7-161
100.
May Corporation, a merchandising firm, has budgeted sales as follows for the third quarter of
the year:
July
$80,000
August
$90,000
September
$70,000
Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly
ending inventory equal to 130% of the Cost of Goods Sold for the following month. The
inventory on June 30 is less than this ideal since it is only $65,000. The company is now
preparing a Merchandise Purchases Budget.
The budgeted purchases for July are:
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101.
Noel Enterprises has budgeted sales in units for the next five months as follows:
June
6,800 units
July
5,400 units
August
7,200 units
September
4,600 units
October
3,800 units
Past experience has shown that the ending inventory for each month must be equal to 10% of
the next month’s sales in units. The inventory on May 31 contained 400 units. The company
needs to prepare a production budget for the second quarter of the year.
The beginning inventory in units for September is:
7-163
102.
Noel Enterprises has budgeted sales in units for the next five months as follows:
June
6,800 units
July
5,400 units
August
7,200 units
September
4,600 units
October
3,800 units
Budgeted unit sales
Add desired ending finished goods inventory (10% × 7,200)
Less beginning finished goods inventory (10% × 5,400)
Required production in units
Past experience has shown that the ending inventory for each month must be equal to 10% of
the next month’s sales in units. The inventory on May 31 contained 400 units. The company
needs to prepare a production budget for the second quarter of the year.
The total number of units to be produced in July is:
7-164
103.
Noel Enterprises has budgeted sales in units for the next five months as follows:
June
6,800 units
July
5,400 units
August
7,200 units
September
4,600 units
October
3,800 units
Past experience has shown that the ending inventory for each month must be equal to 10% of
the next month’s sales in units. The inventory on May 31 contained 400 units. The company
needs to prepare a production budget for the second quarter of the year.
The desired ending inventory for August is:
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104.
Sarter Corporation is in the process of preparing its annual budget. The following beginning
and ending inventory levels are planned for the year.
Beginning Inventory
Ending Inventory
Finished goods (units)
70,000
20,000
Raw material (grams)
50,000
60,000
Less beginning finished goods inventory
Required production in units
Each unit of finished goods requires 3 grams of raw material. The company plans to sell
880,000 units during the year.
The number of units the company would have to manufacture during the year would be:
7-166
105.
Sarter Corporation is in the process of preparing its annual budget. The following beginning
and ending inventory levels are planned for the year.
Beginning Inventory
Ending Inventory
Finished goods (units)
70,000
20,000
Raw material (grams)
50,000
60,000
Less beginning finished goods inventory
Required production in units
Required production in units
Raw materials required for production
Each unit of finished goods requires 3 grams of raw material. The company plans to sell
880,000 units during the year.
How much of the raw material should the company purchase during the year?
7-167
106.
The TS Corporation has budgeted sales for the year as follows:
Quarter
1
2
3
4
Sales in units
10,000
12,000
14,000
16,000
The ending inventory of finished goods for each quarter should equal 25% of the next
quarter’s budgeted sales in units. The finished goods inventory at the start of the year is 2,500
units. Four pounds of raw materials are required for each unit produced. Raw materials on
hand at the start of the year total 4,200 pounds. The raw materials inventory at the end of
each quarter should equal 10% of the next quarter’s production needs in material.
Scheduled production for the third quarter should be:
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107.
The TS Corporation has budgeted sales for the year as follows:
Quarter
1
2
3
4
Sales in units
10,000
12,000
14,000
16,000
The ending inventory of finished goods for each quarter should equal 25% of the next
quarter’s budgeted sales in units. The finished goods inventory at the start of the year is 2,500
units. Four pounds of raw materials are required for each unit produced. Raw materials on
hand at the start of the year total 4,200 pounds. The raw materials inventory at the end of
each quarter should equal 10% of the next quarter’s production needs in material.
Scheduled purchases of raw materials for the second quarter should be:
7-169
108.
Roberts Corporation manufactures home cleaning products. One of the products, Quickclean,
requires 2 pounds of Material A and 5 pounds of Material B per unit manufactured. Material A
is purchased from the supplier for $0.30 per pound and Material B is purchased for $0.50 per
pound. The finished goods inventory on hand at the end of each month should equal 4,000
units plus 25% of the next month’s sales. The raw materials inventory on hand at the end of
each month (for either Material A or Material B) should equal 80% of the following month’s
production needs.
The production budget calls for 26,000 units of Quickclean to be manufactured in June and
32,000 units of Quickclean to be manufactured in July. On May 31 there will be 41,600 pounds
of Material A and 104,000 pounds of Material B in inventory.
Assume that on January 1 the inventory of Quickclean was 8,000 units. Expected sales in
January are 14,000 units and expected sales in February are 18,000 units. The number of
units needed to be produced in January would be:
7-170
109.
Roberts Corporation manufactures home cleaning products. One of the products, Quickclean,
requires 2 pounds of Material A and 5 pounds of Material B per unit manufactured. Material A
is purchased from the supplier for $0.30 per pound and Material B is purchased for $0.50 per
pound. The finished goods inventory on hand at the end of each month should equal 4,000
units plus 25% of the next month’s sales. The raw materials inventory on hand at the end of
each month (for either Material A or Material B) should equal 80% of the following month’s
production needs.
The production budget calls for 26,000 units of Quickclean to be manufactured in June and
32,000 units of Quickclean to be manufactured in July. On May 31 there will be 41,600 pounds
of Material A and 104,000 pounds of Material B in inventory.
The number of pounds of Material A needed for production during June would be:
7-171
110.
