test bank ch8

xx x x x x x x x x x x x x x x x x x x x x x x x x x 8-1 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Professional exam adapted LO10:Budgeted balance sheet LO9: Budgeted income statement LO8: Cash budget LO7: Selling & administrative budget LO5: Direct labor budget LO4: Direct materials budget LO3: Production budget LO6: Manufacturing overhead budget Difficulty E E E E E E E E E E E E E E E E M M E M E E E M M M M LO2: Sales budget LO1: Budget process 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Question Type T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F T/F Conceptual M/C 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Conceptual M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C E E E E E M E E M M M E M E M H M E H E E E E E M M M H M M E E M E M E E E E E x x x x x CMA CIMA x x x x x x x x x CMA x x x x x x x x x x x CMA CMA x x x x x x x x x x x x x x x 8-2 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. CH08-Ref1 CH08-Ref2 CH08-Ref3 CH08-Ref4 CH08-Ref5 CH08-Ref6 CH08-Ref7 CH08-Ref8 CH08-Ref9 CH08-Ref10 CH08-Ref11 CH08-Ref12 CH08-Ref13 CH08-Ref14 CH08-Ref15 CH08-Ref16 CH08-Ref17 CH08-Ref18 CH08-Ref19 CH08-Ref20 CH08-Ref21 CH08-Ref22 CH08-Ref23 CH08-Ref24 CH08-Ref25 CH08-Ref26 CH08-Ref27 CH08-Ref28 68 69 70 71 72 73 74-75 76-78 79-80 81-84 85-93 94-96 97-98 99-100 101-103 104-105 106-107 108-110 111-112 113-114 115-117 118-119 120-122 123-124 125-127 128-129 130-132 133-134 135-137 138-141 142-143 144-145 146-148 149-153 154 155 156 157 158 159 Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Single Part M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Multipart M/C Problem Problem Problem Problem Problem Problem E E E E E M M E-M H H H E-M E E-M E-M E-M H M E-M M E-M E E-M E-M E-H E E-M E M-H E-H E E E-M H M H H H M M x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 8-3 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . All rights reserved.160 161 162 163 164 165 166 167 168 169 170 171 172 173 Problem Problem Problem Problem Problem Problem Problem Problem Problem Problem Problem Problem Problem Problem E M M E E E M E E E E E E E x x x x x x x x x x x x x x x x 8-4 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The cash budget is usually prepared after the budgeted income statement. The sales budget is usually prepared before the production budget. True False 8-5 Copyright © 2015 McGraw-Hill Education. Budgets are used to plan and to control operations. True False 5. The basic idea underlying responsibility accounting is that each manager should be held responsible for the overall profit of the company to ensure that all managers are acting together. True False 8. True False 4. The cash budget is typically prepared before the direct materials budget. All rights reserved.Chapter 08 Master Budgeting True / False Questions 1. A continuous or perpetual budget is a budget that almost never needs to be revised. True False 6. The manufacturing overhead budget is typically prepared before the production budget. Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management. True False 3. True False 7. True False 2. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . True False 12. True False 8-6 Copyright © 2015 McGraw-Hill Education. True False 16. One disadvantage of a self-imposed budget is that budget estimates prepared by front-line managers are often less accurate and reliable than estimates prepared by top managers. A self-imposed budget is a budget that is prepared with the full cooperation and participation of managers at all levels. The direct materials budget is typically prepared before the production budget.9. True False 15. . True False 14. True False 18. True False 17. True False 10. Planning involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change. All rights reserved. the required merchandise purchases for a period are determined by subtracting the desired ending inventory from the sum of the units to be sold during the period and the units in beginning inventory. No reproduction or distribution without the prior written consent of McGraw-Hill Education. a budget is a method for putting a limit on spending. The sales budget often includes a schedule of expected cash collections. True False 13. In a merchandising company. In business. A benefit of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack. The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory. The first budget a company prepares in a master budget is the production budget. True False 11. Only variable manufacturing overhead costs are included in the manufacturing overhead budget. All rights reserved. The manufacturing overhead budget lists all costs of production other than selling and administrative expenses. The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and administrative expense per unit. The direct labor budget shows the direct labor-hours required to produce the desired ending inventory. True False 24. the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate. On a cash budget. the units of raw material needed to meet production should be added to desired ending inventory and the beginning inventory for raw materials should be subtracted to determine the amount of raw materials to be purchased. True False 21. . True False 22. True False Multiple Choice Questions 8-7 Copyright © 2015 McGraw-Hill Education. True False 26. When preparing a direct materials budget. the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment.19. Both variable and fixed manufacturing overhead costs are included in the selling and administrative expense budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. True False 23. True False 20. True False 25. In companies that do not have "no lay-off" policies. 