Accounting Chapter 8 Chapter 8_version1 Craney Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations

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Student name:__________

1) At March 31 Streuling Enterprises, a merchandising firm, had an inventory of 38,000

units, and it had accounts receivable totaling $85,000. Sales, in units, have been budgeted as

follows for the next four months:

April 60,000

May 75,000

June 90,000

July 81,000

Streuling’s board of directors has established a policy to commence in April that the inventory at

the end of each month should contain 40% of the units required for the following month’s

budgeted sales. The selling price is $2 per unit. One-third of sales are paid for by customers in

the month of the sale, the balance is collected in the following month.

Required:

a. Prepare a merchandise purchases budget showing how many units should be purchased for

each of the months April, May, and June.

b. Prepare a schedule of expected cash collections for each of the months April, May, and June.

2) Capes Corporation is a wholesaler of industrial goods. Data regarding the store’s

operations follow:

● Sales are budgeted at $330,000 for November, $340,000 for December, and $320,000 for

January.

● Collections are expected to be 60% in the month of sale and 40% 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 $68,000.

● The November beginning balance in the accounts payable account is $255,000.

Required:

a. Prepare a Schedule of Expected Cash Collections for November and December.

b. Prepare a Merchandise Purchases Budget for November and December.

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3) Tilson Corporation has projected sales and production in units for the second quarter of

the coming year as follows:

April May June

Sales 63,000 53,000 73,000

Production 73,000 63,000 63,000

Cash-related production costs are budgeted at $5 per unit produced. Of these production costs,

25% are paid in the month in which they are incurred and the balance in the following month.

Selling and administrative expenses will amount to $50,000 per month. The accounts payable

balance on March 31 totals $188,000, which will be paid in April.

All units are sold on account for $17 each. Cash collections from sales are budgeted at 75% in

the month of sale, 10% in the month following the month of sale, and the remaining 15% in the

second month following the month of sale. Accounts receivable on April 1 totaled $608,000

($108,000 from February’s sales and $500,000 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.

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4) 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?

5) 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

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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?

6) 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

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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.

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?

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7) 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?

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8) Botz 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 $94. Budgeted unit sales for April, May, June, and July

are 8,200, 10,600, 10,100, and 15,200 units, respectively. All sales are on credit.

● Regarding credit sales, 40% are collected in the month of the sale and 60% in the following

month.

● The ending finished goods inventory equals 30% 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 2 pounds of raw materials. The raw

materials cost $1.00 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 $23.00 per hour. Each unit of finished goods requires 2.4 direct

labor-hours.

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 23,260 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 $19,064, 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?

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9) Hennagir 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 $76

Budgeted unit sales (all on credit):

January 9,500

February 9,900

March 10,600

April 12,600

Raw materials requirement per unit of output 3 pounds

Raw materials cost $5.00 per pound

Direct labor requirement per unit of output 2.2 direct labor-hours

Direct labor wage rate $18.00 per direct labor-hour

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Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 10% of the following month’s sales. The

ending raw materials inventory should equal 40% of the following month’s raw materials

production needs.

Required:

a. What are the budgeted sales for February?

b. What are the expected cash collections for February?

c. What is the budgeted accounts receivable balance at the end of February?

d. According to the production budget, how many units should be produced in February?

e. If 32,400 pounds of raw materials are needed for production in March, how many pounds of

raw materials should be purchased in February?

f. What is the estimated cost of raw materials purchases for February?

g. If the cost of raw material purchases in January is $145,680, then in February what are the

total estimated cash disbursements for raw materials purchases?

h. What is the estimated accounts payable balance at the end of February?

i. What is the estimated raw materials inventory balance at the end of February?

j. 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?

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10) Weller Industrial Gas Corporation supplies acetylene and other compressed gases to

industry. Data regarding the store’s operations follow:

● Sales are budgeted at $350,000 for November, $370,000 for December, and $360,000 for

January.

● Collections are expected to be 75% in the month of sale and 25% in the month following the

sale.

● The cost of goods sold is 74% of sales.

● The company desires an ending merchandise inventory equal to 70% of the cost of goods

sold in the following month.

● Payment for merchandise is made in the month following the purchase.

● Other monthly expenses to be paid in cash are $20,800.

● Monthly depreciation is $20,600.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $21,600

Accounts receivable 82,600

Merchandise inventory 181,300

Property, plant and equipment (net of $592,000 accumulated

depreciation) 1,002,000

Total assets $1,287,500

Liabilities and Stockholders’ Equity

Accounts payable $195,600

Common stock 570,000

Retained earnings 521,900

Total liabilities and stockholders’ equity $1,287,500

Required:

a. Prepare a Schedule of Expected Cash Collections for November and December.

b. Prepare a Merchandise Purchases Budget for November and December. c. Prepare Cash

Budgets for November and December.

d. Prepare Budgeted Income Statements for November and December. e. Prepare a Budgeted

Balance Sheet for the end of December.

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

unit of output requires 0.04 direct labor-hours. The direct labor rate is $8.50 per direct labor-

hour. The production budget calls for producing 5,700 units in February and 6,200 units in

March.

Required:

Prepare 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. (Round “labor-hours

per unit” & “labor cost per hour” answers to 2 decimal places.)

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

unit of output requires 0.58 direct labor-hours. The direct labor rate is $10 per direct labor-hour.

The production budget calls for producing 7,200 units in April and 7,100 units in May. The

direct labor workforce is fully adjusted each month to the required workload.

Required:

Prepare the direct labor budget for the next two months. (Round “labor-hours per unit”

answers to 2 decimal places.)

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13) Brockney Incorporated bases its manufacturing overhead budget on budgeted direct

labor-hours. The variable overhead rate is $1.80 per direct labor-hour. The company’s budgeted

fixed manufacturing overhead is $101,460 per month, which includes depreciation of $19,880.

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

budget indicates that 8,900 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. (Round your answer to 2 decimal

places.)

14) Wala Incorporated bases its selling and administrative expense budget on the number of

units sold. The variable selling and administrative expense is $4.20 per unit. The budgeted fixed

selling and administrative expense is $30,310 per month, which includes depreciation of $3,580.

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

sales budget shows 2,600 units are planned to be sold in July.

Required:

Prepare the selling and administrative expense budget for July.

15) Zolezzi Incorporated is preparing its cash budget for March. The budgeted beginning

cash balance is $23,000. Budgeted cash receipts total $102,000 and budgeted cash disbursements

total $97,000. The desired ending cash balance is $75,000. The company can borrow up to

$110,000 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.

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16) 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.

17) 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

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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.

18) Weller Industrial Gas Corporation supplies acetylene and other compressed gases to

industry. Data regarding the store’s operations follow:

● Sales are budgeted at $330,000 for November, $300,000 for December, and $320,000 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 60% of sales.

● The company desires an ending merchandise inventory equal to 80% of the cost of goods

sold in the following month.

● Payment for merchandise is made in the month following the purchase.

● Other monthly expenses to be paid in cash are $21,200.

● Monthly depreciation is $21,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 22,000

Accounts receivable 83,000

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Merchandise inventory 158,400

Property, plant and equipment (net of $594,000 accumulated

depreciation) 1,004,000

Total assets $ 1,267,400

Liabilities and Stockholders’ Equity

Accounts payable $ 196,000

Common stock 620,000

Retained earnings 451,400

Total liabilities and stockholders’ equity $ 1,267,400

Required:

a. Prepare a Schedule of Expected Cash Collections for November and December.

b. Prepare a Merchandise Purchases Budget for November and December.

c. Prepare Cash Budgets for November and December.

d. Prepare Budgeted Income Statements for November and December.

e. Prepare a Budgeted Balance Sheet for the end of December.

19) Brinso Supply Corporation manufactures and sells cotton gauze. Expected sales of gauze

(in boxes) for upcoming months are as follows:

June 38,000

July 32,000

August 40,000

September 33,000

October 36,000

November 37,000

December 39,000

Management likes to maintain a finished goods inventory equal to 10% of the next month’s

estimated sales.

Required:

Prepare the company’s production budget for the third quarter of this year (the months of July,

August and September). Include a column for each month and a total column for the entire

quarter.

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20) A sales budget is given below for one of the products manufactured by the Key

Company:

January 21,000 units

February 36,000 units

March 61,000 units

April 41,000 units

May 31,000 units

June 25,000 units

The inventory of finished goods at the end of each month should equal 20% of the next month’s

sales. However, on December 31 the finished goods inventory totaled only 4,000 units. Each unit

of product requires three specialized electrical switches. Since the production of these

specialized switches by Key’s suppliers is sometimes irregular, the company has a policy of

maintaining an ending inventory at the end of each month equal to 30% of the next month’s

production needs. This requirement had been met on January 1 of the current year.

Required:

a. Prepare a budget showing the required production each month for January, February, March,

and April.

b. Prepare a budget showing the quantity of switches to be purchased each month for January,

February, and March.

21) 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

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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.

22) 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.

23) 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 $11.00 per direct labor-

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

direct labor workforce is fully adjusted each month to the required workload.

Required:

Construct the direct labor budget for the next two months.

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24) 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.

25) Brockney Incorporated 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.

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26) 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.

27) Wala Incorporated 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.

28) 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.

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29) Zolezzi Incorporated 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.

30) 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.

31) The usual starting point for a master budget is:

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A) the direct materials purchase budget.

B) the budgeted income statement.

C) the sales forecast or sales budget.

D) the production budget.

32) Which of the following budgets are prepared before the sales budget?

Budgeted Income Statement Direct Labor Budget

A) Yes Yes

B) Yes No

C) No Yes

D) No No

A) Choice A

B) Choice B

C) Choice C

D) Choice D

33) There are various budgets within the master budget. One of these budgets is the

production budget. Which of the following BEST describes the production budget?

A) It details the required direct labor hours.

B) It details the required raw materials purchases.

C) It is calculated based on the sales budget and the desired ending inventory.

D) It summarizes the costs of producing units for the budget period.

34) When preparing a direct materials budget, the required purchases of raw materials in

units equals:

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A) raw materials needed to meet the production schedule + desired ending inventory of

raw materials − beginning inventory of raw materials.

B) raw materials needed to meet the production schedule − desired ending inventory of

raw materials − beginning inventory of raw materials.

C) raw materials needed to meet the production schedule − desired ending inventory of

raw materials + beginning inventory of raw materials.

D) raw materials needed to meet the production schedule + desired ending inventory of

raw materials + beginning inventory of raw materials.

35) Which of the following statements is NOT correct concerning the Manufacturing

Overhead Budget?

A) The Manufacturing Overhead Budget provides a schedule of all costs of production

other than direct materials and labor costs.

B) The Manufacturing Overhead Budget shows only the variable portion of

manufacturing overhead.

C) The Manufacturing Overhead Budget shows the expected cash disbursements for

manufacturing overhead.

D) The Manufacturing Overhead Budget is prepared after the Sales Budget.

36) Which of the following statements is NOT correct concerning the Cash Budget?

A) It is not necessary to prepare any other budgets before preparing the Cash Budget.

B) The Cash Budget should be prepared before the Budgeted Income Statement.

C) The Cash Budget should be prepared before the Budgeted Balance Sheet.

D) The Cash Budget builds on earlier budgets and schedules as well as additional data.

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37) All of Gaylord Corporation’s sales are on account. Thirty-five percent of the sales on

account are collected in the month of sale, 45% in the month following sale, and the remainder

are collected in the second month following sale. The following are budgeted sales data for the

company:

January February March April

Total sales $50,000 $60,000 $40,000 $30,000

What is the amount of cash that should be collected in March?

A) $24,000

B) $37,000

C) $41,000

D) $51,000

38) Seventy percent of Pitkin Corporation’s sales are collected in the month of sale, 20% in

the month following sale, and 10% in the second month following sale. The following are

budgeted sales data for the company:

January February March April

Budgeted sales $200,000 $300,000 $350,000 $250,000

Total budgeted cash collections in April would be:

A) $175,000

B) $275,000

C) $70,000

D) $30,000

39) The BRS Corporation makes collections on sales according to the following schedule:

30% in month of sale

66% in month following sale

4% in second month following sale

The following sales have been budgeted:

Sales

April $130,000

May $150,000

June $140,000

Budgeted cash collections in June would be:

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A) $146,200

B) $140,000

C) $140,520

D) $141,000

40) The BRS Corporation makes collections on sales according to the following schedule:

30% in month of sale

60% in month following sale

10% in second month following sale

The following sales have been budgeted:

Sales

April $140,000

May $130,000

June $150,000

Budgeted cash collections in June would be:

A) $137,000

B) $85,000

C) $45,000

D) $123,000

41) Sirignano Corporation produces and sells one product. The budgeted selling price per

unit is $84. Budgeted unit sales for October, November, December, and January are 8,400,

12,000, 13,800, and 14,300 units, respectively. All sales are on credit with 40% collected in the

month of the sale and 60% in the following month. The expected cash collections for November

is closest to:

A) $826,560

B) $705,600

C) $423,360

D) $403,200

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42) All of Pocast Corporation’s sales are on account. Sixty percent of the credit sales are

collected in the month of sale, 30% in the month following sale, and 10% in the second month

following sale. The following are budgeted sales data for the company:

January February March April

Total sales $700,000 $500,000 $400,000 $600,000

Cash receipts in April are expected to be:

A) $530,000

B) $360,000

C) $460,000

D) $410,000

43) Budgeted sales in Acer Corporation over the next four months are given below:

September October November December

Budgeted sales $120,000 $140,000 $180,000 $160,000

Thirty percent of the company’s sales are for cash and 70% are on account. Collections for sales

on account follow a stable pattern as follows: 50% of a month’s credit sales are collected in the

month of sale, 30% are collected in the month following sale, and 20% are collected in the

second month following sale. Given these data, cash collections for December should be:

A) $141,800

B) $100,500

C) $118,700

D) $161,400

44) Corvi Corporation produces and sells one product. The budgeted selling price per unit is

$126. Budgeted unit sales are shown below:

July August September October

Budgeted unit sales 7,300 11,500 14,200 12,100

All sales are on credit with 40% collected in the month of the sale and 60% in the following

month. The expected cash collections for August is closest to:

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A) $551,880

B) $579,600

C) $919,800

D) $1,131,480

45) Sioux Corporation is estimating the following sales for the first four months of next year:

January $ 210,000

February $ 280,000

March $ 340,000

April $ 370,000

Sales are normally collected 60% in the month of sale and 40% in the month following the sale.

