prepare a direct labor budget for Greski
Company for July-September.
July
Aug
Sept
Units to be produced
620
680
540
August
* 2.5
* 2.5
Total direct labor hours needed ……………….
1,550
1,700
$16.00
$16.00
202) Addams, Inc., is preparing its master budget for the second quarter. The following sales and
production data have been forecasted:
April
May
June
July
August
Unit sales ……
400
500
520
480
540
Finished goods inventory on March 31: 120 units
Raw materials inventory on March 31: 450 pounds
Desired ending inventory each month:
Finished goods: 30% of next month’s sales
Raw materials: 25% of next month’s production needs
Number of pounds of raw material required per finished unit: 4 lbs.
How many pounds of raw materials should be purchased in April?
Less: Beginning finished goods inventory …….…
203) Snap, Inc., provides the following data for the next three months:
April
May
June
Budgeted production units………….
442 units
570
544
Ending raw materials inventory …….
663 lbs.
Ending finished goods inventory ……
174 units
Desired ending inventory:
Raw Materials = 30% of next month’s production needs
Pounds of raw material required for each finished Unit = 5 lbs.
Calculate the amount of purchases of raw materials in pounds for April and May.
June
Production budgeted…………………………
Pounds of raw material per unit ………………
Desired ending inventory of raw materials ……
Less beginning inventory of raw materials ……
Purchase of raw materials in pounds ………….
204) Use the following information to prepare the June cash budget for Springer Company. It
should show expected cash receipts and cash payments for the month and the cash balance
expected on June 30.
a. Beginning cash balance on June 1 is $52,000.
b. Cash receipts from sales are expected to be $1,625,000.
c. Cash payments for direct materials and direct labor are expected to be $246,500 and $573,100,
respectively.
d. Budgeted cash payments for variable overhead is $340,000.
e. Budgeted depreciation, the only fixed overhead estimated for June: $24,000.
f. Cash selling and administrative expenses budgeted for June are $282,000.
g. Bank loan interest due in June: $8,000.
i. Loan payment of $50,000 should be made if the preliminary cash balance is greater than
$200,000.
205) Use the following information to prepare a budgeted income statement for Stellar Company
for the month of June.
a. Beginning cash balance on June 1 is $52,000.
b. Sales amounts are: April (actual), $1,450,000, May (actual), $1,600,000, and June (budgeted),
$1,700,000.
c. Cost of goods sold is 53% of sales.
d. Budgeted cash payments for salaries in June: $260,000. Salaries payable on May 31 are
$60,000 and are expected to be $50,000 on June 30.
e. Budgeted depreciation expense for June: $24,000.
f. Other cash expenses budgeted for June: $282,000.
g. Accrued income taxes due in June: $48,000.
h. Bank loan interest due in June: $8,000 which represents the 1% monthly expense on a bank
loan of $800,000.
i. The income tax rate applicable to the company is 30%.
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206) Use the following information to prepare a budgeted balance sheet for Grover Company for
the month of June.
a. The budgeted net income for the month of June is $236,000.
b. The beginning cash balance is $62,000; total budgeted cash receipts are $1,660,000; total
budgeted cash payments are $1,580,000.
c. Budgeted sales for June are $1,700,000. Collections are 40% in the month of sale and 60% in
the month following.
d. The projected inventory balance is 10% of the following month’s sales. Sales for July are
projected to be $1,750,000.
e. Budgeted purchases for June are $900,000 to be paid 80% in the month of purchase and 20%
in the month following.
f. The equipment account balance is $1,400,000 on May 31. No equipment purchases or
disposals will be made during June. On May 31, the accumulated depreciation is $276,000.
Depreciation expense for June is estimated to be $24,000.
g. An outstanding loan balance of $800,000 is expected at the end of June.
h. Accrued income taxes payable for June 30 are expected to be $71,000. Salaries payable for
June 30 are expected to be $50,000.
i. The only other balance sheet accounts are: Common Stock, with a balance of $800,000 on May
31, and Retained Earnings with a balance of $300,000 on May 31. No additional common stock
will be issued and no dividends will be paid during June.
207) There are at least five benefits from budgeting. Identify two of these benefits:
(1) ________
(2) ________
208) ________ is a budgeting guideline that recognizes employees affected by a budget should
be involved in preparing it.
209) A ________ is a continuously revised budget that adds future months or quarters to replace
months or quarters that have lapsed.
210) The master budget process usually begins with the preparation of the ________ and usually
finishes with the preparation of the ________, the ________, and the ________.
211) ________ is a budget system based on expected activities and their levels that enables
management to plan for resources required to perform the activities.
212) The budget that lists the dollar amounts to be both received from plant asset disposals and
spent to purchase additional plant assets to carry out the budgeted business activities is the
________.
213) The ________ shows expected cash inflows and outflows during the budget period.
214) The ________ , prepared by manufacturing firms, shows the number of units to be
produced in a period based on the unit sales projected in the sales budget, along with inventory
considerations.
215) The ________ shows the budgeted costs for factory overhead that will be needed to
complete the estimated production for the period, often separated into variable and fixed costs.