Accounting Chapter 8 14 The direct labor budget of Faver Corporation for the upcoming

253

227) The production department of Tarre Corporation has submitted the following forecast of

units to be produced by quarter for the upcoming fiscal year.

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Units to be produced

10,000

12,000

11,000

10,500

–

Each unit requires 0.30 direct labor-hours at $16.00 per hour.

Required:

Prepare a direct labor budget for the upcoming fiscal year, assuming that the direct labor work

force is adjusted each quarter to match the number of hours required to produce the budgeted

production.

Required production in units

Direct labor-hours per unit

Total direct labor-hours needed

Direct labor cost per hour

$

Total direct labor cost

$

–

228) Whitmer Corporation is working on its direct labor budget for the next two months. Each

unit of output requires 0.05 direct labor-hours. The direct labor rate is $11.80 per direct labor-

hour. The production budget calls for producing 7,100 units in February and 6,800 units in

March.

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.

229) Sthilaire Corporation is working on its direct labor budget for the next two months. Each

unit of output requires 0.34 direct labor-hours. The direct labor rate is $11.10 per direct labor-

hour. The production budget calls for producing 8,000 units in April and 8,300 units in May. 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 2,840 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.

230) The direct labor budget of Faver Corporation for the upcoming year contains the following

details concerning budgeted direct labor-hours.

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Budgeted direct labor-hours

9,000

9,200

9,500

9,800

–

The company’s variable manufacturing overhead rate is $4.00 per direct labor-hour, and the

company’s fixed manufacturing overhead is $60,000 per quarter. The only noncash item included

in the fixed manufacturing overhead is depreciation which is $20,000 per quarter.

Required:

Prepare Faver Corporation’s manufacturing overhead budget for the upcoming fiscal year. Show

both manufacturing overhead expense and cash disbursements for manufacturing overhead.

Budgeted direct labor-hours

overhead rate

overhead

Less depreciation

manufacturing overhead

231) Brockney Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The

variable overhead rate is $8.60 per direct labor-hour. The company’s budgeted fixed

manufacturing overhead is $107,970 per month, which includes depreciation of $9,760. All other

fixed manufacturing overhead costs represent current cash flows. The July direct labor budget

indicates that 6,100 direct labor-hours will be required in that month.

Required:

a. Determine the cash disbursements for manufacturing overhead for July.

b. Determine the predetermined overhead rate for July.

232) The manufacturing overhead budget of Reigle Corporation is based on budgeted direct

labor-hours. The February direct labor budget indicates that 5,800 direct labor-hours will be

required in that month. The variable overhead rate is $4.60 per direct labor-hour. The company’s

budgeted fixed manufacturing overhead is $82,360 per month, which includes depreciation of

$16,820. All other fixed manufacturing overhead costs represent current cash flows.

Required:

a. Determine the cash disbursements for manufacturing overhead for February.

b. Determine the predetermined overhead rate for February.

233) Wala Inc. bases its selling and administrative expense budget on the number of units sold.

The variable selling and administrative expense is $8.20 per unit. The budgeted fixed selling and

administrative expense is $132,800 per month, which includes depreciation of $14,400. The

remainder of the fixed selling and administrative expense represents current cash flows. The

sales budget shows 8,000 units are planned to be sold in July.

Required:

Prepare the selling and administrative expense budget for July.

234) The selling and administrative expense budget of Garney Corporation is based on the

number of units sold, which are budgeted to be 1,800 units in October. The variable selling and

administrative expense is $2.00 per unit. The budgeted fixed selling and administrative expense

is $22,680 per month, which includes depreciation of $7,020. The remainder of the fixed selling

and administrative expense represents current cash flows.

Required:

Prepare the selling and administrative expense budget for October.

235) Zolezzi Inc. is preparing its cash budget for March. The budgeted beginning cash balance is

$42,000. Budgeted cash receipts total $178,000 and budgeted cash disbursements total $175,000.

The desired ending cash balance is $50,000. The company can borrow up to $160,000 at any

time from a local bank, with interest not due until the following month.

Required:

Prepare the company’s cash budget for March in good form. Make sure to indicate what

borrowing, if any, would be needed to attain the desired ending cash balance.

236) Romeiro Corporation is preparing its cash budget for September. The budgeted beginning

cash balance is $46,000. Budgeted cash receipts total $160,000 and budgeted cash disbursements

total $152,000. The desired ending cash balance is $70,000. 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 September in good form.