Based on this information, how much cash should Sioux expect to collect during the month of

April?

A) $370,000

B) $222,000

C) $119,000

D) $358,000

46) Jeanclaude Corporation produces and sells one product. The budgeted selling price per

unit is $105. Budgeted unit sales for July, August, September, and October are 7,400, 7,500,

13,800, and 15,300 units, respectively. All sales are on credit. Regarding credit sales, 40% are

collected in the month of the sale and 60% in the following month.

The budgeted accounts receivable balance at the end of August is closest to:

A) $525,000

B) $315,000

C) $472,500

D) $787,500

47) Crocetti Corporation makes one product and has provided the following information to

help prepare the master budget for the next four months of operations:

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Budgeted selling price per unit $ 121

Budgeted unit sales (all on credit):

January 7,000

February 7,500

March 11,900

April 14,900

Credit sales are collected:

40% in the month of the sale

60% in the following month

The budgeted accounts receivable balance at the end of February is closest to:

A) $544,500

B) $907,500

C) $605,000

D) $363,000

48) Parwin Corporation plans to sell 24,000 units during August. If the company has 8,500

units on hand at the start of the month, and plans to have 9,500 units on hand at the end of the

month, how many units must be produced during the month?

A) 25,000

B) 23,000

C) 33,500

D) 32,500

49) Parwin Corporation plans to sell 23,000 units during August. If the company has 8,000

units on hand at the start of the month, and plans to have 9,000 units on hand at the end of the

month, how many units must be produced during the month?

A) 24,000

B) 22,000

C) 32,000

D) 31,000

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50) Frolic Corporation has budgeted sales and production over the next quarter as follows:

July August September

Sales in units 44,500 56,500 ?

Production in units 45,250 56,800 61,150

The company has 4,900 units of product on hand at July 1. 10% of the next month’s sales in units

should be on hand at the end of each month. October sales are expected to be 76,000 units.

Budgeted sales for September would be (in units):

A) 68,750

B) 59,500

C) 66,800

D) 68,500

51) Frolic Corporation has budgeted sales and production over the next quarter as follows:

July August September

Sales in units 70,000 83,000 ?

Production in units 73,250 84,750 91,750

The company has 17,500 units of product on hand at July 1. 25% of the next month’s sales in

units should be on hand at the end of each month. October sales are expected to be 97,000 units.

Budgeted sales for September would be (in units):

A) 88,000

B) 90,000

C) 86,000

D) 84,000

52) The following information was taken from the production budget of Piwte Corporation

for next quarter:

January February March

Units to be produced 128,000 140,000 152,000

Desired ending inventory of finished goods 30,000 36,000

38,000

How many units is the company expecting to sell in the month of February?

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A) 132,000

B) 138,000

C) 135,000

D) 134,000

53) Fiwrt Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales

Fiwrt (in units) for the next three months are as follows:

October November December

Budgeted unit sales 30,000 36,000 34,000

Fiwrt likes to maintain a finished goods inventory equal to 30% of the next month’s estimated

sales. How many mugs should Fiwrt plan on producing during the month of November?

A) 35,400 mugs

B) 26,800 mugs

C) 36,000 mugs

D) 34,300 mugs

54) Masde Corporation produces and sells Product CharlieD. To guard against stockouts, the

company requires that 25% of the next month’s sales be on hand at the end of each month.

Budgeted sales of Product CharlieD over the next four months are:

June July August September

Budgeted sales in units 40,000 60,000 50,000 80,000

Budgeted production for August would be:

A) 57,500 units

B) 107,000 units

C) 77,000 units

D) 80,000 units

55) Paradise Corporation budgets on an annual basis for its fiscal year. The following

beginning and ending inventory levels (in units) are planned for next year.

Beginning Inventory Ending Inventory

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Raw material* 47,000 57,000

Finished goods 87,000 57,000

* Three pounds of raw material are needed to produce each unit of finished product.

If Paradise Corporation plans to sell 515,000 units during next year, the number of units it

would have to manufacture during the year would be:

A) 485,000units

B) 468,000 units

C) 515,000 units

D) 545,000 units

56) Paradise Corporation budgets on an annual basis for its fiscal year. The following

beginning and ending inventory levels (in units) are planned for next year.

Beginning Inventory Ending Inventory

Raw material* 30,000 40,000

Finished goods 70,000 60,000

* Three pounds of raw material are needed to produce each unit of finished product.

If Paradise Corporation plans to sell 510,000 units during next year, the number of units it

would have to manufacture during the year would be:

A) 500,000 units

B) 520,000 units

C) 510,000 units

D) 570,000 units

57) Stut Corporation, a retailer, plans to sell 28,000 units of Product X during the month of

August. If the company has 6,000 units on hand at the start of the month, and plans to have 9,000

units on hand at the end of the month, how many units of Product X must be purchased from the

supplier during the month?

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A) 37,000

B) 25,000

C) 31,000

D) 28,000

58) Douglas Corporation plans to sell 24,000 units of Product A during July and 30,000 units

during August. Sales of Product A during June were 25,000 units. Past experience has shown

that end-of-month inventory should equal 3,000 units plus 30% of the next month’s sales. On

June 30 this requirement was met. Based on these data, how many units of Product A must be

produced during the month of July?

A) 28,800

B) 22,200

C) 24,000

D) 25,800

59) The following information relates to Mapfes Manufacturing Corporation for next quarter:

January February March

Expected sales (in units) 440,000 390,000 380,000

Desired ending finished goods inventory (in units) 39,000

38,000 40,000

How many units should the company plan on producing for the month of February?

A) 428,000 units

B) 391,000 units

C) 390,000 units

D) 389,000 units

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60) Jannusch Corporation makes one product. Budgeted unit sales for July, August,

September, and October are 10,000, 11,600, 13,300, and 12,700 units, respectively. The ending

finished goods inventory should equal 20% of the following month’s sales. The budgeted

required production for August is closest to:

A) 11,600 units

B) 11,940 units

C) 14,260 units

D) 16,580 units

61) On October 1, Gala Corporation has 300 units of Product XYZ on hand. The company

plans to sell 1,200 units of Product XYZ during October, and plans to have 500 units on hand

October 31. How many units of Product XYZ must be produced during October?

A) 1,400

B) 1,500

C) 1,000

D) 2,000

62) BW Department Store expects to generate the following sales for the next three months:

July August September

Expected sales $490,000 $540,000 $580,000

BW’s cost of goods sold is 60% of sales dollars. At the end of each month, BW wants a

merchandise inventory balance equal to 25% of the following month’s expected cost of goods

sold. What dollar amount of merchandise inventory should BW plan to purchase in August?

A) $330,000

B) $314,600

C) $352,800

D) $327,800

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63) Cardle Corporation makes one product. Budgeted unit sales are shown below:

January February March April

Budgeted unit sales 7,300 8,600 10,100 13,600

The ending finished goods inventory should equal 30% of the following month’s sales. The

budgeted required production for February is closest to:

A) 11,630 units

B) 14,210 units

C) 9,050 units

D) 8,600 units

64) Sleeter Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.Budgeted unit sales for April, May, June, and July are 7,500, 11,900, 10,800, and 14,800

units, respectively. All sales are on credit.

b.The ending finished goods inventory equals 30% of the following month’s sales.

c.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 6 pounds of raw materials. The raw

materials cost $5.00 per pound.

If 72,000 pounds of raw materials are required for production in June, then the budgeted cost

of raw material purchases for May is closest to:

A) $559,230

B) $455,100

C) $350,970

D) $347,100

65) Reaser Corporation makes one product.

April May June July

Budgeted unit sales 8,400 8,700 12,600 13,100

Each unit of finished goods requires 4 pounds of raw materials. The ending finished goods

inventory equals 10% of the following month’s sales. The ending raw materials inventory equals

40% of the following month’s raw materials production needs. If 50,600 pounds of raw materials

are required for production in June, then the budgeted raw material purchases for May is closest

to:

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A) 56,600 pounds

B) 42,056 pounds

C) 71,144 pounds

D) 36,360 pounds

66) Bentsen Corporation makes one product.

July August September October

Budgeted unit sales 8,500 9,000 13,900 11,100

The ending finished goods inventory equals 40% 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 6 pounds of raw materials. The raw materials cost $2.00 per

pound. If 76,680 pounds of raw materials are required for production in September, then the

budgeted cost of raw material purchases for August is closest to:

A) $133,704

B) $131,520

C) $160,008

D) $146,856

67) Sill Corporation makes one product. Budgeted unit sales for January, February, March,

and April are 9,900, 11,400, 11,900, and 13,400 units, respectively. The ending finished goods

inventory equals 20% 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. If 61,000 pounds of raw materials are required for production

in March, then the budgeted raw material purchases for February is closest to:

A) 58,900 pounds

B) 104,900 pounds

C) 57,500 pounds

D) 81,900 pounds

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68) 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

69) 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

70) 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:

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A) 114,600 pounds

B) 89,400 pounds

C) 38,200 pounds

D) 29,800 pounds

71) The following are budgeted data:

January February March

Sales in units 15,700 21,400 18,700

Production in units 18,700 19,700 17,600

One pound of material is required for each finished unit. The inventory of materials at the end of

each month should equal 25% of the following month’s production needs. Purchases of raw

materials for February would be budgeted to be:

A) 20,225 pounds

B) 20,275 pounds

C) 19,175 pounds

D) 18,525 pounds

72) 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

73) The Tobler Corporation has budgeted production for next year as follows:

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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

74) 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) 70,600 ? 83,000

Budgeted raw materials purchases (in pounds) 144,810 160,600

161,800

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 20% of the following month’s

production needs. The company is expected to have 28,240 pounds of raw materials on hand on

January 1. Budgeted production for February should be:

A) 127,200 units

B) 83,600 units

C) 83,000 units

D) 79,625 units

75) 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

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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

76) 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

77) 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

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

unit of output requires 0.40 direct labor-hours. The direct labor rate is $8.00 per direct labor-

hour. The production budget calls for producing 7,200 units in April and 7,000 units in May. 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) $45,930

B) $46,105

C) $45,440

D) $45,615

79) 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. 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) $13,825.00

B) $13,335.00

C) $14,000.00

D) $13,510.00

80) 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) 7,300 9,300 11,300

Budgeted production (in units) 8,300 10,800 13,300

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) $203,400

B) $162,720

C) $191,520

D) $239,400

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81) 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

82) Depasquale Corporation is working on its direct labor budget for the next two months.

Each unit of output requires 0.61 direct labor-hours. The direct labor rate is $8.70 per direct

labor-hour. The production budget calls for producing 6,700 units in May and 7,100 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) $35,556.90

B) $37,679.70

C) $36,618.30

D) $73,236.60

83) 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?

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A) $16,605.00

B) $17,933.40

C) $17,269.20

D) $34,538.40

84) The manufacturing overhead budget at Franklyn Corporation is based on budgeted direct

labor-hours. The direct labor budget indicates that 2,700 direct labor-hours will be required in

January. The variable overhead rate is $7 per direct labor-hour. The company’s budgeted fixed

manufacturing overhead is $42,990 per month, which includes depreciation of $3,770. 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) $61,890

B) $18,900

C) $58,120

D) $39,220

85) 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

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86) Arciba Incorporated 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

87) Haylock Incorporated bases its manufacturing overhead budget on budgeted direct labor-

hours. The direct labor budget indicates that 7,600 direct labor-hours will be required in August.

The variable overhead rate is $1.40 per direct labor-hour. The company’s budgeted fixed

manufacturing overhead is $100,420 per month, which includes depreciation of $8,930. 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) $10,640

B) $102,130

C) $91,490

D) $111,060

88) Haylock Incorporated 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:

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A) $99,680

B) $84,000

C) $53,760

D) $30,240

89) The manufacturing overhead budget at Foshay Corporation is based on budgeted direct

labor-hours. The direct labor budget indicates that 6,600 direct labor-hours will be required in

May. The variable overhead rate is $7.10 per direct labor-hour. The company’s budgeted fixed

manufacturing overhead is $138,600 per month, which includes depreciation of $24,910. 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) $7.10

B) $28.10

C) $24.60

D) $21.00

90) 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

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91) Schuepfer Incorporated bases its selling and administrative expense budget on budgeted

unit sales. The sales budget shows 3,600 units are planned to be sold in March. The variable

selling and administrative expense is $4.10 per unit. The budgeted fixed selling and

administrative expense is $35,860 per month, which includes depreciation of $5,100 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) $50,620

B) $45,520

C) $30,760

D) $14,760

92) Schuepfer Incorporated 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

93) 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:

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A) $81,400

B) $21,400

C) $54,270

D) $60,000

94) 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

95) 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

96) Murie Corporation makes one product and has provided the following information:

Budgeted selling price per unit $ 98 per unit sold

Budgeted unit sales, February 11,000 units

Raw materials requirement per unit of output 5 pounds

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Raw materials cost $ 3.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 18.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 11.00 per direct

labor-hour

Variable selling and administrative expense $ 2.70 per unit sold

Fixed selling and administrative expense $ 80,000 per month

The estimated net operating income (loss) for February is closest to:

A) $5,800

B) $42,000

C) $35,500

D) $85,800

97) Wasilko Corporation produces and sells one product

a.The budgeted selling price per unit is $114. Budgeted unit sales for February is 9,900 units.

b.Each unit of finished goods requires 6 pounds of raw materials. The raw materials cost $4.00

per pound.

c.The direct labor wage rate is $24.00 per hour. Each unit of finished goods requires 2.4 direct

labor-hours.

d.Manufacturing overhead is entirely variable and is $9.00 per direct labor-hour.

e.The variable selling and administrative expense per unit sold is $1.60. The fixed selling and

administrative expense per month is $70,000.