27. 8-8 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . Sales Budget. C. Budgeted Income Statement Budgeted Balance Sheet. All rights reserved. To uncover potential bottlenecks before they occur. B. D. Budgeted Balance Sheet Budgeted Income Statement. To provide a means of allocating resources to those parts of the organization where they can be used most effectively. Budgeted Income Statement. Which of the following budgets are prepared before the production budget? A. To ensure that the company continues to grow. Which of the following represents the normal sequence in which the below budgets are prepared? A. B. To communicate management's plans throughout the entire organization. Sales Budget. Option A Option B Option C Option D 28. C. D. C. B. Which of the following is NOT an objective of the budgeting process? A. Budgeted Balance Sheet 29. Budgeted Balance Sheet. Sales Budget. Budgeted Income Statement Sales Budget. D. All the following are considered to be benefits of participative budgeting. . except for: A. Individuals at all organizational levels are recognized as being part of a team. All rights reserved. this results in greater support for the organization. B. B. budgeted sales . Which of the following benefits could an organization reasonably expect from an effective budget program? A. The budget method that maintains a constant twelve-month planning horizon by adding a new month on the end as the current month is completed is called: A. When managers set their own targets for the budget. B.30. an operating budget.desired ending inventory. 32. top management need not be concerned with the overall profitability of operations. D. C. B. D. D. budgeted sales . C. No reproduction or distribution without the prior written consent of McGraw-Hill Education. a continuous budget. The budget estimates are prepared by those in directly involved in activities. Option A Option B Option C Option D 31. a master budget. 33. budgeted sales + beginning inventory . a capital budget. When preparing a production budget.beginning inventory + desired ending inventory.desired ending inventory. D. the required production equals: A.beginning inventory . Managers are held responsible for reaching their goals and cannot easily shift responsibility by blaming unrealistic goals set by others. C. budgeted sales + beginning inventory + desired ending inventory. 8-9 Copyright © 2015 McGraw-Hill Education. C. the beginning inventory of finished goods. Which of the following might be included as a disbursement on a cash budget? A.500 $98. B. All rights reserved. The WRT Corporation makes collections on sales according to the following schedule: 25% in month of sale 65% in month following sale 5% in second month following sale 5% uncollectible The following sales have been budgeted: Budgeted cash collections in June would be: A. D. B. The direct labor budget is based on: A. C. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Option A Option B Option C Option D 36.34. the required materials purchases for the period. B. $27. the desired ending inventory of finished goods.500 8-10 Copyright © 2015 McGraw-Hill Education. . D. C. D. 35. the required production for the period. C.500 $71.000 $115. 880 $194.000 $370. B. 35% in the month following the sale.000 for August.000 $210.500 39. 60% will be collected the month after the sale. C. B.000 $192. D. Experience indicates that none of the sales on account will be collected in the month of the sale.000 8-11 Copyright © 2015 McGraw-Hill Education. and 5% in the second month following sale. Trumbull Corporation budgeted sales on account of $120. how much cash should Sioux expect to collect during the month of April? A. $211. Based on this information. $286. Seventy percent of Parlee Corporation's sales are collected in the month of sale. D.000 for July.000 $94. The cash receipts from accounts receivable that should be budgeted for September would be: A. 36% in the second month.960 $197.500 $320. C. and 4% will be uncollectible. and $198.800 $147. $169. D. and the remaining 5% being uncollectible. 25% in the month following sale.37. . No reproduction or distribution without the prior written consent of McGraw-Hill Education.760 38. The following are budgeted sales data for the company: Total budgeted cash collections in April would be: A. $35.000 for September. All rights reserved. Sioux Corporation is estimating the following sales for the first four months of next year: Sales are normally collected 60% in the month of sale.000 $125. C. B. C. The remainder are uncollectible. $420. D. Budgeted sales in Acer Corporation over the next four months are given below: Twenty-five percent of the company's sales are for cash and 75% are on account. . No reproduction or distribution without the prior written consent of McGraw-Hill Education. and 10% in the second month following sale.125 $136. cash collections for December should be: A. All rights reserved. and 15% are collected in the second month following sale.875 $98. 