Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
221
216) Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations
follow:
• Sales are budgeted at $390,000 for November, $360,000 for December, and $340,000 for
January.
• Collections are expected to be 85% in the month of sale and 15% in the month following the
sale.
• The cost of goods sold is 80% of sales.
• The company desires an ending merchandise inventory equal to 40% of the cost of goods
sold in the following month. Payment for merchandise is made in the month following the
purchase.
• The November beginning balance in the accounts receivable account is $77,000.
• The November beginning balance in the accounts payable account is $320,000.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
223
217) Tilson Corporation has projected sales and production in units for the second quarter of the
coming year as follows:
April
May
June
Sales
55,000
45,000
65,000
Production
65,000
55,000
55,000
-
Cash-related production costs are budgeted at $7 per unit produced. Of these
production costs, 40% are paid in the month in which they are incurred and the
balance in the following month. Selling and administrative expenses will amount
to $110,000 per month. The accounts payable balance on March 31 totals
$193,000, which will be paid in April.
All units are sold on account for $16 each. Cash collections from sales are
budgeted at 60% in the month of sale, 30% in the month following the month of
sale, and the remaining 10% in the second month following the month of sale.
Accounts receivable on April 1 totaled $520,000 ($100,000 from February's
sales and $420,000 from March's sales).
Required:
a. Prepare a schedule for each month showing budgeted cash disbursements for Tilson
Corporation.
b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Corporation.
226
218) Craney Corporation makes one product and it provided the following information to help
prepare the master budget for the next four months of operations:
> The budgeted selling price per unit is $87. Budgeted unit sales for January, February, March,
and April are 7,100, 8,300, 13,700, and 13,600 units, respectively. All sales are on credit.
> Regarding credit sales, 20% are collected in the month of the sale and 80% in the following
month.
> The ending finished goods inventory equals 40% of the following month's sales.
> The ending raw materials inventory equals 40% of the following month's raw materials
production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw
materials cost $1.00 per pound.
> Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the
following month.
> The direct labor wage rate is $19.00 per hour. Each unit of finished goods requires 2.7 direct
labor-hours.
Required:
a. What are the budgeted sales for February?
b. What are the expected cash collections for February?
c. According to the production budget, how many units should be produced in February?
d. If 68,300 pounds of raw materials are needed for production in March, how many pounds of
raw materials should be purchased in February?
e. What is the estimated cost of raw materials purchases for February?
f. If the cost of raw material purchases in January is $43,660, then in February what are the
estimated cash disbursements for raw materials purchases?
g. What is the total estimated direct labor cost for February assuming the direct labor workforce
is adjusted to match the hours required to produce the forecasted number of units produced?
229
219) Vinall Corporation makes one product and has provided the following information to help
prepare the master budget for the next four months of operations:
Budgeted selling price per unit
$85
Budgeted unit sales (all on credit):
July
9,400
August
11,700
September
10,300
October
11,200
Raw materials requirement per unit of output
2
pounds
Raw materials cost
$2.00
per pound
Direct labor requirement per unit of output
2.1
direct labor-hours
Direct labor wage rate
$25.00
per direct labor-hour
Credit sales are collected:
30% in the month of the sale
70% in the following month
Raw materials purchases are paid:
20% in the month of purchase
80% in the following month
The ending finished goods inventory should equal 20% of the following month's sales. The
ending raw materials inventory should equal 20% of the following month's raw materials
production needs.
Required:
a. What are the budgeted sales for August?
b. What are the expected cash collections for August?
c. According to the production budget, how many units should be produced in August?
d. If 20,960 pounds of raw materials are needed for production in September, how many pounds
of raw materials should be purchased in August?
e. What is the estimated cost of raw materials purchases for August?
f. If the cost of raw material purchases in July is $40,688, then in August what are the total
estimated cash disbursements for raw materials purchases?
g. What is the total estimated direct labor cost for August assuming the direct labor workforce is
adjusted to match the hours required to produce the forecasted number of units produced?
