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Solutions Manual, Chapter 8 31
Exercise 8-15 (30 minutes)
1.
Hruska Corporatio
n
Direct Labor Budget
1st Quarte
r
2nd Quarte
r
3rd Quarte
r
4th Quarte
r
Y
ea
r
Required production in units ……… 12,000 10,000 13,000 14,000 49,000
Direct labor time per unit (hours).. 0.2 0.2 0.2 0.2 0.2
2 and 3.
Hruska Corporatio
n
Manufacturing Overhead Budget
1st Quarte
r
2nd Quarte
r
3rd Quarte
r
4th Quarte
r
Y
ea
r
Bud
eted direct labor-hours ……… 2,400 2,000 2,600 2,800 9,800
V
ariable manufacturin
g
overhead
rate …………………………………… $1.75 $1.75 $1.75 $1.75 $1.75
V
ariable manufacturin
g
overhead.. $ 4,200 $ 3,500 $ 4,550 $ 4,900 $ 17,150
T
g
T
T
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32 Managerial Accounting, 16th Edition
Exercise 8-16 (30 minutes)
1 and 2.
Zan Corporation
Direct Materials Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter Year
Required production in units of
finished goods………………………….. 5,000 8,000 7,000 6,000 26,000
Units of raw materials needed per unit
of finished goods ………………………. × 8 × 8 × 8 × 8 × 8
Units of raw materials needed to meet
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Solutions Manual, Chapter 8 33
Exercise 8-16 (continued)
3.
Zan Corporation
Schedule of Expected Cash Disbursements for Materials
Be
g
innin
g
accounts payable………. $ 2,880 $ 2,880
1st Quarter purchases ……………… 36,000 $24,000 60,000
4.
Zan Corporation
Direct Labor Budget
1st Quarte
r
2nd
Q
uarte
r
3rd Quarte
r
4th Quarte
r
Y
ea
r
Required production in units ……… 5,000 8,000 7,000 6,000 26,000
Direct labor-hours per unit………… × 0.20 × 0.20 ×0.20 ×0.20 ×0.20
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34 Managerial Accounting, 16th Edition
Exercise 8-17 (60 minutes)
1a. The budgeted cash collections are computed as follows:
Cash sales ($240,000 × 35%)…………………………….. $ 84,000
September credit sales collected in October …………… 90,000
T
1b. The budgeted merchandise purchases are computed as follows:
Bud
g
eted cost of
g
oods sold ($240,000 × 45%)……… $108,000
A
dd: desired endin
g
merchandise inventory ($250,000
T
1c. The budgeted cash disbursements for merchandise purchases are
computed as follows:
T
1d. The net operating income is computed as follows:
Sales …………………………………………………………….. $240,000
Net operatin
g
income ……………………………………..… $ 52,000
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Solutions Manual, Chapter 8 35
Exercise 8-17 (continued)
1e. The budgeted balance sheet is computed as follows:
Wheeling Company
Balance Sheet
October 31
Assets
Cash ($59,000 + $236,400 – $105,805 – $78,000) ………. $111,595
Accounts receivable ($240,000 × 65% × 60%) …………… 93,600
Liabilities and Stockholders’ Equity
Accounts payable ($109,350 × 70%)………………………… $ 76,545
Common stock …………………………………………………….. 216,000
2a. The budgeted cash collections are computed as follows:
Cash sales ($240,000 × 35%)…………………………….. $ 84,000
September credit sales collected in October …………… 90,000
T
2b. The budgeted merchandise purchases are computed as follows:
A
× 45% × 10%) ………………………………..………… 11,250
T
otal needs …………………………………………………….. 119,250
Less: be
g
innin
g
merchandise inventory……..………….. 32,400
Required purchases ……………………………………..…… $ 86,850
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36 Managerial Accounting, 16th Edition
Exercise 8-17 (continued)
2c. The budgeted cash disbursements for merchandise purchases are
computed as follows:
September credit purchases paid in October…………… $73,000
2d. The net operating income is computed as follows:
Sales …………………………………………………………….. $240,000
Cost of
g
oods sold ($240,000 × 45%) ………………….. 108,000
2e. The budgeted balance sheet is computed as follows:
Wheeling Company
Balance Sheet
October 31
Assets
Cash ($59,000 + $252,000 – $90,370 – $78,000) ………… $142,630
Accounts receivable ($240,000 × 65% × 50%) …………… 78,000
Liabilities and Stockholders’ Equity
Accounts payable ($86,850 × 80%) …………………………. $ 69,480
Common stock …………………………………………………….. 216,000
Retained earnings ($106,400 + $52,000) …………………… 158,400
Total liabilities and stockholders’ equity ………………..…… $443,880
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Solutions Manual, Chapter 8 37
Exercise 8-17 (continued)
3. Students may be inclined to conclude that the financial projections in
This interpretation overlooks the importance of cash flows and working
capital management. For professors wishing to explore this discussion
The accounts receivable turnover in requirement 1 is 1.70 ($156,000 ÷
$91,800). The average collection period is 17.65 days (30 days ÷
The accounts receivable turnover in requirement 2 is 1.86 ($156,000 ÷
$84,000). The average collection period is 16.13 days (30 days ÷
The operating cycle drops by 4.63 days in requirement 2.
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38 Managerial Accounting, 16th Edition
Exercise 8-18 (30 minutes)
1a. The company’s budgeted sales are computed as follows:
Cash collections in July (a)……………………………..….. $77,000
June sales collected in July (b)………………………….... $50,000
1b. The company’s budgeted merchandise purchases are computed as
follows:
Cash paid for merchandise purchases in July (a)……… $44,500
June purchases paid in July (b) …………………………... $35,300
1c. The company’s budgeted cost of goods sold is computed as follows:
Merchandise purchases in July ……………………………. $46,000
Be
g
innin
g
merchandise inventory in July……………….. 30,000
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Solutions Manual, Chapter 8 39
Exercise 8-18 (continued)
1d. The company’s budgeted net operating income is computed as follows:
Sales ……………………………………………… $90,000
Cost of
g
oods sold ……………………………. 54,000
2. The budgeted balance sheet is computed as follows:
Wolfpack Company
Balance Sheet
July 31
Assets
Cash ($75,000 + $77,000 – $44,500 – $15,000) …….…… $ 92,500
Accounts receivable ($90,000 × 70%) .……………………... 63,000
Inventory ……………………………………………..……………. 22,000
Problem 8-19 (45 minutes)
1. Schedule of cash collections:
Cash sales
—
May ……………………………………….. $ 60,000
Collections on account receivable:
A
–
T
2. Schedule of expected cash disbursements:
Schedule of cash disbursements for purchases:
A
pril 30 accounts payable balance ……..………….. $ 63,000
T
3.
Minden Company
Cash Bud
g
et
For the Month of May
Be
g
innin
g
cash balance ………………………………. $ 9,000
A
dd collections from customers (above)………….. 184,000
T
otal cash available …………………………..……….. 193,000
Less cash disbursements:
T
—
—
T