25% in the month following sale. $103.000 $605. The following are budgeted sales data for the company: Cash receipts in April are expected to be: A. The remainder are uncollectible. All of Porter Corporation's sales are on account. C. D.40. B.000 8-12 Copyright © 2015 McGraw-Hill Education. B. Given these data. Sixty percent of the credit sales are collected in the month of sale.000 $185. 30% are collected in the month following sale. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale.500 41.000 $545.375 $119. 000 units 480. B. 65. Paradise Corporation budgets on an annual basis for its fiscal year.000 57. B.000 55. C. October sales are expected to be 71. D. Frodic Corporation has budgeted sales and production over the next quarter as follows: The company has 4.000 units 450. All rights reserved.000 units of product on hand at July 1.000 units during next year.000 units 43.000 units 510. No reproduction or distribution without the prior written consent of McGraw-Hill Education. *Three pounds of raw material are needed to produce each unit of finished product. 440. C.000 61. . 10% of the next month's sales in units should be on hand at the end of each month. D. the number of units it would have to manufacture during the year would be: A. Budgeted sales for September would be (in units): A.42.500 units. If Paradise Corporation plans to sell 480.000 8-13 Copyright © 2015 McGraw-Hill Education. The following beginning and ending inventory levels (in units) are planned for next year. No reproduction or distribution without the prior written consent of McGraw-Hill Education.800 $327.600 $352.400 $314. B.800 mugs 25. Expected mug sales at Fab (in units) for the next three months are as follows: Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales.300 mugs 8-14 Copyright © 2015 McGraw-Hill Education. 23. $257. B. D.44. At the end of each month. How many mugs should Fab plan on producing during the month of November? A.900 mugs 34.200 mugs 26. What dollar amount of merchandise inventory should JT plan to purchase in August? A. C. Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs. . D.800 45. JT Department Store expects to generate the following sales for the next three months: JT's cost of gods sold is 60% of sales dollars. C. All rights reserved. JT wants a merchandise inventory balance equal to 20% of the following month's expected cost of goods sold. C. the company requires that 30% of the next month's sales be on hand at the end of each month. C. No reproduction or distribution without the prior written consent of McGraw-Hill Education. How many units of Product A must be produced during the month? A.000 47. .000 units of Product A. 132. The following information was taken from the production budget of Paeke Corporation for next quarter: How many units is the company expecting to sell in the month of February? A. D.000 units 80. On November 1.000 units of Product A on hand. B. B.000 units 107. 83.000 36.000 units 8-15 Copyright © 2015 McGraw-Hill Education. B.000 138.500 units on hand at end of the month.46.000 140. D. All rights reserved. and plans to have 6. Budgeted sales of Product BetaC over the next four months are: Budgeted production for August would be: A.500 48. 28. the company plans to sell 30.000 units 77.500 31. Mutskic Corporation produces and sells Product BetaC. D. Barnes Corporation has 8. To guard against stockouts. C. During the month.500 30.000 135. C. The following information relates to Marter Manufacturing Corporation for next quarter: How many units should the company plan on producing for the month of February? A. . Parsons Corporation plans to sell 18.000 units 362.000 units on hand at the start of the month.000 27. All rights reserved. 360. and plans to have 6. how many units of Product X must be purchased from the supplier during the month? A. B. D. plans to sell 25. a retailer.000 18.000 units on hand at the end of the month. C.000 units 398.000 units during August. No reproduction or distribution without the prior written consent of McGraw-Hill Education.49. B.000 units 8-16 Copyright © 2015 McGraw-Hill Education.500 units on hand at the start of the month.500 17. C. D. Starg Corporation.000 units 358.500 50. and plans to have 7. 24. D. 32. B. If the company has 9. how many units must be produced during the month? A.000 units of Product X during the month of August.000 25.000 23.000 51.500 19.000 units on hand at the end of the month. If the company has 5. C.000 units 8.800 pounds 38. D. Shocker Corporation's sales budget shows quarterly sales for the next year as follows: Unit sales Corporation policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales. B. