108) 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
109) The estimated direct labor cost for May is closest to:
A) $558,000
B) $33,480
C) $837,000
D) $279,000
110) The estimated selling and administrative expense for May is closest to:
A) $115,700
B) $80,000
C) $77,130
D) $35,700
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
–
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.
111) The budgeted sales for August is closest to:
A) $956,800
B) $1,039,600
C) $993,600
D) $828,000
112) The expected cash collections for August is closest to:
A) $912,640
B) $415,840
C) $496,800
D) $828,000
113) 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
114) 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
115) 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
116) The estimated direct labor cost for August is closest to:
A) $465,000
B) $684,992
C) $31,136
D) $244,640
117) The estimated selling and administrative expense for August is closest to:
A) $70,000
B) $57,970
C) $16,950
D) $86,950
114
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
–
118) Expected cash collections in December are:
A) $68,000
B) $256,000
C) $320,000
D) $324,000
119) The cost of December merchandise purchases would be:
A) $255,000
B) $139,500
C) $235,500
D) $240,000
120) December cash disbursements for merchandise purchases would be:
A) $139,500
B) $246,000
C) $240,000
D) $235,500
121) The difference between cash receipts and cash disbursements for December would be:
A) $54,000
B) $68,600
C) $28,200
D) $12,200
119
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
–
122) Expected cash collections in December are:
A) $310,000
B) $101,500
C) $303,000
D) $201,500