The estimated net operating income (loss) for February is closest to:

A) $50,000

B) $91,080

C) $21,080

D) $36,920

98) Sedita Incorporated is working on its cash budget for July. The budgeted beginning cash

balance is $20,000. Budgeted cash receipts total $192,000 and budgeted cash disbursements total

$191,000. The desired ending cash balance is $36,000. The excess (deficiency) of cash available

over disbursements for July will be:

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A) $21,000

B) $19,000

C) $1,000

D) $212,000

99) Sedita Incorporated is working on its cash budget for July. The budgeted beginning cash

balance is $46,000. Budgeted cash receipts total $175,000 and budgeted cash disbursements total

$174,000. The desired ending cash balance is $50,000. The excess (deficiency) of cash available

over disbursements for July will be:

A) $47,000

B) $221,000

C) $45,000

D) $1,000

100) Sparks Corporation has a cash balance of $10,500 on April 1. The company must

maintain a minimum cash balance of $8,500. During April, expected cash receipts are $53,000.

Cash disbursements during the month are expected to total $59,500. Ignoring interest payments,

during April the company will need to borrow:

A) $4,500

B) $4,000

C) $8,500

D) $6,500

101) Sparks Corporation has a cash balance of $18,000 on April 1. The company must

maintain a minimum cash balance of $10,000. During April, expected cash receipts are $98,000.

Cash disbursements during the month are expected to total $112,000. Ignoring interest payments,

during April the company will need to borrow:

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A) $8,000

B) $2,000

C) $6,000

D) $4,000

102) Bustillo Incorporated is working on its cash budget for March. The budgeted beginning

cash balance is $43,000. Budgeted cash receipts total $124,000 and budgeted cash disbursements

total $118,000. The desired ending cash balance is $67,500. To attain its desired ending cash

balance for March, the company needs to borrow:

A) $116,500

B) $18,500

C) $0

D) $67,500

103) Bustillo Incorporated is working on its cash budget for March. The budgeted beginning

cash balance is $35,000. Budgeted cash receipts total $142,000 and budgeted cash disbursements

total $151,000. The desired ending cash balance is $30,000. To attain its desired ending cash

balance for March, the company needs to borrow:

A) $0

B) $4,000

C) $56,000

D) $30,000

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104) Knappert Corporation makes one product and has provided the following information:

a.Each unit of finished goods requires 3 pounds of raw materials. The raw materials cost $5.00

per pound.

b.The direct labor wage rate is $24.00 per hour. Each unit of finished goods requires 2.8 direct

labor-hours.

c.Manufacturing overhead is entirely variable and is $11.00 per direct labor-hour.

d.The variable selling and administrative expense per unit sold is $3.80. The fixed selling and

administrative expense per month is $50,000.

The unit product cost is closest to:

A) $82.20

B) $93.20

C) $30.80

D) $113.00

105) Fredericksen Corporation makes one product and has provided the following information:

Budgeted sales, February 8,700 units

Raw materials requirement per unit of output 6 pounds

Raw materials cost $ 2.00 per pound

Direct labor requirement per unit of output 2.9 direct labor-hours

Direct labor wage rate $ 21.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 10.00 per direct

labor-hour

Variable selling and administrative expense $ 1.10 per unit sold

Fixed selling and administrative expense $ 80,000 per month

The estimated cost of goods sold for February is closest to:

A) $886,530

B) $634,230

C) $252,300

D) $721,230

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106) Raimondo Corporation makes one product and has provided the following information:

a.The budgeted selling price per unit is $89. Budgeted unit sales for August is 8,300 units.

b.Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00

per pound.

c.The direct labor wage rate is $21.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

d.Manufacturing overhead is entirely variable and is $7.00 per direct labor-hour.

The estimated cost of goods sold for August is closest to:

A) $519,580

B) $577,680

C) $670,640

D) $151,060

107) Gusler Corporation makes one product and has provided the following information:

Budgeted sales, May 9,500 units

Raw materials requirement per unit of output 2 pounds

Raw materials cost $ 2.00 per pound

Direct labor requirement per unit of output 2.7 direct labor-hours

Direct labor wage rate $ 20.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 10.00 per direct

labor-hour

The estimated cost of goods sold for May is closest to:

A) $807,500

B) $256,500

C) $646,000

D) $551,000

108) Kesselring Corporation makes one product and has provided the following information to

help prepare the master budget for the next three months of operations:

Budgeted unit sales (all on credit):

July 8,400

August 8,800

September 12,200

Raw materials requirement per unit of output 4 pounds

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Raw materials cost $ 3.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 18.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 11.00 per direct

labor-hour

The ending finished goods inventory should equal 40% of the following month’s sales. The

budgeted finished goods inventory balance at the end of August is closest to:

A) $358,192

B) $150,304

C) $304,512

D) $454,816

109) Darke Corporation makes one product and has provided the following information:

a.Budgeted unit sales for October, November, and December are 7,600, 9,000, and 10,100

units respectively.

b.The ending finished goods inventory equals 40% of the following month’s sales.

c.Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $1.00

per pound.

d.The direct labor wage rate is $19.00 per hour. Each unit of finished goods requires 3.0 direct

labor-hours.

e.Manufacturing overhead is entirely variable and is $11.00 per direct labor-hour.

The estimated finished goods inventory balance at the end of November is closest to:

A) $294,920

B) $383,800

C) $133,320

D) $250,480

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110) Stefanovich Corporation makes one product. The company has provided the following

information concerning its raw materials needs:

● The ending raw materials inventory should equal 20% of the following month’s raw

materials production needs.

● Each unit of finished goods requires 2 pounds of raw materials.

● The raw materials cost $3.00 per pound.

● The company will need 26,440 pounds of raw material to satisfy production needs in March.

The raw materials inventory balance at the end of February should be closest to:

A) $74,136

B) $14,568

C) $88,704

D) $15,864

111) Harrti Corporation has budgeted for the following sales:

July $448,800

August $583,800

September $616,900

October $891,900

November $749,000

December $709,000

Sales are collected as follows: 20% in the month of sale; 55% in the month following the sale;

and the remaining 25% in the second month following the sale. In Harrti’s budgeted balance

sheet at December 31, at what amount will accounts receivable be shown?

A) $709,000

B) $187,250

C) $567,200

D) $754,450

112) Harrti Corporation has budgeted for the following sales:

July $445,000

August $580,000

September $615,000

October $890,000

November $730,000

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December $690,000

Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale;

and the remaining 30% in the second month following the sale. In Harrti’s budgeted balance

sheet at December 31, at what amount will accounts receivable be shown?

A) $690,000

B) $219,000

C) $621,000

D) $840,000

113) Um Corporation has provided the following information concerning its raw materials

purchases. The budgeted cost of raw materials purchases in November is $286,032. The

company pays for 40% of its raw materials purchases in the month of purchase and 60% in the

following month. The budgeted accounts payable balance at the end of November is closest to:

A) $114,413

B) $140,333

C) $171,619

D) $286,032

114) Litzinger Corporation makes one product. The ending raw materials inventory should

equal 20% of the following month’s raw materials production needs. Each unit of finished goods

requires 4 pounds of raw materials. The raw materials cost $1.00 per pound. The company

estimates that it will need 53,720 pounds of raw material to satisfy production needs in June. The

raw materials inventory balance at the end of May should be closest to:

A) $10,744

B) $7,984

C) $50,664

D) $42,680

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115) The LaGrange Corporation had the following budgeted sales for the first half of the

current year:

Cash Sales Credit Sales

January $40,000 $140,000

February $45,000 $160,000

March $35,000 $120,000

April $30,000 $115,000

May $40,000 $190,000

June $70,000 $90,000

The company is in the process of preparing a cash budget and must determine the expected cash

collections by month. To this end, the following information has been assembled:

Collections on sales:

40% in month of sale

45% in month following sale

15% in second month following sale

The accounts receivable balance on January 1 of the current year was $66,000, of which

$51,000 represents uncollected December sales and $15,000 represents uncollected November

sales.

The total cash collected during January by LaGrange Corporation would be:

A) $224,000

B) $194,000

C) $85,000

D) $149,250

116) The LaGrange Corporation had the following budgeted sales for the first half of the

current year:

Cash Sales Credit Sales

January $70,000 $340,000

February $50,000 $190,000

March $40,000 $135,000

April $35,000 $120,000

May $45,000 $160,000

June $40,000 $140,000

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The company is in the process of preparing a cash budget and must determine the expected cash

collections by month. To this end, the following information has been assembled:

Collections on sales:

60% in month of sale

30% in month following sale

10% in second month following sale

The accounts receivable balance on January 1 of the current year was $70,000, of which

$50,000 represents uncollected December sales and $20,000 represents uncollected November

sales.

The total cash collected during January by LaGrange Corporation would be:

A) $410,000

B) $254,000

C) $344,000

D) $331,500

117) The LaGrange Corporation had the following budgeted sales for the first half of the

current year:

Cash Sales Credit Sales

January $ 30,000 $ 130,000

February $ 35,000 $ 150,000

March $ 36,000 $ 110,000

April $ 31,000 $ 116,000

May $ 41,000 $ 180,000

June $ 60,000 $ 100,000

The company is in the process of preparing a cash budget and must determine the expected cash

collections by month. To this end, the following information has been assembled:

Collections on sales:

50% in month of sale

40% in month following sale

10% in second month following sale

The accounts receivable balance on January 1 of the current year was $72,000, of which

$56,000 represents uncollected December sales and $16,000 represents uncollected November

sales.

What is the budgeted accounts receivable balance on May 31?

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A) $85,600

B) $90,000

C) $101,600

D) $187,200

118) The LaGrange Corporation had the following budgeted sales for the first half of the

current year:

Cash Sales Credit Sales

January $70,000 $340,000

February $50,000 $190,000

March $40,000 $135,000

April $35,000 $120,000

May $45,000 $160,000

June $40,000 $140,000

The company is in the process of preparing a cash budget and must determine the expected cash

collections by month. To this end, the following information has been assembled:

Collections on sales:

60% in month of sale

30% in month following sale

10% in second month following sale

The accounts receivable balance on January 1 of the current year was $70,000, of which

$50,000 represents uncollected December sales and $20,000 represents uncollected November

sales.

What is the budgeted accounts receivable balance on May 31?

A) $56,000

B) $64,000

C) $76,000

D) $132,000

119) The LaPann Corporation has obtained the following sales forecast data:

July August September October

Cash sales $ 80,000 $ 70,000 $ 50,000 $ 60,000

Credit sales $ 240,000 $ 220,000 $ 180,000 $ 200,000

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The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month

following the month of sale, and the remainder in the second month following the month of sale.

There are no bad debts.

The budgeted accounts receivable balance on September 30 would be:

A) $126,000

B) $148,000

C) $166,000

D) $190,000

120) The LaPann Corporation has obtained the following sales forecast data:

July August September October

Cash sales $ 80,000 $ 70,000 $ 50,000 $ 60,000

Credit sales $ 240,000 $ 220,000 $ 180,000 $ 200,000

The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month

following the month of sale, and the remainder in the second month following the month of sale.

There are no bad debts.

The budgeted cash receipts for October would be:

A) $188,000

B) $248,000

C) $226,000

D) $278,000

121) Hesterman 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 $ 118

Budgeted unit sales (all on credit):

April 7,800

May 9,400

June 14,000

July 12,100

Raw materials requirement per unit of output 3 pounds

Raw materials cost $ 3.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 25.00 per direct labor-hour

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Credit sales are collected:

40% in the month of the sale

60% in the following month

The ending finished goods inventory should equal 40% of the following month’s sales. The

ending raw materials inventory should equal 20% of the following month’s raw materials

production needs.

The expected cash collections for May is closest to:

A) $920,400

B) $995,920

C) $552,240

D) $443,680

122) Hesterman 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 $ 118

Budgeted unit sales (all on credit):

April 7,800

May 9,400

June 14,000

July 12,100

Raw materials requirement per unit of output 3 pounds

Raw materials cost $ 3.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 25.00 per direct labor-hour

Credit sales are collected:

40% in the month of the sale

60% in the following month

The ending finished goods inventory should equal 40% of the following month’s sales. The

ending raw materials inventory should equal 20% of the following month’s raw materials

production needs.

The budgeted required production for May is closest to:

A) 11,240 units

B) 9,400 units

C) 15,000 units

D) 18,760 units

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123) Hesterman 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 $ 118

Budgeted unit sales (all on credit):

April 7,800

May 9,400

June 14,000

July 12,100

Raw materials requirement per unit of output 3 pounds

Raw materials cost $ 3.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 25.00 per direct labor-hour

Credit sales are collected:

40% in the month of the sale

60% in the following month

The ending finished goods inventory should equal 40% of the following month’s sales. The

ending raw materials inventory should equal 20% of the following month’s raw materials

production needs.