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The following are budgeted data: Two pounds of material are required for each finished unit. 7. All rights reserved.800 units 8. C.200 pounds 52. B. The inventory of materials at the end of each month should equal 20% of the following month's production needs.000 pounds 8-17 Copyright © 2015 McGraw-Hill Education. Budgeted production for the second quarter of the next year would be: A. .000 pounds 36.200 units 8. Purchases of raw materials for May should be: A. 39.400 units 53. D.52. Budgeted production for February should be: A. 397. Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below: Two pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. G Products. D. B. . The company is expected to have 30. 60.500 grams 399. G's production budget indicated the following units (jars) of gravy to be produced for the upcoming months indicated: Five grams of garlic are needed for every jar of gravy. C.54. C. How many grams of garlic should G plan on purchasing during the month of May? A.000 units 84.500 grams 437.000 pounds of raw materials on hand on January 1. manufactures garlic gravy. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 units 8-18 Copyright © 2015 McGraw-Hill Education. D. G also likes to have enough garlic on hand at the end of the month to cover 10% of the next month's production requirements for garlic.500 grams 55. Inc. B.500 grams 407.000 units 108.000 units 54. All rights reserved. Selected data from Rhett's master budget for next quarter are shown below: How many yards of cloth should Rhett plan on purchasing in May? A. The inventory of materials at the end of each month should equal 20% of the following month's production needs.000 pounds 19. The following are budgeted data: One pound of material is required for each finished unit. .800 pounds 57. C.700 yards 98.100 yards 98. Rhett Corporation manufactures and sells dress shirts.800 yards 8-19 Copyright © 2015 McGraw-Hill Education. 84. D. D. No reproduction or distribution without the prior written consent of McGraw-Hill Education. B. Purchases of raw materials for February would be budgeted to be: A.200 pounds 23.56. All rights reserved. B.700 yards 96. 19. C. Each shirt (unit) requires 3 yards of cloth.000 pounds 18. 80 per direct labor-hour.000 pounds 180.228. what would be the total combined direct labor cost for the two months? A.230 $31.000 pounds of material A are on hand to start the year. D. The company guarantees its direct labor workers a 40-hour paid work week. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month. No reproduction or distribution without the prior written consent of McGraw-Hill Education.00 $28.760 hours in total each month even if there is not enough work to keep them busy. The production budget calls for producing 6.50 direct labor-hours. 145.000 pounds 135.000 pounds 140.50 $26. The direct labor rate is $9. C. Morie Corporation is working on its direct labor budget for the next two months. The production budget calls for producing 2. Each unit of output requires 0. With the number of workers currently employed. that means that the company is committed to paying its direct labor work force for at least 1.000 units in March and 2. .000 pounds 59. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 30. $28.115 60.360 $62. Each unit of output requires 0.122. C. What would be the total combined direct labor cost for the two months? A. D. All rights reserved. Prester Corporation has budgeted production for next year as follows: Two pounds of material A are required for each unit produced. B. $30.300 units in April. Milano Corporation is working on its direct labor budget for the next two months. B.400 units in October and 6.870 $31.00 $26.406.58. Budgeted purchases of material A for the second quarter would be: A. D.512.75 direct labor-hours. C. The direct labor rate is $8.50 8-20 Copyright © 2015 McGraw-Hill Education. B.10 per direct labor-hour.300 units in November. Each skirt (unit) requires 2.6 yards of cloth. For July. All rights reserved. The company's budgeted fixed manufacturing overhead is $96.10 direct labor-hours at a cost of $8. and the average hourly cost of Triste's direct labor is $15. Each unit requires 0. . $51. Selected data from Triste's master budget for next quarter are shown below: Each unit requires 1. C.000 units.6 hours of direct labor.000 $210.160 $600 $5.750 $46.060 $142. D. $336. The variable overhead rate is $9. How much will White Corporation budget for labor in July? A. B.50 per direct labor-hour. The direct labor budget indicates that 4. No reproduction or distribution without the prior written consent of McGraw-Hill Education.61.000 $5. D.000 63. The manufacturing overhead budget at Amrein Corporation is based on budgeted direct labor-hours. which includes depreciation of $7.900 direct labor-hours will be required in August.690 $134.000 $150. C. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. All other fixed manufacturing overhead costs represent current cash flows. B.100 62. White Corporation has budgeted production of 6.350. B. What is the cost of Triste Corporation's direct labor in September? A.040 per month.100 8-21 Copyright © 2015 McGraw-Hill Education.000 $240.40 per direct labor-hour. Triste Corporation manufactures and sells women's skirts. D. $88. C. