41
58) Pabon Corporation makes one product. Budgeted unit sales for August and September are
11,100 and 12,600 units, respectively. The ending finished goods inventory equals 40% of the
following month’s sales. The direct labor wage rate is $19.00 per hour. Each unit of finished
goods requires 2.5 direct labor-hours. The estimated direct labor cost for August is closest to:
A) $389,000
B) $555,750
C) $29,250
D) $222,300
59) Dustman Manufacturing Corporation’s most recent production budget indicates the following
required production:
January
February
March
April
Required production (units)
4,000
6,000
5,500
5,000
–
Each unit of finished product requires 3 feet of raw materials. The company maintains raw
materials inventory equal to 2,000 feet plus 10% of the next month’s expected production needs.
The raw material used in Dustman Manufacturing Corporation’s product costs $4.50 per foot.
What is the value of raw material that Dustman Manufacturing should plan on purchasing for the
month of February?
A) $73,575
B) $74,250
C) $81,000
D) $80,325
Required production in units
Raw materials required per unit
Raw materials needed to meet the production
Total raw materials needs
[2,000 feet + (6,000 units × 3 feet per unit × 10%)]
Raw materials to be purchased
Cost of raw materials per unit
Cost of raw materials to be purchased
–
60) The Jung Corporation’s production budget calls for the following number of units to be
produced each quarter for next year:
Budgeted production
Quarter 1
45,000
units
Quarter 2
38,000
units
Quarter 3
34,000
units
Quarter 4
48,000
units
–
Each unit of product requires three pounds of direct material. The company’s policy is to begin
each quarter with an inventory of direct materials equal to 30% of that quarter’s direct material
requirements. Budgeted direct materials purchases for the third quarter would be:
A) 114,600 pounds
B) 89,400 pounds
C) 38,200 pounds
D) 29,800 pounds
Required production in units
Raw materials needed to meet the production
(48,000 units × 3 pounds per unit × 30%)
Total raw materials needs
(34,000 units × 3 pounds per unit × 30%)
Raw materials to be purchased
–
61) The following are budgeted data:
January
February
March
Sales in units
15,000
20,000
18,000
Production in units
18,000
19,000
16,000
–
One pound of material is required for each finished unit. The inventory of materials at the end of
each month should equal 20% of the following month’s production needs. Purchases of raw
materials for February would be budgeted to be:
A) 19,600 pounds
B) 20,400 pounds
C) 18,400 pounds
D) 18,600 pounds
Required production in units
Raw materials needed to meet the production
(16,000 × 1 × 20%)
Total raw materials needs
(19,000 × 1 × 20%)
Raw materials to be purchased
–
62) The Tobler Corporation has budgeted production for next year as follows:
Quarter
First
Second
Third
Fourth
Production in units
10,000
12,000
16,000
14,000
–
Four pounds of raw materials are required for each unit produced. Raw materials on hand at the
start of the year total 4,000 pounds. The raw materials inventory at the end of each quarter
should equal 10% of the next quarter’s production needs. Budgeted purchases of raw materials in
the third quarter would be:
A) 63,200 pounds
B) 62,400 pounds
C) 56,800 pounds
D) 50,400 pounds
Required production in units
(14,000 units × 4 pounds per unit × 10%)
Total raw materials needs
(16,000 units × 4 pounds per unit × 10%)
Raw materials to be purchased
–
63) Marst Corporation’s budgeted production in units and budgeted raw materials purchases over
the next three months are given below:
January
February
March
Budgeted production (in units)
70,000
?
80,000
Budgeted raw materials purchases (in pounds)
142,400
151,600
158,800
–
Two pounds of raw materials are required to produce one unit of product. The company wants
raw materials on hand at the end of each month equal to 30% of the following month’s
production needs. The company is expected to have 42,000 pounds of raw materials on hand on
January 1. Budgeted production for February should be:
A) 103,400 units
B) 80,600 units
C) 80,000 units
D) 74,000 units
Required production in units
Raw materials required per unit
Raw materials needed to meet the production
(80,000 units × 2 pounds per unit × 30%)
Total raw materials needs
48,000 + 2X
(X units × 2 pounds per unit × 30%)
Raw materials to be purchased
–
64) Catano Corporation pays for 40% of its raw materials purchases in the month of purchase
and 60% in the following month. If the budgeted cost of raw materials purchases in July is
$256,550 and in August is $278,050, then in August the total budgeted cash disbursements for
raw materials purchases is closest to:
A) $265,150
B) $153,930
C) $166,830
D) $111,220
65) Garry Corporation’s most recent production budget indicates the following required
production:
October
November
December
Required production (units)
210,000
175,000
110,000
–
Each unit of finished product requires 5 pounds of raw materials. The company maintains raw
materials inventory equal to 25% of the next month’s expected production needs. How many
pounds of raw material should Garry plan on purchasing for the month of November?
A) 1,006,250
B) 793,750
C) 1,012,500
D) 893,500
Required production in units
Raw materials needed to meet the production
(110,000 units × 5 pounds per unit × 25%)
Total raw materials needs
(175,000 units × 5 pounds per unit × 25%)
Raw materials to be purchased
–
66) Pooler Corporation is working on its direct labor budget for the next two months. Each unit
of output requires 0.15 direct labor-hours. The direct labor rate is $7.00 per direct labor-hour.