If 39,720 pounds of raw materials are required for production in June, then the budgeted cost

of raw material purchases for May is closest to:

A) $145,224

B) $124,992

C) $101,160

D) $104,760

124) Hesterman 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 $ 118

Budgeted unit sales (all on credit):

April 7,800

May 9,400

June 14,000

July 12,100

Raw materials requirement per unit of output 3 pounds

Raw materials cost $ 3.00 per pound

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Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 25.00 per direct labor-hour

Credit sales are collected:

40% in the month of the sale

60% in the following month

The ending finished goods inventory should equal 40% of the following month’s sales. The

ending raw materials inventory should equal 20% of the following month’s raw materials

production needs.

The estimated direct labor cost for May is closest to:

A) $786,800

B) $31,472

C) $534,000

D) $281,000

125) Rokosz Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $104. Budgeted unit sales for October, November,

December, and January are 6,900, 7,100, 11,300, and 15,300 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct

labor-hours.

The expected cash collections for November is closest to:

A) $502,320

B) $221,520

C) $723,840

D) $717,600

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126) Rokosz Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $104. Budgeted unit sales for October, November,

December, and January are 6,900, 7,100, 11,300, and 15,300 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct

labor-hours.

The budgeted required production for November is closest to:

A) 7,940 units

B) 10,780 units

C) 9,360 units

D) 7,100 units

127) Rokosz Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $104. Budgeted unit sales for October, November,

December, and January are 6,900, 7,100, 11,300, and 15,300 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct

labor-hours.

If 60,500 pounds of raw materials are required for production in December, then the budgeted

cost of raw material purchases for November is closest to:

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A) $91,880

B) $139,520

C) $79,400

D) $115,700

128) Rokosz Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $104. Budgeted unit sales for October, November,

December, and January are 6,900, 7,100, 11,300, and 15,300 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct

labor-hours.

The estimated direct labor cost for November is closest to:

A) $320,000

B) $182,620

C) $456,550

D) $19,850

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129) Michard Corporation makes one product and it provided the following information to

help prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and

July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.

b.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in

the following month.

f.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct

labor-hours.

g.The variable selling and administrative expense per unit sold is $3.40. The fixed selling and

administrative expense per month is $80,000.

The budgeted sales for May is closest to:

A) $1,725,000

B) $950,000

C) $1,312,500

D) $1,612,500

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130) Michard Corporation makes one product and it provided the following information to

help prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and

July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.

b.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in

the following month.

f.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct

labor-hours.

g.The variable selling and administrative expense per unit sold is $3.40. The fixed selling and

administrative expense per month is $80,000.

The expected cash collections for May is closest to:

A) $262,500

B) $1,022,500

C) $760,000

D) $950,000

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131) Michard Corporation makes one product and it provided the following information to

help prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and

July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.

b.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in

the following month.

f.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct

labor-hours.

g.The variable selling and administrative expense per unit sold is $3.40. The fixed selling and

administrative expense per month is $80,000.

The budgeted required production for May is closest to:

A) 11,160 units

B) 13,260 units

C) 15,360 units

D) 10,500 units

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132) Michard Corporation makes one product and it provided the following information to

help prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and

July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.

b.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in

the following month.

f.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct

labor-hours.

g.The variable selling and administrative expense per unit sold is $3.40. The fixed selling and

administrative expense per month is $80,000.

If 54,480 pounds of raw materials are required for production in June, then the budgeted raw

material purchases for May is closest to:

A) 74,376 pounds

B) 44,640 pounds

C) 47,592 pounds

D) 60,984 pounds

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133) Michard Corporation makes one product and it provided the following information to

help prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and

July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.

b.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in

the following month.

f.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct

labor-hours.

g.The variable selling and administrative expense per unit sold is $3.40. The fixed selling and

administrative expense per month is $80,000.

If 54,480 pounds of raw materials are required for production in June, then the budgeted cost

of raw material purchases for May is closest to:

A) $148,752

B) $89,280

C) $121,968

D) $95,184

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134) Michard Corporation makes one product and it provided the following information to

help prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and

July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.

b.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in

the following month.

f.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct

labor-hours.

g.The variable selling and administrative expense per unit sold is $3.40. The fixed selling and

administrative expense per month is $80,000.

The estimated direct labor cost for May is closest to:

A) $558,000

B) $33,480

C) $837,000

D) $279,000

Version 1 70

135) Michard Corporation makes one product and it provided the following information to

help prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and

July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.

b.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following

month.

c.The ending finished goods inventory equals 20% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw

materials cost $2.00 per pound.

e.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in

the following month.

f.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct

labor-hours.

g.The variable selling and administrative expense per unit sold is $3.40. The fixed selling and

administrative expense per month is $80,000.

The estimated selling and administrative expense for May is closest to:

A) $115,700

B) $80,000

C) $77,130

D) $35,700

136) Sevenbergen 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 $ 92

Budgeted unit sales (all on credit):

July 9,000

August 11,300

September 10,400

October 10,800

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 22.00 per direct labor-hour

Variable selling and administrative expense $ 1.50 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% 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 30% of the following month’s raw materials

production needs.

The budgeted sales for August is closest to:

A) $956,800

B) $1,039,600

C) $993,600

D) $828,000

137) Sevenbergen 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 $ 92

Budgeted unit sales (all on credit):

July 9,000

August 11,300

September 10,400

October 10,800

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 22.00 per direct labor-hour

Variable selling and administrative expense $ 1.50 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% 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 30% of the following month’s raw materials

production needs.

The expected cash collections for August is closest to:

A) $912,640

B) $415,840

C) $496,800

D) $828,000

138) Sevenbergen 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 $ 92

Budgeted unit sales (all on credit):

July 9,000

August 11,300

September 10,400

October 10,800

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 22.00 per direct labor-hour

Variable selling and administrative expense $ 1.50 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% 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 30% of the following month’s raw materials

production needs.

The budgeted required production for August is closest to:

A) 15,640 units

B) 13,380 units

C) 11,300 units

D) 11,120 units

139) Sevenbergen 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 $ 92

Budgeted unit sales (all on credit):

July 9,000

August 11,300

September 10,400

October 10,800

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 22.00 per direct labor-hour

Variable selling and administrative expense $ 1.50 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% 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 30% of the following month’s raw materials

production needs.

If 41,920 pounds of raw materials are required for production in September, then the budgeted

raw material purchases for August is closest to:

A) 57,056 pounds

B) 44,480 pounds

C) 43,712 pounds

D) 70,400 pounds

140) Sevenbergen 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 $ 92

Budgeted unit sales (all on credit):

July 9,000

August 11,300

September 10,400

October 10,800

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 22.00 per direct labor-hour

Variable selling and administrative expense $ 1.50 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% 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 30% of the following month’s raw materials

production needs.

If 41,920 pounds of raw materials are required for production in September, then the budgeted

cost of raw material purchases for August is closest to:

A) $57,056

B) $43,712

C) $44,480

D) $70,400

141) Sevenbergen 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 $ 92

Budgeted unit sales (all on credit):

July 9,000

August 11,300

September 10,400

October 10,800

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 22.00 per direct labor-hour

Variable selling and administrative expense $ 1.50 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% 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 30% of the following month’s raw materials

production needs.

The estimated direct labor cost for August is closest to:

A) $465,000

B) $684,992

C) $31,136

D) $244,640

142) Sevenbergen 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 $ 92

Budgeted unit sales (all on credit):

July 9,000

August 11,300

September 10,400

October 10,800

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.8 direct labor-hours

Direct labor wage rate $ 22.00 per direct labor-hour

Variable selling and administrative expense $ 1.50 per unit sold

Fixed selling and administrative expense $ 70,000 per month

Version 1 77

Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% 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 30% of the following month’s raw materials

production needs.

The estimated selling and administrative expense for August is closest to:

A) $70,000

B) $57,970

C) $16,950

D) $86,950

143) Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the

store’s operations follow:

● Sales are budgeted at $320,000 for November, $300,000 for December, and $290,000 for

January.

● Collections are expected to be 55% in the month of sale and 45% in the month following the

sale.

● The cost of goods sold is 70% of sales.

● The company would like to maintain ending merchandise inventories equal to 70% of the

next month’s cost of goods sold. Payment for merchandise is made in the month following the

purchase.

● Other monthly expenses to be paid in cash are $23,800.

● Monthly depreciation is $14,800.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 21,400

Accounts receivable 71,400

Merchandise inventory 156,800

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Property, plant and equipment, net of $573,400 accumulated

depreciation 1,095,400

Total assets $ 1,345,000

Liabilities and Stockholders’ Equity

Accounts payable $ 255,400

Common stock 821,400

Retained earnings 268,200

Total liabilities and stockholders’ equity $ 1,345,000

Expected cash collections in December are:

A) $144,000

B) $165,000

C) $300,000

D) $309,000

144) Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the

store’s operations follow:

● Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for

January.

● Collections are expected to be 80% in the month of sale and 20% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company would like to maintain ending merchandise inventories equal to 60% of the

next month’s cost of goods sold. Payment for merchandise is made in the month following the

purchase.

● Other monthly expenses to be paid in cash are $24,000.

● Monthly depreciation is $15,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 20,000

Accounts receivable 70,000

Merchandise inventory 153,000

Property, plant and equipment, net of $572,000 accumulated

depreciation 1,094,000

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Total assets $ 1,337,000

Liabilities and Stockholders’ Equity

Accounts payable $ 254,000

Common stock 820,000

Retained earnings 263,000

Total liabilities and stockholders’ equity $ 1,337,000

Expected cash collections in December are:

A) $68,000

B) $256,000

C) $320,000

D) $324,000

145) Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the

store’s operations follow:

● Sales are budgeted at $310,000 for November, $290,000 for December, and $280,000 for

January.

● Collections are expected to be 60% in the month of sale and 40% in the month following the

sale.

● The cost of goods sold is 65% of sales.

● The company would like to maintain ending merchandise inventories equal to 55% of the

next month’s cost of goods sold. Payment for merchandise is made in the month following the

purchase.

● Other monthly expenses to be paid in cash are $23,700.

● Monthly depreciation is $14,700.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 21,500

Accounts receivable 71,500

Merchandise inventory 110,825

Property, plant and equipment, net of $573,500 accumulated

depreciation 1,095,500

Total assets $ 1,299,325

Liabilities and Stockholders’ Equity

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Accounts payable $ 255,500

Common stock 821,500

Retained earnings 222,325

Total liabilities and stockholders’ equity $ 1,299,325

The cost of December merchandise purchases would be:

A) $201,500

B) $100,100

C) $184,925

D) $188,500

146) Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the

store’s operations follow:

● Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for

January.

● Collections are expected to be 80% in the month of sale and 20% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company would like to maintain ending merchandise inventories equal to 60% of the

next month’s cost of goods sold. Payment for merchandise is made in the month following the

purchase.

● Other monthly expenses to be paid in cash are $24,000.

● Monthly depreciation is $15,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 20,000

Accounts receivable 70,000

Merchandise inventory 153,000

Property, plant and equipment, net of $572,000 accumulated

depreciation 1,094,000

Total assets $ 1,337,000

Liabilities and Stockholders’ Equity

Accounts payable $ 254,000

Common stock 820,000

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Retained earnings 263,000

Total liabilities and stockholders’ equity $ 1,337,000

The cost of December merchandise purchases would be:

A) $255,000

B) $139,500

C) $235,500

D) $240,000

147) Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the

store’s operations follow:

● Sales are budgeted at $320,000 for November, $300,000 for December, and $290,000 for

January.

● Collections are expected to be 55% in the month of sale and 45% in the month following the

sale.

● The cost of goods sold is 70% of sales.

● The company would like to maintain ending merchandise inventories equal to 70% of the

next month’s cost of goods sold. Payment for merchandise is made in the month following the

purchase.

● Other monthly expenses to be paid in cash are $23,800.

● Monthly depreciation is $14,800.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 21,400

Accounts receivable 71,400

Merchandise inventory 156,800

Property, plant and equipment, net of $573,400 accumulated

depreciation 1,095,400

Total assets $ 1,345,000

Liabilities and Stockholders’ Equity

Accounts payable $ 255,400

Common stock 821,400

Retained earnings 268,200

Total liabilities and stockholders’ equity $ 1,345,000

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December cash disbursements for merchandise purchases would be:

A) $142,100

B) $214,200

C) $210,000

D) $205,100

148) Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the

store’s operations follow:

● Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for

January.

● Collections are expected to be 80% in the month of sale and 20% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company would like to maintain ending merchandise inventories equal to 60% of the

next month’s cost of goods sold. Payment for merchandise is made in the month following the

purchase.

● Other monthly expenses to be paid in cash are $24,000.

● Monthly depreciation is $15,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 20,000

Accounts receivable 70,000

Merchandise inventory 153,000

Property, plant and equipment, net of $572,000 accumulated

depreciation 1,094,000

Total assets $ 1,337,000

Liabilities and Stockholders’ Equity

Accounts payable $ 254,000

Common stock 820,000

Retained earnings 263,000

Total liabilities and stockholders’ equity $ 1,337,000

December cash disbursements for merchandise purchases would be:

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A) $139,500

B) $246,000

C) $240,000

D) $235,500

149) Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the

store’s operations follow:

● Sales are budgeted at $460,000 for November, $440,000 for December, and $430,000 for

January.

● Collections are expected to be 45% in the month of sale and 55% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company would like to maintain ending merchandise inventories equal to 60% of the

next month’s cost of goods sold. Payment for merchandise is made in the month following the

purchase.

● Other monthly expenses to be paid in cash are $25,200.

● Monthly depreciation is $16,200.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 21,200

Accounts receivable 71,200

Merchandise inventory 220,800

Property, plant and equipment, net of $573,200 accumulated

depreciation 1,095,200

Total assets $ 1,408,400

Liabilities and Stockholders’ Equity

Accounts payable $ 255,200

Common stock 821,200

Retained earnings 332,000

Total liabilities and stockholders’ equity $ 1,408,400

The difference between cash receipts and cash disbursements for December would be:

Version 1 84

A) $67,400

B) $50,550

C) $37,600

D) $114,600

150) Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the

store’s operations follow:

● Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for

January.