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. B.40 $8. The company's budgeted fixed manufacturing overhead is $20.50 $17.50 per direct labor-hour. D. The company's budgeted fixed manufacturing overhead is $133.90 per direct labor-hour.600. The direct labor budget indicates that 7. The company recomputes its predetermined overhead rate every month. The company recomputes its predetermined overhead rate every month.300 direct labor-hours will be required in March. which includes depreciation of $19. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8. .00 65. B. Axsom Inc. The manufacturing overhead budget at Pendley Corporation is based on budgeted direct labor-hours. The predetermined overhead rate for August should be: A.90 66.50 $15. bases its manufacturing overhead budget on budgeted direct laborhours. Morrish Inc. $5. All rights reserved. which includes depreciation of $2. The predetermined overhead rate for March should be: A.070 8-22 Copyright © 2015 McGraw-Hill Education.30 $15. All other fixed manufacturing overhead costs represent current cash flows.100 direct labor-hours will be required in January. $22.780 $83. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The variable overhead rate is $8.10 $20.500 per month.64. B. which includes depreciation of $30.260. C. The company's budgeted fixed manufacturing overhead is $102.020 per month. The direct labor budget indicates that 1. The variable overhead rate is $5. C.950 per month. The variable overhead rate is $1. D. $115.80 per direct labor-hour.730 $95.900 direct labor-hours will be required in August. D.850 $12. All other fixed manufacturing overhead costs represent current cash flows. C.880.30 $24. All other fixed manufacturing overhead costs represent current cash flows. D.800 per month. the company needs to borrow: A. The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be: A. $110.400 $118. To attain its desired ending cash balance for May.000 and budgeted cash disbursements total $124. The desired ending cash balance is $60. The remainder of the fixed selling and administrative expense represents current cash flows. The variable selling and administrative expense is $8.720 $110. D. is working on its cash budget for May.820 69.67. The budgeted beginning cash balance is $45.580 per month.600 units are planned to be sold in April. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 $10.000 8-23 Copyright © 2015 McGraw-Hill Education.800 $64. D. which includes depreciation of $16.000. $191.800 units for February.400 $93. C.000 $0 $60. All rights reserved. C.600 68.020 $182. The selling and administrative expense budget of Ruffing Corporation is based on budgeted unit sales.10 per unit. $38. The budgeted fixed selling and administrative expense is $71. B. . The sales budget shows 6.880 $54. C. bases its selling and administrative expense budget on budgeted unit sales. The variable selling and administrative expense is $9.70 per unit. which includes depreciation of $8.000.380 per month. B. which are 4. Laurey Inc. B. Budgeted cash receipts total $129. Vandel Inc.520 per month. The budgeted fixed selling and administrative expense is $127. The cash disbursements for selling and administrative expenses on the February selling and administrative expense budget should be: A.000. The remainder of the fixed selling and administrative expense represents current cash flows. If the desired May 31 cash balance is $20. Cash disbursements during the month are expected to total $52. Budgeted cash receipts total $114. The budgeted beginning cash balance is $41.000 $4.000.000.000 72. All rights reserved. B.000.000 and budgeted cash disbursements total $113. C. . The company's cash balance on May 1 is $17. B. Sparks Corporation has a cash balance of $7. For May. $4. The excess (deficiency) of cash available over disbursements for January will be: A.000.000 $8.000 8-24 Copyright © 2015 McGraw-Hill Education. D. D.000.000 $12.500 $2.500 $6.000 71. The desired ending cash balance is $60. $42.000.500 on April 1.000 $16. $3.000. during April the company will need to borrow: A.000 and its cash disbursements at $138. is working on its cash budget for January. C.000.000. Arakaki Inc. C.000 $1.70. D. then how much cash must the company borrow during the month (before considering any interest payments)? A. No reproduction or distribution without the prior written consent of McGraw-Hill Education. During April. The company must maintain a minimum cash balance of $6. Young Corporation has budgeted its cash receipts at $125. Ignoring interest payments. B.000 $40. expected cash receipts are $48.000 $155. No reproduction or distribution without the prior written consent of McGraw-Hill Education. D. D.000 $215. B. The budgeted accounts receivable balance on February 28 would be: A. C. $680. The budgeted cash receipts for April would be: A.500 The Khaki Corporation has the following budgeted sales data: The regular pattern of collection of credit sales is 40% in the month of sale. D. $350.000 75. B. Harrti Corporation has budgeted for the following sales: Sales are collected as follows: 10% in the month of sale.000 $612. and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31. C.000 $320.000 $383. 