Quick Study 20-19 (10 minutes)
GUITAR SHOPPE
Cash Receipts Budget
For Month Ended September 30
Cash receipts from September cash sales (40% x $170,000)………... $ 68,000
Quick Study 20-20 (10 minutes)
MUSIC WORLD
Cash Receipts Budget
For Month Ended September 30
Cash receipts from August sales (55% x $150,000)………….……….…. $ 82,500
Quick Study 20-21 (10 minutes)
WELLS COMPANY
Budgeted Cash Receipts
For Month Ended November 30
Cash receipts from November cash sales (25% x $80,000)…………... $ 20,000
Collection of October’s sales (60% x $66,000)……………………………… 39,600
Quick Study 20-22 (15 minutes)
Computation of budgeted Accounts Receivable balance as of July 31
Sales month Total Sales
Credit
Sales*
Percent Still
Uncollected*
Amount
Uncollected
June….…….……….$420,000 $168,000 10% $ 16,800
Quick Study 20-23 (5 minutes)
MESSERS COMPANY
Cash Budget
For Month Ended February 28
Beginning cash balance………………….………………………………………..… $ 20,000
Cash receipts………………………………..…………………….……….……….…… 75,000
Total cash available……………………………..……………………..….……….…. 95,000
Cash disbursements……………..……………………….….……….……….…….. (100,250)
Based on the cash budget above, the company must borrow $10,250 during
February to maintain a $5,000 cash balance.
Financial and Managerial Accounting, 6th Edition
Quick Study 20-24 (15 minutes)
GADO COMPANY
Cash Budget
For Month Ended March 31
Beginning cash balance………………….………………………….…..$ 72,000
Cash receipts from sales…………..……………….…………………… 300,000
Total cash available………………………………..….……….……….… $372,000
Cash disbursements
Payments for purchases…………………..……..……….……….…..140,000
Salaries……………..………………………………….…….……….……….80,000
Quick Study 20-25 (10 minutes)
Sales……………..………………………………………………….….……….…….….… BIS
Office salaries paid………………………….…………………..…………………..… BIS
Accumulated depreciation………………..……………….……………………….. BBS
Quick Study 20-26 (10 minutes)
GORDANDS
Cash Disbursements for Merchandise (Budgeted)
For Month Ended September 30
Cash disbursements for September purchases (25% x $720,000)....$180,000
Quick Study 20-27 (10 minutes)
MEYER CO.
Cash Disbursements for Merchandise (Budgeted)
For January, February, and March
January February March
Purchases…………………………….………..…….. $15,800 $18,600 $20,200
Cash disbursements for
Current month’s purchases (40%) ..........$ 6,320 $ 7,440 $ 8,080
* Accounts payable balance at December 31
Quick Study 20-28 (5 minutes)
RAIDER-X COMPANY
Purchases Budget (in units)
For Month Ended April 30
Budgeted ending inventory (130% x 3,000)………….………………………. 3,900
Budgeted sales for April (units)…………………..……..….……….……….…. 18,000
Financial and Managerial Accounting, 6th Edition
Quick Study 20-29 (15 minutes)
LEXI COMPANY
Merchandise Purchases Budget
For April, May, and June
April May June
Next month’s budgeted sales (units)…..…..
1,220,000 980,000 1,020,000
Ratio of inventory to future sales............... x 30% x 30% x 30%
Budgeted ending inventory (units)…..…..... 366,000 294,000 306,000
Quick Study 20-30 (15 minutes)
MONTEL COMPANY
Computation of Budgeted Cost of Purchases
For Month Ended July 31
Budgeted ending inventory…………….……………..…………………………….…...$ 40,000
Budgeted cost of goods to be sold [$600,000 x (1 – 40%)]………….……… 360,000
Required available merchandise…………………………………..……….……….…400,000
Quick Study 20-31 (10 minutes)
1. Activity-based budgeting requires managers to focus on the activities of
2. Traditional budgeting consists of listing the amount of resources
required for each department (such as salaries and utilities). Activity-
Quick Study 20-32 (10 minutes)
1.
Sales (current year)………………………………….……….……….…..
(in € millions)
€25,400
2.
Note: Assume budgeted sales of €26,000 for this question.
Financial and Managerial Accounting, 6th Edition
EXERCISES
Exercise 20-1 (5 minutes)
Exercise 20-2 (10 minutes)
Exercise 20-3 (15 minutes)
HOSPITABLE CO.
Production Budget
For April, May, and June
April May June
Next month’s budgeted sales (units)…..….. 580 540 620
Ratio of inventory to future sales............... x 25% x 25% x 25%
Budgeted ending inventory (units) …......... 145 135 155
Add budgeted sales for the month….......... 500 580 540
Exercise 20-4 (15 minutes)
HOSPITABLE CO.
Direct Materials Budget
For April, May, and June
April May June
Budgeted production (units)*…………….…... 455 570 560
Materials requirements per unit…..…….…… x 5 x 5 x 5
Materials needed for production (lbs.)....... 2,275 2,850 2,800
Cost per lb. ………….………………………….…….
Total cost……………………………………..…….….
x 4
$9,868
x 4
$11,340
x 4
$11,080
* From Exercise 20-3. **540 units (July’s budgeted production) x 30%
Exercise 20-5 (10 minutes)
MANNER COMPANY
Direct Labor Budget
For July, August, and September
July August Sept.
Budgeted production (units)….….………...... 620 680 540
Labor requirements per unit (hours).......... x 2 x 2 x 2
Total labor hours needed………………..……… 1,240 1,360 1,080
Exercise 20-6 (15 minutes)
Financial and Managerial Accounting, 6th Edition
RIDA INC.
Direct Materials Budget
Second Quarter
Units to be produced…………..……………..…………….…….……… 240,000
Materials requirement per unit………………..….….……….………x 0.60
Materials needed for production (pounds)………..…………….. 144,000
Add budgeted materials ending inventory (pounds)*.......... 9,450
Material price per pound……………..……………….….……….…….
Total cost of direct materials purchases……….….……….…….
$19,293,750
*(52,500 x 0.60) x 30%
Exercise 20-7 (15 minutes)
1.
ADDISON CO.
Direct Labor Budget
Second Quarter
Units to be produced…………..……………..…………….…….……… 2,400
Labor requirements per unit (hours)…………….…………………. x 4
Total labor hours needed…………………………..….……….………. 9,600
Exercise 20-7 (continued)
2.
ADDISON CO.
Factory Overhead Budget
Second Quarter
Total labor hours needed…………………………..….……….………. 9,600
Variable overhead rate per DL hour……………….……….………. x $11
Budgeted variable overhead…………………..………………………. $105,600
Exercise 20-8 (20 minutes)
RAD CO.
Direct Materials Budget
For April, May, and June
April May June
Budgeted production (units)….….………...... 442 570 544
Materials requirements per unit…..…….…… x 5 x 5 x 5
Materials needed for production (lbs.)....... 2,210 2,850 2,720
Deduct beginning inventory (lbs.).............. (663) (855) (816)
Materials to be purchased (lbs.)……………… 2,402 2,811 2,714
*30% of next month’s materials needed for production. July’s materials needed for
production equals 2,700 pounds (540 units x 5).
Financial and Managerial Accounting, 6th Edition