The production budget calls for producing 6,500 units in April and 6,200 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 1,000 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?
A) $13,825.00
B) $13,335.00
C) $14,000.00
D) $13,510.00
67) Tracie Corporation manufactures and sells women’s skirts. Each skirt (unit) requires 2.2
yards of cloth. Selected data from Tracie’s master budget for next quarter are shown below:
July
August
September
Budgeted sales (in units)
7,000
9,000
11,000
Budgeted production (in units)
8,000
10,500
13,000
–
Each unit requires 0.8 hours of direct labor, and the average hourly cost of Tracie’s direct labor is
$18. What is the cost of Tracie Corporation’s direct labor in September?
A) $198,000
B) $158,400
C) $187,200
D) $234,000
Required production in units
13,000
Direct labor-hours per unit
Total direct labor-hours needed
10,400
Direct labor cost per hour
Total direct labor cost
–
68) Depasquale Corporation is working on its direct labor budget for the next two months. Each
unit of output requires 0.41 direct labor-hours. The direct labor rate is $8.10 per direct labor-
hour. The production budget calls for producing 5,000 units in May and 5,400 units in June. If
the direct labor work force is fully adjusted to the total direct labor-hours needed each month,
what would be the total combined direct labor cost for the two months?
A) $16,605.00
B) $17,933.40
C) $17,269.20
D) $34,538.40
69) The manufacturing overhead budget at Franklyn Corporation is based on budgeted direct
labor-hours. The direct labor budget indicates that 4,400 direct labor-hours will be required in
January. The variable overhead rate is $1.30 per direct labor-hour. The company’s budgeted fixed
manufacturing overhead is $60,280 per month, which includes depreciation of $17,160. All other
fixed manufacturing overhead costs represent current cash flows. The January cash
disbursements for manufacturing overhead on the manufacturing overhead budget should be:
A) $5,720
B) $43,120
C) $48,840
D) $66,000
70) Arciba Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The
direct labor budget indicates that 7,400 direct labor-hours will be required in January. The
variable overhead rate is $9.50 per direct labor-hour. The company’s budgeted fixed
manufacturing overhead is $130,980 per month, which includes depreciation of $10,360. All
other fixed manufacturing overhead costs represent current cash flows. The company recomputes
its predetermined overhead rate every month. The predetermined overhead rate for January
should be:
A) $27.20
B) $25.80
C) $17.70
D) $9.50
71) Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The
direct labor budget indicates that 5,600 direct labor-hours will be required in August. The
variable overhead rate is $5.40 per direct labor-hour. The company’s budgeted fixed
manufacturing overhead is $69,440 per month, which includes depreciation of $15,680. All other
fixed manufacturing overhead costs represent current cash flows. The August cash disbursements
for manufacturing overhead on the manufacturing overhead budget should be:
A) $99,680
B) $84,000
C) $53,760
D) $30,240
72) The manufacturing overhead budget at Foshay Corporation is based on budgeted direct
labor-hours. The direct labor budget indicates that 5,800 direct labor-hours will be required in
May. The variable overhead rate is $9.10 per direct labor-hour. The company’s budgeted fixed
manufacturing overhead is $104,400 per month, which includes depreciation of $8,120. All other
fixed manufacturing overhead costs represent current cash flows. The company recomputes its
predetermined overhead rate every month. The predetermined overhead rate for May should be:
A) $9.10
B) $27.10
C) $18.00
D) $25.70
73) Schuepfer Inc. bases its selling and administrative expense budget on budgeted unit sales.
The sales budget shows 1,300 units are planned to be sold in March. The variable selling and
administrative expense is $4.20 per unit. The budgeted fixed selling and administrative expense
is $19,240 per month, which includes depreciation of $3,380 per month. The remainder of the
fixed selling and administrative expense represents current cash flows. The cash disbursements
for selling and administrative expenses on the March selling and administrative expense budget
should be:
A) $15,860
B) $5,460
C) $24,700
D) $21,320
74) Yerkey Corporation makes one product and has provided the following information to help
prepare the master budget:
Budgeted unit sales, February
10,700
units
Variable selling and administrative expense
$
2.00
per unit sold
Fixed selling and administrative expense
$
60,000
per month
–
The estimated selling and administrative expense for February is closest to:
A) $81,400
B) $21,400
C) $54,270
D) $60,000
Budgeted unit sales
10,700
Variable selling and administrative expense per unit
2.00
Total variable selling and administrative expense
21,400
Fixed selling and administrative expenses
60,000
Total selling and administrative expenses
81,400
–
75) Bux Corporation produces and sells one product. In November it expects to sell 10,600 units
of this product. The company’s variable selling and administrative expense is $3.70 per unit sold
and its fixed selling and administrative expense is $50,000 per month. The estimated selling and
administrative expense for November is closest to:
A) $50,000
B) $89,220
C) $59,480
D) $39,220
76) The selling and administrative expense budget of Choo Corporation is based on budgeted
unit sales, which are 4,600 units for August. The variable selling and administrative expense is
$7.30 per unit. The budgeted fixed selling and administrative expense is $51,980 per month,
which includes depreciation of $6,440 per month. The remainder of the fixed selling and
administrative expense represents current cash flows. The cash disbursements for selling and
administrative expenses on the August selling and administrative expense budget should be:
A) $85,560
B) $45,540
C) $79,120
D) $33,580