74. $250. 60% in the month following the sale. B.000 8-25 Copyright © 2015 McGraw-Hill Education. and the remainder in the second month following the month of sale.000 $826.000 $210. 50% in the month following sale. All rights reserved. There are no bad debts.000 $175.73.500 $214. C. .000 $313. at what amount will accounts receivable be shown? A. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 $28. Based on experience from its other retail outlets.000 $97.000 $12. The March 31 balance in accounts receivable will be: A. the total cash receipts will be: A.000 $95.000 $75.000 $60.000 $114. the balance in accounts receivable on January 31 will be: A. $100. $74. Home Corporation is making the following sales projections: Home Corporation estimates that 70% of the credit sales will be collected in the month following the month of sale. B. C. Based on these data. C. D. B. $40. . All rights reserved. 76. D. with the balance collected in the second month following the month of sale.000 77. B. C. D.Home Corporation will open a new store on January 1.000 78. In a cash budget for April.000 $57.000 8-26 Copyright © 2015 McGraw-Hill Education.000 $58. 000 represents uncollected December sales and $10. D. B. Of this amount. $81.000 $345.000 $141. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 represents uncollected November sales.Richards Corporation has the following budgeted sales for the first half of next year: The company is in the process of preparing a cash budget and must determine the expected cash collections by month. C. All rights reserved. What is the budgeted accounts receivable balance on May 30? A. D. C.000 $68. To this end.000 $360.000. B. $60.000 80.000 8-27 Copyright © 2015 McGraw-Hill Education. the following information has been assembled: The accounts receivable balance on January 1 is $70. 79.000 $420. The total cash collected during January would be: A. $270.000 $60. . $340. C. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000. and 3% uncollectible.000 8-28 Copyright © 2015 McGraw-Hill Education.000 $328. • The cost of goods sold is 75% of sales. • Other monthly expenses to be paid in cash are $21.500 $255.100 82. D. D. 17% in the month following the sale.000 $178. $340.000 for January.100 $272. • The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. $225. . • Ignore taxes.000 for November.000 for December.Bracken Corporation is a small wholesaler of gourmet food products. Expected cash collections in December are: A. Payment for merchandise is made in the month following the purchase. All rights reserved. Data regarding the store's operations follow: • Sales are budgeted at $330. • Monthly depreciation is $19.800.500 $247. The cost of December merchandise purchases would be: A. and $340. 81. C. B.000 $56. B. • Collections are expected to be 80% in the month of sale. 000 for November. • Monthly depreciation is $20. • Collections are expected to be 80% in the month of sale.550 $53. and 1% uncollectible.000 $255. No reproduction or distribution without the prior written consent of McGraw-Hill Education.83.500 $225. D. Payment for merchandise is made in the month following the purchase. • The cost of goods sold is 65% of sales.000 for January.550 $87. • Ignore taxes. and $210. December cash disbursements for merchandise purchases would be: A. All rights reserved. • The company desires to have an ending merchandise inventory at the end of each month equal to 60% of the next month's cost of goods sold. $230.750 84.550 Dilbert Farm Supply is located in a small town in the rural west.000 $252. C. D. B. 8-29 Copyright © 2015 McGraw-Hill Education.000. Data regarding the store's operations follow: • Sales are budgeted at $260.000 $19. 19% in the month following the sale. $34. B. • Other monthly expenses to be paid in cash are $20. The difference between cash receipts and cash disbursements for December would be: A.000 for December. . C. $178.300. 000 8-30 Copyright © 2015 McGraw-Hill Education. D.900 88. Expected cash collections in December are: A. C.300 $81. B.500 $153. D.900 $149. C. The cash balance at the end of December would be: A.700 $169. D. All rights reserved.900 89. The net income for December would be: A. .200 $55.900 $93. No reproduction or distribution without the prior written consent of McGraw-Hill Education. B. $230.500 $82.700 $149.000 $81. C. B. The cost of December merchandise purchases would be: A. C.500 $157. The difference between cash receipts and cash disbursements for December would be: A.000 $184.200 $37. B.000 $233.800 $27.85. B. $180. D.400 $49. C. December cash disbursements for merchandise purchases would be: A.400 86.500 87. $55. B. $141.800 90. $60. D. C. D.900 $40.700 $17. $141.800 $37. net of uncollectible accounts. D. C.91.000 (at cost) on January 1. D. $81.000 $263.400 $418. C. Retained earnings at the end of December would be: A.300 $471. All rights reserved.100 $43.000 $250. .000 8-31 Copyright © 2015 McGraw-Hill Education.300 $466. Accounts payable at the end of December would be: A. D. B. $380. Assuming that the Bingham Corporation had inventory on hand of $70. The accounts receivable balance.700 $59. at the end of December would be: A.900 $141. $180.300 