● Collections are expected to be 80% in the month of sale and 20% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company would like to maintain ending merchandise inventories equal to 60% of the

next month’s cost of goods sold. Payment for merchandise is made in the month following the

purchase.

● Other monthly expenses to be paid in cash are $24,000.

● Monthly depreciation is $15,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 20,000

Accounts receivable 70,000

Merchandise inventory 153,000

Property, plant and equipment, net of $572,000 accumulated

depreciation 1,094,000

Total assets $ 1,337,000

Liabilities and Stockholders’ Equity

Accounts payable $ 254,000

Common stock 820,000

Retained earnings 263,000

Total liabilities and stockholders’ equity $ 1,337,000

The difference between cash receipts and cash disbursements for December would be:

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A) $54,000

B) $68,600

C) $28,200

D) $12,200

151) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $281,000 for November, $321,000 for December, and $212,000 for

January.

● Collections are expected to be 75% in the month of sale and 25% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 90% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $20,100.

● Monthly depreciation is $22,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 29,000

Accounts receivable 78,000

Merchandise inventory 182,400

Property, plant and equipment, net of $624,000 accumulated

depreciation 1,006,000

Total assets $ 1,295,400

Liabilities and Stockholders’ Equity

Accounts payable $ 241,000

Common stock 742,000

Retained earnings 312,400

Total liabilities and stockholders’ equity $ 1,295,400

Expected cash collections in December are:

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A) $321,000

B) $70,250

C) $311,000

D) $240,750

152) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for

January.

● Collections are expected to be 65% in the month of sale and 35% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 70% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $21,100.

● Monthly depreciation is $21,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 25,000

Accounts receivable 77,000

Merchandise inventory 162,400

Property, plant and equipment, net of $624,000 accumulated

depreciation 1,026,000

Total assets $ 1,290,400

Liabilities and Stockholders’ Equity

Accounts payable $ 239,000

Common stock 740,000

Retained earnings 311,400

Total liabilities and stockholders’ equity $ 1,290,400

Expected cash collections in December are:

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A) $310,000

B) $101,500

C) $303,000

D) $201,500

153) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $251,000 for November, $291,000 for December, and $218,000 for

January.

● Collections are expected to be 60% in the month of sale and 40% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 90% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $20,000.

● Monthly depreciation is $25,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 26,000

Accounts receivable 81,000

Merchandise inventory 169,425

Property, plant and equipment, net of $624,000 accumulated

depreciation 946,000

Total assets $ 1,222,425

Liabilities and Stockholders’ Equity

Accounts payable $ 247,000

Common stock 748,000

Retained earnings 227,425

Total liabilities and stockholders’ equity $ 1,222,425

The cost of December merchandise purchases would be:

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A) $218,250

B) $188,250

C) $147,150

D) $168,975

154) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for

January.

● Collections are expected to be 65% in the month of sale and 35% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 70% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $21,100.

● Monthly depreciation is $21,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 25,000

Accounts receivable 77,000

Merchandise inventory 162,400

Property, plant and equipment, net of $624,000 accumulated

depreciation 1,026,000

Total assets $ 1,290,400

Liabilities and Stockholders’ Equity

Accounts payable $ 239,000

Common stock 740,000

Retained earnings 311,400

Total liabilities and stockholders’ equity $ 1,290,400

The cost of December merchandise purchases would be:

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A) $248,000

B) $232,000

C) $117,600

D) $192,000

155) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for

January.

● Collections are expected to be 65% in the month of sale and 35% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 70% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $21,100.

● Monthly depreciation is $21,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 25,000

Accounts receivable 77,000

Merchandise inventory 162,400

Property, plant and equipment, net of $624,000 accumulated

depreciation 1,026,000

Total assets $ 1,290,400

Liabilities and Stockholders’ Equity

Accounts payable $ 239,000

Common stock 740,000

Retained earnings 311,400

Total liabilities and stockholders’ equity $ 1,290,400

December cash disbursements for merchandise purchases would be:

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A) $192,000

B) $243,200

C) $117,600

D) $248,000

156) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $303,000 for November, $323,000 for December, and $223,000 for

January.

● Collections are expected to be 70% in the month of sale and 30% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 80% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $22,400.

● Monthly depreciation is $27,500.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 33,000

Accounts receivable 83,500

Merchandise inventory 181,800

Property, plant and equipment, net of $624,000 accumulated

depreciation 918,000

Total assets $ 1,216,300

Liabilities and Stockholders’ Equity

Accounts payable $ 252,000

Common stock 753,000

Retained earnings 211,300

Total liabilities and stockholders’ equity $ 1,216,300

The difference between cash receipts and cash disbursements for December would be:

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A) $75,800

B) $31,100

C) $22,350

D) $55,350

157) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for

January.

● Collections are expected to be 65% in the month of sale and 35% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 70% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $21,100.

● Monthly depreciation is $21,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 25,000

Accounts receivable 77,000

Merchandise inventory 162,400

Property, plant and equipment, net of $624,000 accumulated

depreciation 1,026,000

Total assets $ 1,290,400

Liabilities and Stockholders’ Equity

Accounts payable $ 239,000

Common stock 740,000

Retained earnings 311,400

Total liabilities and stockholders’ equity $ 1,290,400

The difference between cash receipts and cash disbursements for December would be:

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A) $46,600

B) $19,200

C) $13,700

D) $38,700

158) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for

January.

● Collections are expected to be 65% in the month of sale and 35% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 70% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $21,100.

● Monthly depreciation is $21,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 25,000

Accounts receivable 77,000

Merchandise inventory 162,400

Property, plant and equipment, net of $624,000 accumulated

depreciation 1,026,000

Total assets $ 1,290,400

Liabilities and Stockholders’ Equity

Accounts payable $ 239,000

Common stock 740,000

Retained earnings 311,400

Total liabilities and stockholders’ equity $ 1,290,400

The net income for December would be:

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A) $19,900

B) $38,700

C) $40,900

D) $13,700

159) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for

January.

● Collections are expected to be 65% in the month of sale and 35% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 70% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $21,100.

● Monthly depreciation is $21,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 25,000

Accounts receivable 77,000

Merchandise inventory 162,400

Property, plant and equipment, net of $624,000 accumulated

depreciation 1,026,000

Total assets $ 1,290,400

Liabilities and Stockholders’ Equity

Accounts payable $ 239,000

Common stock 740,000

Retained earnings 311,400

Total liabilities and stockholders’ equity $ 1,290,400

The cash balance at the end of December would be:

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A) $69,100

B) $25,000

C) $57,900

D) $38,300

160) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $307,000 for November, $327,000 for December, and $227,000 for

January.

● Collections are expected to be 60% in the month of sale and 40% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 90% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $22,800.

● Monthly depreciation is $29,500.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 35,000

Accounts receivable 85,500

Merchandise inventory 207,225

Property, plant and equipment, net of $624,000 accumulated

depreciation 922,000

Total assets $ 1,249,725

Liabilities and Stockholders’ Equity

Accounts payable $ 256,000

Common stock 757,000

Retained earnings 236,725

Total liabilities and stockholders’ equity $ 1,249,725

Accounts payable at the end of December would be:

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A) $177,750

B) $245,250

C) $153,225

D) $24,525

161) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for

January.

● Collections are expected to be 65% in the month of sale and 35% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 70% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $21,100.

● Monthly depreciation is $21,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 25,000

Accounts receivable 77,000

Merchandise inventory 162,400

Property, plant and equipment, net of $624,000 accumulated

depreciation 1,026,000

Total assets $ 1,290,400

Liabilities and Stockholders’ Equity

Accounts payable $ 239,000

Common stock 740,000

Retained earnings 311,400

Total liabilities and stockholders’ equity $ 1,290,400

Accounts payable at the end of December would be:

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A) $192,000

B) $248,000

C) $117,600

D) $74,400

162) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $254,000 for November, $294,000 for December, and $221,000 for

January.

● Collections are expected to be 60% in the month of sale and 40% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 90% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $15,600.

● Monthly depreciation is $26,500.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 32,000

Accounts receivable 82,500

Merchandise inventory 182,880

Property, plant and equipment, net of $624,000 accumulated

depreciation 916,000

Total assets $ 1,213,380

Liabilities and Stockholders’ Equity

Accounts payable $ 250,000

Common stock 751,000

Retained earnings 212,380

Total liabilities and stockholders’ equity $ 1,213,380

Retained earnings at the end of December would be:

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A) $221,180

B) $212,380

C) $237,780

D) $254,380

163) Dilly Farm Supply is located in a small town in the rural west. Data regarding the store’s

operations follow:

● Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for

January.

● Collections are expected to be 65% in the month of sale and 35% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory at the end of each month

equal to 70% of the next month’s cost of goods sold. Payment for merchandise is made in the

month following the purchase.

● Other monthly expenses to be paid in cash are $21,100.

● Monthly depreciation is $21,000.

● Ignore taxes.

;

Balance Sheet

October 31

Assets

Cash $ 25,000

Accounts receivable 77,000

Merchandise inventory 162,400

Property, plant and equipment, net of $624,000 accumulated

depreciation 1,026,000

Total assets $ 1,290,400

Liabilities and Stockholders’ Equity

Accounts payable $ 239,000

Common stock 740,000

Retained earnings 311,400

Total liabilities and stockholders’ equity $ 1,290,400

Retained earnings at the end of December would be:

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A) $325,100

B) $311,400

C) $353,400

D) $347,200

164) Luchini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and

July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit.

b.Regarding credit sales, 40% are collected in the month of the sale and 60% in the following

month.

c.The ending finished goods inventory equals 10% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $5.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct

labor-hours.

g.Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing

overhead is zero.

The budgeted accounts receivable balance at the end of May is closest to:

A) $747,000

B) $448,440

C) $672,660

D) $1,121,100

Version 1 99

165) Luchini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and

July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit.

b.Regarding credit sales, 40% are collected in the month of the sale and 60% in the following

month.

c.The ending finished goods inventory equals 10% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $5.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct

labor-hours.

g.Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing

overhead is zero.

If 66,850 pounds of raw materials are required for production in June, then the budgeted raw

material purchases for May is closest to:

A) 52,100 pounds

B) 72,155 pounds

C) 87,785 pounds

D) 56,525 pounds

Version 1 100

166) Luchini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and

July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit.

b.Regarding credit sales, 40% are collected in the month of the sale and 60% in the following

month.

c.The ending finished goods inventory equals 10% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $5.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct

labor-hours.

g.Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing

overhead is zero.

If the budgeted cost of raw materials purchases in April is $207,650 and in May is $282,625,

then in May the total budgeted cash disbursements for raw materials purchases is closest to:

A) $124,590

B) $237,640

C) $169,575

D) $113,050

Version 1 101

167) Luchini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and

July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit.

b.Regarding credit sales, 40% are collected in the month of the sale and 60% in the following

month.

c.The ending finished goods inventory equals 10% of the following month’s sales.

d.The ending raw materials inventory equals 30% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $5.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct

labor-hours.

g.Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing

overhead is zero.

The estimated finished goods inventory balance at the end of May is closest to:

A) $102,676

B) $111,986

C) $26,999

D) $129,675

168) Fuson 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 $ 118

Budgeted unit sales (all on credit):

October 9,600

November 10,100

December 13,700

January 11,300

Raw materials requirement per unit of output 3 pounds

Raw materials cost $ 4.00 per pound

Direct labor requirement per unit of output 2.7 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 12.00 per direct

labor-hour

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 10% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The budgeted accounts receivable balance at the end of November is closest to:

A) $795,000

B) $357,540

C) $1,191,800

D) $834,260

169) Fuson 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 $ 118

Budgeted unit sales (all on credit):

October 9,600

November 10,100

December 13,700

January 11,300

Raw materials requirement per unit of output 3 pounds

Raw materials cost $ 4.00 per pound

Direct labor requirement per unit of output 2.7 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 12.00 per direct

labor-hour

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 10% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

If 40,380 pounds of raw materials are required for production in December, then the budgeted

raw material purchases for November is closest to:

A) 32,280 pounds

B) 38,556 pounds

C) 31,380 pounds

D) 35,418 pounds

170) Fuson 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 $ 118

Budgeted unit sales (all on credit):

October 9,600

November 10,100

December 13,700

January 11,300

Raw materials requirement per unit of output 3 pounds

Raw materials cost $ 4.00 per pound

Direct labor requirement per unit of output 2.7 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 12.00 per direct

labor-hour

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 10% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

If the budgeted cost of raw materials purchases in October is $116,772 and in November is

$129,120, then in November the total budgeted cash disbursements for raw materials purchases

is closest to:

A) $81,740

B) $90,384

C) $38,736

D) $120,476

171) Fuson 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 $ 118

Budgeted unit sales (all on credit):

October 9,600

November 10,100

December 13,700

January 11,300

Raw materials requirement per unit of output 3 pounds

Raw materials cost $ 4.00 per pound

Direct labor requirement per unit of output 2.7 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 12.00 per direct

labor-hour

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 10% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The estimated finished goods inventory balance at the end of November is closest to:

A) $44,388

B) $117,957

C) $101,517

D) $145,905

172) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The budgeted sales for February is closest to:

Version 1 106

A) $825,000

B) $1,166,000

C) $1,287,000

D) $1,320,000

173) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The expected cash collections for February is closest to:

A) $577,500

B) $927,300

C) $349,800

D) $825,000

Version 1 107

174) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The budgeted accounts receivable balance at the end of February is closest to:

A) $777,000

B) $1,166,000

C) $816,200

D) $349,800

Version 1 108

175) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The budgeted required production for February is closest to:

A) 11,020 units

B) 14,200 units

C) 10,600 units

D) 17,380 units

Version 1 109

176) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

If the company estimates that it will need 59,550 pounds of raw material to satisfy production

needs in March, then the raw materials inventory balance at the end of February should be

closest to:

A) $23,820

B) $222,180

C) $22,040

D) $244,220

Version 1 110

177) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

If the budgeted cost of raw materials purchases in February is $222,180, then the budgeted

accounts payable balance at the end of February is closest to:

A) $222,180

B) $88,872

C) $117,912

D) $133,308

Version 1 111

178) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The estimated direct labor cost for February is closest to:

A) $253,460

B) $456,000

C) $658,996

D) $28,652

Version 1 112

179) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The estimated unit product cost is closest to:

A) $20.80

B) $87.80

C) $79.80

D) $100.60

Version 1 113

180) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The estimated finished goods inventory balance at the end of February is closest to:

A) $74,880

B) $362,160

C) $316,080

D) $287,280

Version 1 114

181) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The estimated cost of goods sold for February is closest to:

A) $1,066,360

B) $220,480

C) $930,680

D) $845,880

Version 1 115

182) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The estimated selling and administrative expense for February is closest to:

A) $70,000

B) $58,680

C) $88,020

D) $18,020

Version 1 116

183) Petrini Corporation makes one product and it provided the following information to help

prepare the master budget for the next four months of operations:

a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February,

March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on

credit.

b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following

month.

c.The ending finished goods inventory equals 30% of the following month’s sales.

d.The ending raw materials inventory equals 10% of the following month’s raw materials

production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw

materials cost $4.00 per pound.

e.Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in

the following month.

f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct

labor-hours.

g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.

h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and

administrative expense per month is $70,000.

The estimated net operating income (loss) for February is closest to:

A) $11,620

B) $81,620

C) $41,000

D) $29,640

184) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

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Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The budgeted sales for February is closest to:

A) $1,474,400

B) $1,290,100

C) $1,164,000

D) $970,000

185) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The expected cash collections for February is closest to:

A) $970,000

B) $1,028,200

C) $349,200

D) $679,000

186) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The budgeted accounts receivable balance at the end of February is closest to:

A) $349,200

B) $814,800

C) $776,000

D) $1,164,000

187) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The budgeted required production for February is closest to:

A) 12,390 units

B) 19,590 units

C) 15,990 units

D) 12,000 units

188) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

If the company estimates that it will need 55,480 pounds of raw material to satisfy production

needs in March, then the raw materials inventory balance at the end of February should be

closest to:

A) $55,108

B) $50,152

C) $4,956

D) $5,548

189) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

If the budgeted cost of raw materials purchases in February is $50,152, then the budgeted

accounts payable balance at the end of February is closest to:

A) $19,971

B) $50,152

C) $15,046

D) $35,106

190) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The estimated direct labor cost for February is closest to:

A) $284,970

B) $712,425

C) $499,000

D) $30,975

191) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The estimated unit product cost is closest to:

A) $70.50

B) $22.50

C) $84.00

D) $61.50

192) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

Version 1 125

Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The estimated finished goods inventory balance at the end of February is closest to:

A) $335,160

B) $245,385

C) $281,295

D) $89,775

193) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

Version 1 126

Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The estimated cost of goods sold for February is closest to:

A) $846,000

B) $270,000

C) $738,000

D) $1,008,000

194) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

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Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The estimated selling and administrative expense for February is closest to:

A) $71,470

B) $37,200

C) $107,200

D) $70,000

195) Bonkowski 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 $ 97

Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct

labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

Version 1 128

Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month’s sales. The

ending raw materials inventory should equal 10% of the following month’s raw materials

production needs.

The estimated net operating income (loss) for February is closest to:

A) $85,000

B) $48,800

C) $118,800

D) $86,000

196) KAB Incorporated, a small retail store, had the following results for May. The budgets

for June and July are also given.

May (actual) June (budget) July (budget)

Sales $ 42,000 $ 40,000 $ 45,000

Less cost of goods sold 21,000 20,000 22,500

Gross margin 21,000 20,000 22,500

Less selling and administrative expenses 20,000 20,000

20,000

Net operating income $ 1,000 $ 0 $ 2,500

Sales are collected 80% in the month of the sale and the balance in the month following the sale.

(There are no bad debts.) The goods that are sold are purchased in the month prior to sale.

Suppliers of the goods are paid in the month following the sale. The “selling and administrative

expenses” are paid in the month of the sale.

The amount of cash collected during June should be:

A) $32,000

B) $40,000

C) $40,400

D) $41,000

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197) KAB Incorporated, a small retail store, had the following results for May. The budgets

for June and July are also given.

May (actual) June (budget) July (budget)

Sales $ 42,000 $ 40,000 $ 45,000

Less cost of goods sold 21,000 20,000 22,500

Gross margin 21,000 20,000 22,500

Less selling and administrative expenses 20,000 20,000

20,000

Net operating income $ 1,000 $ 0 $ 2,500

Sales are collected 80% in the month of the sale and the balance in the month following the sale.

(There are no bad debts.) The goods that are sold are purchased in the month prior to sale.

Suppliers of the goods are paid in the month following the sale. The “selling and administrative

expenses” are paid in the month of the sale.

The cash disbursements during June for goods purchased for sale and for selling and

administrative expenses should be:

A) $40,000

B) $41,000

C) $42,500

D) $43,500

198) Roberts Enterprises has budgeted sales in units for the next five months as follows:

June 4,500 units

July 7,100 units

August 5,300 units

September 6,700 units

October 3,700 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 450 units. The company needs to

prepare a production budget for the second quarter of the year.

The beginning inventory in units for September is:

A) 370 units

B) 6,700 units

C) 530 units

D) 670 units

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199) Roberts Enterprises has budgeted sales in units for the next five months as follows:

June 4,620 units

July 7,700 units

August 5,420 units

September 6,940 units

October 3,820 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 462 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:

A) 8,242 units

B) 7,700 units

C) 7,472 units

D) 7,862 units

200) Roberts Enterprises has budgeted sales in units for the next five months as follows:

June 4,500 units

July 7,100 units

August 5,300 units

September 6,700 units

October 3,700 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 450 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:

A) 7,630 units

B) 7,100 units

C) 6,920 units

D) 7,280 units

201) Roberts Enterprises has budgeted sales in units for the next five months as follows:

June 4,500 units

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July 7,100 units

August 5,300 units

September 6,700 units

October 3,700 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 450 units. The company needs to

prepare a production budget for the second quarter of the year.

The desired ending inventory for August is:

A) 530 units

B) 670 units

C) 710 units

D) 370 units

202) Marty’s Merchandise has budgeted sales as follows for the second quarter of the year:

April $30,000

May $60,000

June $50,000

Cost of goods sold is equal to 70% of sales. The company wants to maintain a monthly ending

inventory equal to 120% of the cost of goods sold for the following month. The inventory on

March 31 was below this target and was only $22,000. The company is now preparing a

Merchandise Purchases Budget for April, May, and June.

The desired beginning inventory for June is:

A) $42,000

B) $35,000

C) $50,000

D) $38,000

203) Marty’s Merchandise has budgeted sales as follows for the second quarter of the year:

April $ 30,000

May $ 60,000

June $ 50,000

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Cost of goods sold is equal to 70% of sales. The company wants to maintain a monthly ending

inventory equal to 120% of the cost of goods sold for the following month. The inventory on

March 31 was below this target and was only $22,000. The company is now preparing a

Merchandise Purchases Budget for April, May, and June.

The budgeted purchases for May are:

A) $49,400

B) $50,400

C) $60,000

D) $33,600

204) Harden, Incorporated, has budgeted sales in units for the next five months as follows:

June 7,500 units

July 5,800 units

August 7,600 units

September 7,300 units

October 5,400 units

Past experience has shown that the ending inventory for each month should be equal to 20% of

the next month’s sales in units. The inventory on May 31 contained 1,500 units. The company

needs to prepare a production budget for the next five months.

The beginning inventory for September should be:

A) 1,460 units

B) 1,500 units

C) 1,520 units

D) 1,080 units

205) Harden, Incorporated, has budgeted sales in units for the next five months as follows:

June 7,000 units

July 5,300 units

August 7,100 units

September 6,800 units

October 4,900 units

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Past experience has shown that the ending inventory for each month should be equal to 15% of

the next month’s sales in units. The inventory on May 31 contained 1,050 units. The company

needs to prepare a production budget for the next five months.

The beginning inventory for September should be:

A) 1,020 units

B) 1,050 units

C) 1,065 units

D) 735 units

206) Harden, Inc., has budgeted sales in units for the next five months as follows:

June 7,000 units

July 5,300 units

August 7,100 units

September 6,800 units

October 4,900 units

Past experience has shown that the ending inventory for each month should be equal to 15% of

the next month’s sales in units. The inventory on May 31 contained 1,050 units. The company

needs to prepare a production budget for the next five months.

The total number of units produced in July should be:

A) 5,300 units

B) 6,365 units

C) 5,570 units

D) 5,030 units

207) Sarafiny 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) 29,000 79,000

Raw material (grams) 59,000 49,000

Each unit of finished goods requires 2 grams of raw material. The company plans to sell 760,000

units during the year.

The number of units the company would have to manufacture during the year would be:

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A) 760,000 units

B) 839,000 units

C) 701,000 units

D) 810,000 units

208) Sarafiny 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) 20,000 30,000

Raw material (grams) 50,000 40,000

Each unit of finished goods requires 7 grams of raw material. The company plans to sell 270,000

units during the year.

The number of units the company would have to manufacture during the year would be:

A) 300,000 units

B) 270,000 units

C) 260,000 units

D) 280,000 units

209) Sarafiny 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) 30,000 80,000

Raw material (grams) 60,000 50,000

Each unit of finished goods requires 2 grams of raw material. The company plans to sell 650,000

units during the year.

How much of the raw material should the company purchase during the year?

A) 1,420,000 grams

B) 1,390,000 grams

C) 1,450,000 grams

D) 1,400,000 grams

Version 1 135

210) Sarafiny 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) 20,000 30,000

Raw material (grams) 50,000 40,000

Each unit of finished goods requires 7 grams of raw material. The company plans to sell 270,000

units during the year.

How much of the raw material should the company purchase during the year?

A) 1,960,000 grams

B) 1,950,000 grams

C) 1,970,000 grams

D) 2,000,000 grams

211) LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ

requires 2.3 hours of direct labor at the rate of $19.00 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:

A) $43.70

B) $5.60

C) $19.00

D) $20.10

212) LBC 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 $14.50 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:

A) $50.75

B) $14.50

C) $4.14

D) $18.00

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213) LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ

requires 2.7 hours of direct labor at the rate of $23.00 per direct labor-hour. Management would

like you to prepare a Direct Labor Budget for June.

The company plans to sell 46,000 units of Product WZ in June. The finished goods inventories

on June 1 and June 30 are budgeted to be 580 and 140 units, respectively. Budgeted direct labor

costs for June would be:

A) $1,050,500

B) $2,829,276

C) $2,848,026

D) $2,866,776

214) LBC 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 $14.50 per direct labor-hour. Management would

like you to prepare a Direct Labor Budget for June.

The company plans to sell 39,000 units of Product WZ in June. The finished goods inventories

on June 1 and June 30 are budgeted to be 200 and 100 units, respectively. Budgeted direct labor

costs for June would be:

A) $1,984,325

B) $1,974,175

C) $1,979,250

D) $564,050

215) Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp

requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the

next five months is as follows:

August 22,600 units

September 21,300 units

October 22,700 units

November 23,900 units

December 23,600 units

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The company wants to maintain monthly ending inventories of Jurislon equal to 20% of the

following month’s production needs. On July 31, this requirement was not met since only 10,800

kilograms of Jurislon were on hand. The cost of Jurislon is $18.00 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:

A) $81,720

B) $76,680

C) $191,700

D) $204,300

216) Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp

requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the

next five months is as follows:

August 23,500 units

September 22,200 units

October 23,600 units

November 24,800 units

December 24,500 units

The company wants to maintain monthly ending inventories of Jurislon equal to 25% of the

following month’s production needs. On July 31, this requirement was not met since only 11,700

kilograms of Jurislon were on hand. The cost of Jurislon is $27 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:

A) $2,785,050

B) $1,644,975

C) $1,960,875

D) $1,586,250

217) Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp

requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the

next five months is as follows:

August 22,600 units

September 21,300 units

October 22,700 units

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November 23,900 units

December 23,600 units

The company wants to maintain monthly ending inventories of Jurislon equal to 20% of the

following month’s production needs. On July 31, this requirement was not met since only 10,800

kilograms of Jurislon were on hand. The cost of Jurislon is $18.00 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:

A) $1,839,600

B) $1,014,300

C) $1,208,700

D) $1,017,000

218) Coles Corporation, Incorporated 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 14,000 units

September 14,500 units

October 15,500 units

November 12,600 units

December 11,900 units

The company wants to maintain monthly ending inventories of Material K equal to 20% of the

following month’s production needs. On July 31, this requirement was not met since only 2,500

yards of Material K were on hand. The cost of Material K is $0.85 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:

A) $40,970

B) $48,200

C) $33,840

D) $42,300

219) Coles Corporation, Incorporated 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 14,000 units

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September 14,500 units

October 15,500 units

November 12,600 units

December 11,900 units

The company wants to maintain monthly ending inventories of Material K equal to 20% of the

following month’s production needs. On July 31, this requirement was not met since only 2,500

yards of Material K were on hand. The cost of Material K is $0.85 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:

A) 7,560 yards

B) 8,400 yards

C) 8,700 yards

D) 9,300 yards

220) Coles Corporation, Incorporated 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 14,000 units

September 14,500 units

October 15,500 units

November 12,600 units

December 11,900 units

The company wants to maintain monthly ending inventories of Material K equal to 20% of the

following month’s production needs. On July 31, this requirement was not met since only 2,500

yards of Material K were on hand. The cost of Material K is $0.85 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:

A) 37,800 yards

B) 44,940 yards

C) 37,380 yards

D) 45,360 yards

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221) Acti Manufacturing Corporation is estimating the following raw material purchases for

the final four months of the year:

September $ 830,000

October $ 940,000

November $ 860,000

December $ 780,000

At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The

remaining 60% is paid for in the month following the purchase.

