93) 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
Uncollected April credit sales (10% × $120,000)
$
Uncollected May credit sales (40% × $160,000)
May 31 accounts receivable
$
94) 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 accounts receivable balance on September 30 would be:
A) $126,000
B) $148,000
C) $166,000
D) $190,000
Uncollected August credit sales (10% × $220,000)
$
22,000
Uncollected September credit sales (80% × $180,000)
144,000
Accounts receivable at the end of September
$
166,000
–
95) 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
August credit sales collected in October (10% × $220,000)
September credit sales collected in October (70% × $180,000)
126,000
October credit sales collected in October (20% × $200,000)
October cash sales
Cash receipts for October
248,000
–
96) 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 expected cash collections for May is closest to:
A) $920,400
B) $995,920
C) $552,240
D) $443,680
97) 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
98) 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
99) 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 estimated direct labor cost for May is closest to:
A) $786,800
B) $31,472
C) $534,000
D) $281,000
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.
100) The expected cash collections for November is closest to:
A) $502,320
B) $221,520
C) $723,840
D) $717,600
101) 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
102) 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:
A) $91,880
B) $139,520
C) $79,400
D) $115,700
103) The estimated direct labor cost for November is closest to:
A) $320,000
B) $182,620
C) $456,550
D) $19,850
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.
104) The budgeted sales for May is closest to:
A) $1,725,000
B) $950,000
C) $1,312,500
D) $1,612,500
105) The expected cash collections for May is closest to:
A) $262,500
B) $1,022,500
C) $760,000
D) $950,000
106) 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
107) 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