92. No reproduction or distribution without the prior written consent of McGraw-Hill Education. a merchandising company: 94.000 $110. the purchases for January (at cost) would be: A. C.500 93.800 $149. C. B. B. D. $46. B.400 The following are budgeted data for the Bingham Corporation.000 $93.700 $81. C.880 units. $180. The inventory on May 31 contained 1.900 units 8-32 Copyright © 2015 McGraw-Hill Education.. Inc.500 $240. C.080 units 98. All rights reserved. Assume that all purchases are paid for in the month following the month of purchase. The cash disbursements for purchases that would appear in the April cash budget would be: A. B.000 96.500 Harris. C.000 $217.95. D. The total number of units produced in July should be: A. D. B.800 units 7. . The company needs to prepare a production budget for the next five months. No reproduction or distribution without the prior written consent of McGraw-Hill Education.260 units 7.460 units 1.880 units 1. 9.000 $160. 97.000 $240. B. has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units. 820 units 1. B. The beginning inventory for September should be: A.000 $300. D. D. The desired ending inventory (at cost) for February would be: A.000 $157. $180.700 units 7. C. 000. 99. B.150 100 The budgeted purchases for July are: . $117. The inventory on May 31 contained 400 units. A. a merchandising firm. D.450 $91. $52. No reproduction or distribution without the prior written consent of McGraw-Hill Education.050 $47.050 $91. The company needs to prepare a production budget for the second quarter of the year. B.000 $63. C.May Corporation. has budgeted sales as follows for the third quarter of the year: Cost of goods sold is equal to 65% of sales.050 Noel Enterprises has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units.000 $76. All rights reserved. The inventory on June 30 is less than this ideal since it is only $65. D. 8-33 Copyright © 2015 McGraw-Hill Education. . The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month. The desired beginning inventory for September is: A.000 $59. The company is now preparing a Merchandise Purchases Budget. C. 220 units 103 The desired ending inventory for August is: .000 units 930. 900.000 units 830. D. D. B. No reproduction or distribution without the prior written consent of McGraw-Hill Education. A.600 units 720 units 102 The total number of units to be produced in July is: .400 units 6. D.000 units 880. be: A. C. The following beginning and ending inventory levels are planned for the year. A. C. 380 units 460 units 4. B. C. A. .000 units 8-34 Copyright © 2015 McGraw-Hill Education. 5. All rights reserved. The company plans to sell 880. 720 units 460 units 540 units 380 units Sarter Corporation is in the process of preparing its annual budget.120 units 5.580 units 5. B. D.000 units during the year.101 The beginning inventory in units for September is: . Each unit of finished goods requires 3 grams of raw material. B. C. 104 The number of units the company would have to manufacture during the year would . The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in material.105 How much of the raw material should the company purchase during the year? . B. B. 50.000 grams 2. 14.000 grams 2.550. A. Four pounds of raw materials are required for each unit produced. . 106 Scheduled production for the third quarter should be: .500 units.200 pounds.480. D.500 units 13.490.000 pounds 8-35 Copyright © 2015 McGraw-Hill Education.500 units 107 Scheduled purchases of raw materials for the second quarter should be: . C. No reproduction or distribution without the prior written consent of McGraw-Hill Education.800 pounds 50. Raw materials on hand at the start of the year total 4.500.800 pounds 55. B.500 units 15. A. A. 2.000 pounds 55.000 grams The TS Corporation has budgeted sales for the year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. The finished goods inventory at the start of the year is 2. C. C.000 grams 2. D. D. All rights reserved.500 units 18. C.00 per direct labor-hour. D.000 units plus 25% of the next month's sales.30 per pound and Material B is purchased for $0. On May 31 there will be 41. C. Expected . .000 130.5 hours of direct labor at the rate of $16.600 51. B. C.Roberts Corporation manufactures home cleaning products.000 units. B. 61. B. The raw materials inventory on hand at the end of each month (for either Material A or Material B) should equal 80% of the following month's production needs.000 109 The number of pounds of Material A needed for production during June would be: . sales in January are 14. One of the products.500 14. The number of units needed to be produced in January would be: A.200 35. A.000 160. Quickclean.000 units and expected sales in February are 18. 8-36 Copyright © 2015 McGraw-Hill Education.600 52.600 pounds of Material A and 104. Management would like you to prepare a Direct Labor Budget for June. A.000 units of Quickclean to be manufactured in July.500 15.50 per pound.000 pounds of Material B in inventory. D.000 units. The finished goods inventory on hand at the end of each month should equal 4.000 LFM Corporation makes and sells a product called Product WZ.000 units of Quickclean to be manufactured in June and 32. D.000 154. All rights reserved. The production budget calls for 26. 