How much cash should Acti expect to pay out for raw material purchases during November?

A) $908,000

B) $438,000

C) $564,000

D) $344,000

222) Acti Manufacturing Corporation is estimating the following raw material purchases for

the final four months of the year:

September $ 830,000

October $ 940,000

November $ 860,000

December $ 780,000

At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The

remaining 60% is paid for in the month following the purchase.

In Acti’s budgeted balance sheet at December 31, at what amount will accounts payable for raw

materials be shown?

A) $780,000

B) $564,000

C) $468,000

D) $588,000

223) Smith Corporation makes and sells a single product called a Pod. Each Pod requires 1.4

direct labor-hours at $9.60 per direct labor-hour. The direct labor workforce is fully adjusted

each month to the required workload. Smith Corporation is preparing a Direct Labor Budget for

the second quarter of the year.

The budgeted direct labor cost per Pod is closest to:

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A) $13.44

B) $9.60

C) $7.38

D) $11.00

224) Smith Corporation makes and sells a single product called a Pod. Each Pod requires 2.1

direct labor-hours at $10.30 per direct labor-hour. The direct labor workforce is fully adjusted

each month to the required workload. Smith Corporation is preparing a Direct Labor Budget for

the second quarter of the year.

In June the company has budgeted to produce 22,700 Pods. Budgeted direct labor costs

incurred in June would be: (Round your intermediate calculations to 2 decimal places.)

A) $671,280

B) $491,001

C) $279,480

D) $233,810

225) Smith Corporation makes and sells a single product called a Pod. Each Pod requires 1.4

direct labor-hours at $9.60 per direct labor-hour. The direct labor workforce is fully adjusted

each month to the required workload. Smith Corporation is preparing a Direct Labor Budget for

the second quarter of the year.

In June the company has budgeted to produce 22,000 Pods. Budgeted direct labor costs

incurred in June would be:

A) $470,400

B) $295,680

C) $240,000

D) $211,200

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226) Smith Corporation makes and sells a single product called a Pod. Each Pod requires 1.4

direct labor-hours at $9.60 per direct labor-hour. The direct labor workforce is fully adjusted

each month to the required workload. Smith Corporation is preparing a Direct Labor Budget for

the second quarter of the year.

If the budgeted direct labor cost for April is $201,600, then the budgeted production of Pods

for April would be:

A) 21,000 units

B) 29,400 units

C) 18,273 units

D) 15,000 units

227) The LFH Corporation makes and sells a single product, Product T. Each unit of Product

T requires 1.5 direct labor-hours at a rate of $10.50 per direct labor-hour. The direct labor

workforce is fully adjusted each month to the required workload. LFH Corporation needs to

prepare a Direct Labor Budget for the second quarter of next year.

The budgeted direct labor cost per unit of Product T is closest to:

A) $9.10

B) $10.50

C) $7.00

D) $15.75

228) The LFH Corporation makes and sells a single product, Product T. Each unit of Product

T requires 1.5 direct labor-hours at a rate of $10.50 per direct labor-hour. The direct labor

workforce is fully adjusted each month to the required workload. LFH Corporation needs to

prepare a Direct Labor Budget for the second quarter of next year.

The company has budgeted to produce 28,000 units of Product T in June. The finished goods

inventories on June 1 and June 30 were budgeted at 800 and 600 units, respectively. Budgeted

direct labor costs for June would be:

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A) $294,000

B) $441,000

C) $444,150

D) $437,850

229) The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth

quarter of the year. The budgeted variable manufacturing overhead is $4 per direct labor-hour;

the budgeted fixed manufacturing overhead is $94,000 per month, of which $16,900 is factory

depreciation.

If the budgeted direct labor time for November is 8,900 hours, then the total budgeted

manufacturing overhead for November is:

A) $112,700

B) $129,600

C) $94,000

D) $146,500

230) The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth

quarter of the year. The budgeted variable manufacturing overhead is $5.00 per direct labor-

hour; the budgeted fixed manufacturing overhead is $75,000 per month, of which $15,000 is

factory depreciation.

If the budgeted direct labor time for November is 7,000 hours, then the total budgeted

manufacturing overhead for November is:

A) $95,000

B) $110,000

C) $75,000

D) $125,000

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231) The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth

quarter of the year. The budgeted variable manufacturing overhead is $5.00 per direct labor-

hour; the budgeted fixed manufacturing overhead is $75,000 per month, of which $15,000 is

factory depreciation.

If the budgeted cash disbursements for manufacturing overhead for December total $105,000,

then the budgeted direct labor-hours for December must be:

A) 6,000 direct labor-hours

B) 21,000 direct labor-hours

C) 9,000 direct labor-hours

D) 3,000 direct labor-hours

232) The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth

quarter of the year. The budgeted variable manufacturing overhead is $5.00 per direct labor-

hour; the budgeted fixed manufacturing overhead is $75,000 per month, of which $15,000 is

factory depreciation.

If the budgeted direct labor time for December is 8,000 hours, then average budgeted

manufacturing overhead per direct labor-hour is closest to:

A) $14.38 per direct labor-hour

B) $9.38 per direct labor-hour

C) $12.50 per direct labor-hour

D) $16.25 per direct labor-hour

233) Avril Incorporated bases its manufacturing overhead budget on budgeted direct labor-

hours. The variable overhead rate is $4.60 per direct labor-hour. The company’s budgeted fixed

manufacturing overhead is $54,080 per month, which includes depreciation of $3,840. All other

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

indicates that 3,200 direct labor-hours will be required in October.

The October cash disbursements for manufacturing overhead on the manufacturing overhead

budget should be:

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A) $68,800

B) $64,960

C) $14,720

D) $50,240

234) Avril Incorporated bases its manufacturing overhead budget on budgeted direct labor-

hours. The variable overhead rate is $4.60 per direct labor-hour. The company’s budgeted fixed

manufacturing overhead is $54,080 per month, which includes depreciation of $3,840. All other

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

indicates that 3,200 direct labor-hours will be required in October.

The company recomputes its predetermined overhead rate every month. The predetermined

overhead rate for October should be:

A) $4.60 per direct labor-hour

B) $21.50 per direct labor-hour

C) $20.30 per direct labor-hour

D) $16.90 per direct labor-hour

235) The manufacturing overhead budget at Polich Corporation is based on budgeted direct

labor-hours. The direct labor budget indicates that 7,700 direct labor-hours will be required in

February. The variable overhead rate is $8.20 per direct labor-hour. The company’s budgeted

fixed manufacturing overhead is $112,420 per month, which includes depreciation of $18,110.

All other fixed manufacturing overhead costs represent current cash flows.

The company recomputes its predetermined overhead rate every month. The predetermined

overhead rate for February should be:

A) $14.60 per direct labor-hour

B) $20.50 per direct labor-hour

C) $8.20 per direct labor-hour

D) $22.80 per direct labor-hour

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236) The manufacturing overhead budget at Polich Corporation is based on budgeted direct

labor-hours. The direct labor budget indicates that 1,600 direct labor-hours will be required in

February. The variable overhead rate is $3.40 per direct labor-hour. The company’s budgeted

fixed manufacturing overhead is $28,320 per month, which includes depreciation of $3,680. All

other fixed manufacturing overhead costs represent current cash flows.

The company recomputes its predetermined overhead rate every month. The predetermined

overhead rate for February should be:

A) $3.40 per direct labor-hour

B) $21.10 per direct labor-hour

C) $17.70 per direct labor-hour

D) $18.80 per direct labor-hour

237) The manufacturing overhead budget at Polich Corporation is based on budgeted direct

labor-hours. The direct labor budget indicates that 7,500 direct labor-hours will be required in

February. The variable overhead rate is $8.40 per direct labor-hour. The company’s budgeted

fixed manufacturing overhead is $110,250 per month, which includes depreciation of $18,090.

All other fixed manufacturing overhead costs represent current cash flows.

The February cash disbursements for manufacturing overhead on the manufacturing overhead

budget should be:

A) $63,000

B) $173,250

C) $92,160

D) $155,160

238) The manufacturing overhead budget at Polich Corporation is based on budgeted direct

labor-hours. The direct labor budget indicates that 1,600 direct labor-hours will be required in

February. The variable overhead rate is $3.40 per direct labor-hour. The company’s budgeted

fixed manufacturing overhead is $28,320 per month, which includes depreciation of $3,680. All

other fixed manufacturing overhead costs represent current cash flows.

The February cash disbursements for manufacturing overhead on the manufacturing overhead

budget should be:

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A) $24,640

B) $33,760

C) $30,080

D) $5,440

239) Davis Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter

of the year. The budgeted variable manufacturing overhead rate is $1.70 per direct labor-hour;

the budgeted fixed manufacturing overhead is $116,000 per month, of which $30,000 is factory

depreciation.

If the budgeted direct labor time for October is 8,000 hours, then the total budgeted

manufacturing overhead for October is:

A) $129,600

B) $43,600

C) $99,600

D) $86,000

240) Davis Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter

of the year. The budgeted variable manufacturing overhead rate is $1.70 per direct labor-hour;

the budgeted fixed manufacturing overhead is $116,000 per month, of which $30,000 is factory

depreciation.

If the budgeted direct labor time for November is 7,000 hours, then the total budgeted cash

disbursements for manufacturing overhead for November must be:

A) $41,900

B) $127,900

C) $86,000

D) $97,900

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241) Davis Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter

of the year. The budgeted variable manufacturing overhead rate is $1.70 per direct labor-hour;

the budgeted fixed manufacturing overhead is $116,000 per month, of which $30,000 is factory

depreciation.

If the budgeted direct labor time for December is 4,000 hours, then the predetermined

manufacturing overhead per direct labor-hour for December would be:

A) $9.20

B) $30.70

C) $23.20

D) $1.70

242) The Puyer Corporation makes and sells only one product called a Deb. The company is in

the process of preparing its Selling and Administrative Expense Budget for next year. The

following budget data are available:

Monthly Fixed Cost Variable Cost Per Deb Sold

Sales commissions $ 0.90

Shipping $ 1.40

Advertising $ 50,000 $ 0.20

Executive salaries $ 60,000

Depreciation on office equipment $ 20,000

Other $ 40,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 16,000 Debs in January, then the total budgeted variable

selling and administrative expenses for January will be:

A) $17,600

B) $25,600

C) $40,000

D) $36,800

243) The Puyer Corporation makes and sells only one product called a Deb. The company is in

the process of preparing its Selling and Administrative Expense Budget for next year. The

following budget data are available:

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Monthly Fixed Cost Variable Cost Per Deb Sold

Sales commissions $ 1.04

Shipping $ 1.54

Advertising $ 51,400 $ 0.34

Executive salaries $ 61,400

Depreciation on office equipment $ 21,400

Other $ 41,400

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 16,400 Debs in February, then the total budgeted fixed

selling and administrative expenses for February is:

A) $124,200

B) $134,200

C) $154,200

D) $175,600

244) The Puyer Corporation makes and sells only one product called a Deb. The company is in

the process of preparing its Selling and Administrative Expense Budget for next year. The

following budget data are available:

Monthly Fixed Cost Variable Cost Per Deb Sold

Sales commissions $ 0.90

Shipping $ 1.40

Advertising $ 50,000 $ 0.20

Executive salaries $ 60,000

Depreciation on office equipment $ 20,000

Other $ 40,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 15,000 Debs in February, then the total budgeted fixed

selling and administrative expenses for February is:

A) $120,000

B) $130,000

C) $150,000

D) $170,000

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245) The Puyer Corporation makes and sells only one product called a Deb. The company is in

the process of preparing its Selling and Administrative Expense Budget for next year. The

following budget data are available:

Monthly Fixed Cost Variable Cost Per Deb Sold

Sales commissions $ 0.90

Shipping $ 1.40

Advertising $ 50,000 $ 0.20

Executive salaries $ 60,000

Depreciation on office equipment $ 20,000

Other $ 40,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 17,000 Debs in March, then the average budgeted selling

and administrative expenses per unit sold for March is closest to:

A) $12.50 per unit

B) $2.50 per unit

C) $10.00 per unit

D) $17.00 per unit

246) The Puyer Corporation makes and sells only one product called a Deb. The company is in

the process of preparing its Selling and Administrative Expense Budget for next year. The

following budget data are available:

Monthly Fixed Cost Variable Cost Per Deb Sold

Sales commissions $ 0.90

Shipping $ 1.40

Advertising $ 50,000 $ 0.20

Executive salaries $ 60,000

Depreciation on office equipment $ 20,000

Other $ 40,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the budgeted cash disbursements for selling and administrative expenses for April total

$195,500, then how many Debs does the company plan to sell in April?