Roberts Corporation manufactures home cleaning products. One of the products, Quickclean,
requires 2 pounds of Material A and 5 pounds of Material B per unit manufactured. Material A
is purchased from the supplier for $0.30 per pound and Material B is purchased for $0.50 per
pound. The finished goods inventory on hand at the end of each month should equal 4,000
units plus 25% of the next month’s sales. The raw materials inventory on hand at the end of
each month (for either Material A or Material B) should equal 80% of the following month’s
production needs.
The production budget calls for 26,000 units of Quickclean to be manufactured in June and
32,000 units of Quickclean to be manufactured in July. On May 31 there will be 41,600 pounds
of Material A and 104,000 pounds of Material B in inventory.
The number of pounds of Material B to be purchased during June would be:
7-172
111.
LFM Corporation makes and sells a product called Product WZ. Each unit of Product WZ
requires 3.5 hours of direct labor at the rate of $16.00 per direct labor-hour. Management
would like you to prepare a Direct Labor Budget for June.
The budgeted direct labor cost per unit of Product WZ would be:
7-173
112.
LFM Corporation makes and sells a product called Product WZ. Each unit of Product WZ
requires 3.5 hours of direct labor at the rate of $16.00 per direct labor-hour. Management
would like you to prepare a Direct Labor Budget for June.
The company plans to sell 31,000 units of Product WZ in June. The finished goods inventories
on June 1 and June 30 are budgeted to be 100 and 600 units, respectively. Budgeted direct
labor costs for June would be:
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113.
Cashan Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 1.5
kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five
months is as follows:
August
24,500 units
September
24,700 units
October
24,600 units
November
26,400 units
December
24,500 units
The company wants to maintain monthly ending inventories of Jurislon equal to 30% of the
following month’s production needs. On July 31, this requirement was not met since only
10,400 kilograms of Jurislon were on hand. The cost of Jurislon is $4.00 per kilogram. The
company wants to prepare a Direct Materials Purchase Budget for the next five months.
The desired ending inventory of Jurislon for September is:
7-175
114.
Cashan Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 1.5
kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five
months is as follows:
August
24,500 units
September
24,700 units
October
24,600 units
November
26,400 units
December
24,500 units
Required production in units
Raw materials needed for production
Total raw materials needs
Less beginning raw materials inventory
Cost per kilogram
Required purchases
The company wants to maintain monthly ending inventories of Jurislon equal to 30% of the
following month’s production needs. On July 31, this requirement was not met since only
10,400 kilograms of Jurislon were on hand. The cost of Jurislon is $4.00 per kilogram. The
company wants to prepare a Direct Materials Purchase Budget for the next five months.
The total cost of Jurislon to be purchased in August is:
7-176
115.
Cowles Corporation Inc., makes and sells a single product, Product R. Three yards of Material
K are needed to make one unit of Product R. Budgeted production of Product R for the next
five months is as follows:
August
13,000 units
September
13,500 units
October
14,500 units
November
13,600 units
December
12,900 units
The company wants to maintain monthly ending inventories of Material K equal to 30% of the
following month’s production needs. On July 31, this requirement was not met because only
3,500 yards of Material K were on hand. The cost of Material K is $0.80 per yard. The
company wants to prepare a Direct Materials Purchase Budget for the rest of the year.
The total cost of Material K to be purchased in August is:
7-177
116.
Cowles Corporation Inc., makes and sells a single product, Product R. Three yards of Material
K are needed to make one unit of Product R. Budgeted production of Product R for the next
five months is as follows:
August
13,000 units
September
13,500 units
October
14,500 units
November
13,600 units
December
12,900 units
The company wants to maintain monthly ending inventories of Material K equal to 30% of the
following month’s production needs. On July 31, this requirement was not met because only
3,500 yards of Material K were on hand. The cost of Material K is $0.80 per yard. The
company wants to prepare a Direct Materials Purchase Budget for the rest of the year.
The desired ending inventory of Material K for September is:
7-178
117.
Cowles Corporation Inc., makes and sells a single product, Product R. Three yards of Material
K are needed to make one unit of Product R. Budgeted production of Product R for the next
five months is as follows:
August
13,000 units
September
13,500 units
October
14,500 units
November
13,600 units
December
12,900 units
The company wants to maintain monthly ending inventories of Material K equal to 30% of the
following month’s production needs. On July 31, this requirement was not met because only
3,500 yards of Material K were on hand. The cost of Material K is $0.80 per yard. The
company wants to prepare a Direct Materials Purchase Budget for the rest of the year.
The total needs (i.e., production requirements plus desired ending inventory) of Material K for
November are:
7-179
118.
Adi Manufacturing Corporation is estimating the following raw material purchases for the final
four months of the year:
September
$800,000
October
$920,000
November
$840,000
December
$760,000
At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The
remaining 70% is paid for in the month following the purchase.
How much cash should Adi expect to pay out for raw material purchases during November?
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119.
Adi Manufacturing Corporation is estimating the following raw material purchases for the final
four months of the year:
September
$800,000
October
$920,000
November
$840,000
December
$760,000
At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The
remaining 70% is paid for in the month following the purchase.
In Adi’s budgeted balance sheet at December 31, at what amount will accounts payable for
raw materials be shown?
120.
The Gerald Corporation makes and sells a single product called a Clop. Each Clop requires
1.1 direct labor-hours at $8.20 per direct labor-hour. The direct labor workforce is fully
adjusted each month to the required workload. The company is preparing a Direct Labor
Budget for the first quarter of the year.
The budgeted direct labor cost per Clop is closest to: