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98. Capp Corporation is a wholesaler of industrial goods. Data regarding the store’s
operations follow:
ο Sales are budgeted at $350,000 for November, $360,000 for December, and $340,000 for
January.
ο Collections are expected to be 60% in the month of sale, 39% in the month following the sale,
and 1% uncollectible.
ο The cost of goods sold is 75% of sales.
ο The company desires an ending merchandise inventory equal to 40% of the following month’s
cost of goods sold. Payment for merchandise is made in the month following the purchase.
ο The November beginning balance in the accounts receivable account is $70,000.
ο The November beginning balance in the accounts payable account is $257,000.
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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99. Edwards Company has projected sales and production in units for the second quarter of
the year as follows:
Required:
a. Cash production costs are budgeted at $6 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 (all paid in cash) amount to $60,000 per month. The accounts
payable balance on March 31 totals $96,000, all of which will be paid in April. Prepare a schedule
for each month showing budgeted cash disbursements for Edwards Company.
b. Assume that all units will be sold on account for $15 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 March
31 totaled $255,000 $(45,000 from February’s sales and the remainder from March.) Prepare a
schedule for each month showing budgeted cash receipts for Edwards Company.
100. Kindschuh Corporation is working on its direct labor budget for the next two months.
Each unit of output requires 0.07 direct labor-hours. The direct labor rate is $8.50 per direct
labor-hour. The production budget calls for producing 4,800 units in June and 5,300 units in July.
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.
101. Capati 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 $8.50 per direct labor-hour.
The production budget calls for producing 2,300 units in August and 2,200 units in September.
The company guarantees its direct labor workers a 40-hour paid work week. With the number of
workers currently employed, that means that the company is committed to paying its direct labor
work force for at least 960 hours in total each month even if there is not enough work to keep
them busy.
Required:
Construct the direct labor budget for the next two months.
102. Mccoo Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The
variable overhead rate is $1.30 per direct labor-hour. The company’s budgeted fixed
manufacturing overhead is $98,900 per month, which includes depreciation of $19,780. All other
fixed manufacturing overhead costs represent current cash flows. The September direct labor
budget indicates that 8,600 direct labor-hours will be required in that month.
Required:
a. Determine the cash disbursement for manufacturing overhead for September.
b. Determine the predetermined overhead rate for September.
103. The manufacturing overhead budget of Lewison Corporation is based on budgeted direct
labor-hours. The June direct labor budget indicates that 5,800 direct labor-hours will be required
in that month. The variable overhead rate is $7.70 per direct labor-hour. The company’s budgeted
fixed manufacturing overhead is $111,360 per month, which includes depreciation of $17,400. All
other fixed manufacturing overhead costs represent current cash flows.
Required:
a. Determine the cash disbursement for manufacturing overhead for June. Show your work!
b. Determine the predetermined overhead rate for June. Show your work!
104. Lahay Inc. bases its selling and administrative expense budget on the number of units
sold. The variable selling and administrative expense is $4.30 per unit. The budgeted fixed selling
and administrative expense is $30,240 per month, which includes depreciation of $3,510. The
remainder of the fixed selling and administrative expense represents current cash flows. The
sales budget shows 2,700 units are planned to be sold in April.
Required:
Prepare the selling and administrative expense budget for April.
105. The selling and administrative expense budget of Fenley Corporation is based on the
number of units sold, which are budgeted to be 2,500 units in January. The variable selling and
administrative expense is $4.40 per unit. The budgeted fixed selling and administrative expense
is $35,750 per month, which includes depreciation of $4,000. The remainder of the fixed selling
and administrative expense represents current cash flows.
Required:
Prepare the selling and administrative expense budget for January.
106. Enciso Corporation is preparing its cash budget for November. The budgeted beginning
cash balance is $31,000. Budgeted cash receipts total $135,000 and budgeted cash
disbursements total $141,000. The desired ending cash balance is $50,000. The company can
borrow up to $100,000 at any time from a local bank, with interest not due until the following
month.
Required:
Prepare the company’s cash budget for November in good form.
107. Wehr Inc. is preparing its cash budget for April. The budgeted beginning cash balance is
$19,000. Budgeted cash receipts total $105,000 and budgeted cash disbursements total $98,000.
The desired ending cash balance is $50,000. 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 April in good form. Make sure to indicate what borrowing,
if any, would be needed to attain the desired ending cash balance.