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A) 14,400 units

B) 8,000 units

C) 10,200 units

D) 18,200 units

247) Porter Corporation makes and sells a single product called a Yute. The company is in the

process of preparing its Selling and Administrative Expense Budget for the last quarter of the

year. The following budget data are available:

Variable Cost Per Yute Sold Monthly Fixed Cost

Sales commissions $ 5.90

Shipping $ 5.30

Advertising $ 8.90 $ 32,000

Executive salaries $ 178,000

Depreciation on office equipment $ 7,000

Other $ 0.60 $ 20,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 14,000 Yutes in November, then the total budgeted selling

and administrative expenses for November would be:

A) $526,800

B) $289,800

C) $237,000

D) $519,800

248) Porter Corporation makes and sells a single product called a Yute. The company is in the

process of preparing its Selling and Administrative Expense Budget for the last quarter of the

year. The following budget data are available:

Variable Cost Per Yute Sold Monthly Fixed Cost

Sales commissions $ 5.90

Shipping $ 5.30

Advertising $ 8.90 $ 32,000

Executive salaries $ 178,000

Depreciation on office equipment $ 7,000

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Other $ 0.60 $ 20,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 12,000 Yutes in December, then the budgeted total cash

disbursements for selling and administrative expenses for December would be:

A) $237,000

B) $485,400

C) $248,400

D) $478,400

249) Porter Corporation makes and sells a single product called a Yute. The company is in the

process of preparing its Selling and Administrative Expense Budget for the last quarter of the

year. The following budget data are available:

Variable Cost Per Yute Sold Monthly Fixed Cost

Sales commissions $ 5.90

Shipping $ 5.30

Advertising $ 8.90 $ 32,000

Executive salaries $ 178,000

Depreciation on office equipment $ 7,000

Other $ 0.60 $ 20,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the total budgeted selling and administrative expense for October is $518,520, then how

many Yutes does the company plan to sell in October?

A) 13,300 units

B) 14,100 units

C) 13,800 units

D) 13,600 units

250) Bries Corporation is preparing its cash budget for January. The budgeted beginning cash

balance is $18,000. Budgeted cash receipts total $183,000 and budgeted cash disbursements total

$188,000. The desired ending cash balance is $30,000.

The excess (deficiency) of cash available over disbursements for January is:

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A) $23,000

B) $13,000

C) ($5,000)

D) $201,000

251) Bries Corporation is preparing its cash budget for January. The budgeted beginning cash

balance is $19,100. Budgeted cash receipts total $188,500 and budgeted cash disbursements total

$190,200. The desired ending cash balance is $31,100.

To attain its desired ending cash balance for January, the company should borrow:

A) $13,700

B) $0

C) $31,100

D) $48,500

252) Bries Corporation is preparing its cash budget for January. The budgeted beginning cash

balance is $18,000. Budgeted cash receipts total $183,000 and budgeted cash disbursements total

$188,000. The desired ending cash balance is $30,000.

To attain its desired ending cash balance for January, the company should borrow:

A) $17,000

B) $0

C) $30,000

D) $43,000

253) Varughese Incorporated is working on its cash budget for March. The budgeted

beginning cash balance is $33,000. Budgeted cash receipts total $182,000 and budgeted cash

disbursements total $191,000. The desired ending cash balance is $40,000.

The excess (deficiency) of cash available over disbursements for March will be:

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A) $215,000

B) $42,000

C) $24,000

D) ($9,000)

254) Varughese Incorporated is working on its cash budget for March. The budgeted

beginning cash balance is $33,000. Budgeted cash receipts total $182,000 and budgeted cash

disbursements total $191,000. The desired ending cash balance is $40,000.

To attain its desired ending cash balance for March, the company needs to borrow:

A) $40,000

B) $0

C) $16,000

D) $64,000

255) The Bandeiras Corporation, a merchandising firm, has budgeted its activity for December

according to the following information:

● Sales at $460,000, all for cash.

● Merchandise inventory on November 30 was $205,000.

● The cash balance at December 1 was $19,000.

● Selling and administrative expenses are budgeted at $63,000 for December and are paid in

cash.

● Budgeted depreciation for December is $27,000.

● The planned merchandise inventory on December 31 is $235,000.

● The cost of goods sold is 70% of the sales price.

● All purchases are paid for in cash.

● There is no interest expense or income tax expense.

The budgeted cash receipts for December are:

A) $325,000

B) $460,000

C) $135,000

D) $487,000

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256) The Bandeiras Corporation, a merchandising firm, has budgeted its activity for December

according to the following information:

● Sales at $550,000, all for cash.

● Merchandise inventory on November 30 was $300,000.

● The cash balance at December 1 was $25,000.

● Selling and administrative expenses are budgeted at $60,000 for December and are paid in

cash.

● Budgeted depreciation for December is $35,000.

● The planned merchandise inventory on December 31 is $270,000.

● The cost of goods sold is 75% of the sales price.

● All purchases are paid for in cash.

● There is no interest expense or income tax expense.

The budgeted cash receipts for December are:

A) $412,500

B) $137,500

C) $585,000

D) $550,000

257) The Bandeiras Corporation, a merchandising firm, has budgeted its activity for December

according to the following information:

● Sales at $550,000, all for cash.

● Merchandise inventory on November 30 was $300,000.

● The cash balance at December 1 was $25,000.

● Selling and administrative expenses are budgeted at $60,000 for December and are paid in

cash.

● Budgeted depreciation for December is $35,000.

● The planned merchandise inventory on December 31 is $270,000.

● The cost of goods sold is 75% of the sales price.

● All purchases are paid for in cash.

● There is no interest expense or income tax expense.

The budgeted cash disbursements for December are:

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A) $382,500

B) $442,500

C) $472,500

D) $477,500

258) The Bandeiras Corporation, a merchandising firm, has budgeted its activity for December

according to the following information:

● Sales at $550,000, all for cash.

● Merchandise inventory on November 30 was $300,000.

● The cash balance at December 1 was $25,000.

● Selling and administrative expenses are budgeted at $60,000 for December and are paid in

cash.

● Budgeted depreciation for December is $35,000.

● The planned merchandise inventory on December 31 is $270,000.

● The cost of goods sold is 75% of the sales price.

● All purchases are paid for in cash.

● There is no interest expense or income tax expense.

The budgeted net income for December is:

A) $107,500

B) $137,500

C) $42,500

D) $77,500

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259) Carver Lumber sells lumber and general building supplies to building contractors in a

medium-sized town in Montana. Data regarding the store’s operations follow:

● Sales are budgeted at $370,000 for November, $340,000 for December, and $320,000 for

January.

● Collections are expected to be 90% in the month of sale and 10% in the month following the

sale.

● The cost of goods sold is 80% of sales.

● The company desires to have an ending merchandise inventory equal to 50% of the

following month’s cost of goods sold. Payment for merchandise is made in the month following

the purchase.

● Other monthly expenses to be paid in cash are $26,700.

● Monthly depreciation is $20,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 25,000

Accounts receivable 81,000

Inventory 148,000

Property, plant and equipment, net of $512,000 accumulated

depreciation 1,022,000

Total assets $ 1,276,000

Liabilities and Stockholders’ Equity

Accounts payable $ 282,000

Common stock 800,000

Retained earnings 194,000

Total liabilities and stockholders’ equity $ 1,276,000

The net income for December would be:

A) $21,300

B) $26,300

C) $16,500

D) $41,300

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260) Carver Lumber sells lumber and general building supplies to building contractors in a

medium-sized town in Montana. Data regarding the store’s operations follow:

● Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for

January.

● Collections are expected to be 90% in the month of sale and 10% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company desires to have an ending merchandise inventory equal to 60% of the

following month’s cost of goods sold. Payment for merchandise is made in the month following

the purchase.

● Other monthly expenses to be paid in cash are $24,700.

● Monthly depreciation is $16,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 19,000

Accounts receivable 77,000

Inventory 157,500

Property, plant and equipment, net of $502,000 accumulated

depreciation 1,002,000

Total assets $ 1,255,500

Liabilities and Stockholders’ Equity

Accounts payable $ 272,000

Common stock 780,000

Retained earnings 203,500

Total liabilities and stockholders’ equity $ 1,255,500

The net income for December would be:

A) $39,300

B) $42,300

C) $32,900

D) $55,300

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261) Carver Lumber sells lumber and general building supplies to building contractors in a

medium-sized town in Montana. Data regarding the store’s operations follow:

● Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for

January.

● Collections are expected to be 90% in the month of sale and 10% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company desires to have an ending merchandise inventory equal to 60% of the

following month’s cost of goods sold. Payment for merchandise is made in the month following

the purchase.

● Other monthly expenses to be paid in cash are $24,700.

● Monthly depreciation is $16,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 19,000

Accounts receivable 77,000

Inventory 157,500

Property, plant and equipment, net of $502,000 accumulated

depreciation 1,002,000

Total assets $ 1,255,500

Liabilities and Stockholders’ Equity

Accounts payable $ 272,000

Common stock 780,000

Retained earnings 203,500

Total liabilities and stockholders’ equity $ 1,255,500

The cash balance at the end of December would be:

A) $19,000

B) $163,600

C) $61,300

D) $137,600

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262) Carver Lumber sells lumber and general building supplies to building contractors in a

medium-sized town in Montana. Data regarding the store’s operations follow:

● Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for

January.

● Collections are expected to be 90% in the month of sale and 10% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company desires to have an ending merchandise inventory equal to 60% of the

following month’s cost of goods sold. Payment for merchandise is made in the month following

the purchase.

● Other monthly expenses to be paid in cash are $24,700.

● Monthly depreciation is $16,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 19,000

Accounts receivable 77,000

Inventory 157,500

Property, plant and equipment, net of $502,000 accumulated

depreciation 1,002,000

Total assets $ 1,255,500

Liabilities and Stockholders’ Equity

Accounts payable $ 272,000

Common stock 780,000

Retained earnings 203,500

Total liabilities and stockholders’ equity $ 1,255,500

Accounts payable at the end of December would be:

A) $231,000

B) $96,000

C) $135,000

D) $240,000

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263) Carver Lumber sells lumber and general building supplies to building contractors in a

medium-sized town in Montana. Data regarding the store’s operations follow:

● Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for

January.

● Collections are expected to be 90% in the month of sale and 10% in the month following the

sale.

● The cost of goods sold is 75% of sales.

● The company desires to have an ending merchandise inventory equal to 60% of the

following month’s cost of goods sold. Payment for merchandise is made in the month following

the purchase.

● Other monthly expenses to be paid in cash are $24,700.

● Monthly depreciation is $16,000.

● Ignore taxes.

Balance Sheet

October 31

Assets

Cash $ 19,000

Accounts receivable 77,000

Inventory 157,500

Property, plant and equipment, net of $502,000 accumulated

depreciation 1,002,000

Total assets $ 1,255,500

Liabilities and Stockholders’ Equity

Accounts payable $ 272,000

Common stock 780,000

Retained earnings 203,500

Total liabilities and stockholders’ equity $ 1,255,500

Retained earnings at the end of December would be:

A) $289,600

B) $296,000

C) $236,400

D) $203,500

264) Budgets are used for the distinct purposes of planning and profit.

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⊚ true

⊚ false

265) The budgeted income statement is typically prepared before the budgeted balance sheet.

⊚ true

⊚ false

266) Control involves developing goals and preparing various budgets to achieve those goals.

⊚ true

⊚ false

267) A continuous or perpetual budget is a 12-month budget that rolls forward one month (or

quarter) as the current month (or quarter) is completed.

⊚ true

⊚ false

268) The cash budget is the starting point in preparing the master budget.

⊚ true

⊚ false

269) The master budget consists of a number of separate but interdependent budgets.

⊚ true

⊚ false

270) The production budget is typically prepared prior to the sales budget.

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⊚ true

⊚ false

271) The production budget is typically prepared before the direct materials budget.

⊚ true

⊚ false

272) The selling and administrative budget is typically prepared before the cash budget.

⊚ true

⊚ false

273) A benefit from budgeting is that it forces managers to think about and plan for the future.

⊚ true

⊚ false

274) One of the weaknesses of budgets is that they are of little value in uncovering potential

bottlenecks.

⊚ true

⊚ false

275) One disadvantage of budgeting is that budgeting makes it more difficult to coordinate the

plans and activities of departmental managers.

⊚ true

⊚ false

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276) Cash collections in a schedule of cash collections typically consist of collections on sales

made to customers in prior periods plus collections on sales made in the current budget period.

⊚ true

⊚ false

277) The number of units to be produced in a period can be determined by adding the expected

sales to the desired ending inventory and then deducting the beginning inventory.

⊚ true

⊚ false

278) In a production budget, if the number of units in finished goods inventory at the end of

the period is less than the number of units in finished goods inventory at the beginning of the

period, then the expected number of units sold is less than the number of units to be produced

during the period.

⊚ true

⊚ false

279) In the merchandise purchases budget, the required purchases (in units) for a period can be

determined by subtracting the beginning merchandise inventory (in units) from the budgeted

sales (in units) and desired ending merchandise inventory (in units).

⊚ true

⊚ false

280) When preparing a direct materials budget, beginning inventory for raw materials should

be added to production needs, and desired ending inventory should be subtracted to determine

the amount of raw materials to be purchased.

⊚ true

⊚ false

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281) The direct labor budget begins with the required production in units from the production

budget.

⊚ true

⊚ false

282) The direct labor budget shows the direct labor-hours required to satisfy the production

budget.

⊚ true

⊚ false

283) In the manufacturing overhead budget, the non-cash charges (such as depreciation) are

deducted from the total budgeted manufacturing overhead to determine the expected cash

disbursements for manufacturing overhead.

⊚ true

⊚ false

284) The manufacturing overhead budget lists all costs of production other than direct

materials and direct labor.

⊚ true

⊚ false

285) The selling and administrative expense budget lists all costs of production other than

direct materials and direct labor.

⊚ true

⊚ false

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286) The budgeted variable selling and administrative expense is calculated by multiplying the

budgeted unit sales by the variable selling and administrative expense per unit.

⊚ true

⊚ false

287) The disbursements section of a cash budget consists of all cash payments for the period

except cash payments for dividends.

⊚ true

⊚ false

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Answer Key

Test name: chapter 8

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