232
220) Mumbower Corporation makes one product and has provided the following information to
help prepare the master budget for the next four months of operations:
Budgeted selling price per unit
$103
Budgeted unit sales (all on credit):
October
9,500
November
10,700
December
9,800
January
10,800
Raw materials requirement per unit of output
4
pounds
Raw materials cost
$5.00
per pound
Direct labor requirement per unit of output
2.8
direct labor-hours
Direct labor wage rate
$19.00
per direct labor-hour
Variable selling and administrative expense
$1.60
per unit sold
Fixed selling and administrative expense
$80,000
per month
Credit sales are collected:
40% in the month of the sale
60% in the following month
Raw materials purchases are paid:
40% in the month of purchase
60% in the following month
The ending finished goods inventory should equal 20% of the following month's sales. The
ending raw materials inventory should equal 40% of the following month's raw materials
production needs.
233
Required:
a. What are the budgeted sales for November?
b. What are the expected cash collections for November?
c. What is the budgeted accounts receivable balance at the end of November?
d. According to the production budget, how many units should be produced in November?
e. If 40,000 pounds of raw materials are needed for production in December, how many pounds
of raw materials should be purchased in November?
f. What is the estimated cost of raw materials purchases for November?
g. If the cost of raw material purchases in October is $201,040, then in November what are the
total estimated cash disbursements for raw materials purchases?
h. What is the estimated accounts payable balance at the end of November?
i. What is the estimated raw materials inventory balance at the end of November?
j. What is the total estimated direct labor cost for November assuming the direct labor workforce
is adjusted to match the hours required to produce the forecasted number of units produced?
k. For simplicity, we will assume that there is no fixed manufacturing overhead and that the
variable manufacturing overhead is $7.00 per direct labor-hour. What is the estimated unit
product cost?
l. What is the estimated finished goods inventory balance at the end of November?
m. What is the estimated cost of goods sold and gross margin for November?
n. What is the estimated total selling and administrative expense for November?
o. What is the estimated net operating income for November?
237
221) Tsosie Corporation makes one product and it provided the following information to help
prepare the master budget for the next four months of operations:
> The budgeted selling price per unit is $103. Budgeted unit sales for April, May, June, and July
are 9,300, 11,300, 9,800, and 12,800 units, respectively. All sales are on credit.
> Regarding credit sales, 20% are collected in the month of the sale and 80% in the following
month.
> The ending finished goods inventory equals 10% of the following month's sales.
> The ending raw materials inventory equals 10% of the following month's raw materials
production needs. Each unit of finished goods requires 2 pounds of raw materials. The raw
materials cost $4.00 per pound.
> Regarding raw materials purchases, 10% are paid for in the month of purchase and 90% in the
following month.
> The direct labor wage rate is $20.00 per hour. Each unit of finished goods requires 2.7 direct
labor-hours.
> The variable selling and administrative expense per unit sold is $3.70. The fixed selling and
administrative expense per month is $80,000.
Required:
a. What are the budgeted sales for May?
b. What are the expected cash collections for May?
c. What is the budgeted accounts receivable balance at the end of May?
d. According to the production budget, how many units should be produced in May?
e. If 20,200 pounds of raw materials are needed for production in June, how many pounds of raw
materials should be purchased in May?
f. What is the estimated cost of raw materials purchases for May?
g. If the cost of raw material purchases in April is $77,320, then in May what are the total
estimated cash disbursements for raw materials purchases?
h. What is the estimated accounts payable balance at the end of May?
i. What is the estimated raw materials inventory balance at the end of May?
j. What is the total estimated direct labor cost for May assuming the direct labor workforce is
adjusted to match the hours required to produce the forecasted number of units produced?
k. For simplicity, we will assume that there is no fixed manufacturing overhead and that the
variable manufacturing overhead is $11.00 per direct labor-hour. What is the estimated unit
product cost?
l. What is the estimated finished goods inventory balance at the end of May?
m. What is the estimated cost of goods sold and gross margin for May?
n. What is the estimated total selling and administrative expense for May?
o. What is the estimated net operating income for May?