10.000 14. requires 2 pounds of Material A and 5 pounds of Material B per unit manufactured.000 110 The number of pounds of Material B to be purchased during June would be: . 128. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 108 Assume that on January 1 the inventory of Quickclean was 8. Material A is purchased from the supplier for $0. Each unit of Product WZ requires 3. The cost of Jurislon is $4.00 $56. No reproduction or distribution without the prior written consent of McGraw-Hill Education. C. D. C.736. this requirement was not met since only 10. Budgeted production of Miniwarps for the next five months is as follows: The company wants to maintain monthly ending inventories of Jurislon equal to 30% of the following month's production needs.280 8-37 Copyright © 2015 McGraw-Hill Education. A. The finished goods .000 Cashan Corporation makes and sells a product called a Miniwarp.460 $44. B.00 112 The company plans to sell 31.640 $29. 113 The desired ending inventory of Jurislon for September is: .000 $504. $29.764. C. B. respectively. B.5 kilograms of the raw material Jurislon. All rights reserved.400 kilograms of Jurislon were on hand. .000 $1. $4. Budgeted direct labor costs for June would be: A. One Miniwarp requires 1.000 $1.00 per kilogram.57 $19. D. On July 31. The company wants to prepare a Direct Materials Purchase Budget for the next five months. D.708.50 $16. A. inventories on June 1 and June 30 are budgeted to be 100 and 600 units. $1.520 $44.000 units of Product WZ in June.111 The budgeted direct labor cost per unit of Product WZ would be: . Budgeted production of Product R for the next five months is as follows: The company wants to maintain monthly ending inventories of Material K equal to 30% of the following month's production needs. B.350 $24. No reproduction or distribution without the prior written consent of McGraw-Hill Education.050 yards 12. makes and sells a single product.500 yards 13. On July 31. C.150 yards 8-38 Copyright © 2015 McGraw-Hill Education.80 per yard.120 $30.114 The total cost of Jurislon to be purchased in August is: . D. B. Inc. $47.280 116 The desired ending inventory of Material K for September is: . Product R. All rights reserved.400 $191.000 Cowles Corporation. A.750 yards 12. $149. C. this requirement was not met because only 3.860 $252. D. C. . D. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. Three yards of Material K are needed to make one unit of Product R. A. B. 12.650 $38. 115 The total cost of Material K to be purchased in August is: . The cost of Material K is $0.460 $147.500 yards of Material K were on hand. A. 117 The total needs (i.e., production requirements plus desired ending inventory) of . Material K for November are: A. B. C. D. 40,800 yards 44,940 yards 37,380 yards 52,410 yards Adi Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The remaining 70% is paid for in the month following the purchase. 118 How much cash should Adi expect to pay out for raw material purchases during . November? A. B. C. D. $896,000 $392,000 $644,000 $252,000 119 In Adi's budgeted balance sheet at December 31, at what amount will accounts . payable for raw materials be shown? A. B. C. D. $760,000 $532,000 $228,000 $588,000 The Gerald Corporation makes and sells a single product called a Clop. Each Clop requires 1.1 direct labor-hours at $8.20 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. The company is preparing a Direct Labor Budget for the first quarter of the year. 8-39 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 120 The budgeted direct labor cost per Clop is closest to: . A. B. C. D. $7.45 $8.20 $9.02 $9.76 121 If the company has budgeted to produce 20,000 Clops in January, then the budgeted . direct labor cost for January is: A. B. C. D. $164,000 $180,400 $172,200 $195,600 122 If the budgeted direct labor cost for February is $162,360, then the budgeted . production of Clops for February is: A. B. C. D. 23,200 units 21,000 units 19,800 units 18,000 units The LFG Corporation makes and sells a single product, Product T. Each unit of Product T requires 1.4 direct labor-hours at a rate of $9.80 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. LFG Corporation needs to prepare a Direct Labor Budget for the second quarter of next year. 123 The budgeted direct labor cost per unit of Product T is closest to: . A. B. C. D. $9.80 $11.83 $7.00 $13.72 8-40 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 124 The company has budgeted to produce 24,000 units of Product T in June. The . finished goods inventories on June 1 and June 30 were budgeted at 600 and 800 units, respectively. Budgeted direct labor costs for June would be: A. B. C. D. $332,024 $329,280 $235,200 $326,536 The Covey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $4.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $64,000 per month, of which $18,000 is factory depreciation. 125 If the budgeted direct labor time for October is 8,000 hours, then the total budgeted . manufacturing overhead for October is: A. B. C. D. $96,000 $78,000 $64,000 $76,000 126 If the budgeted cash disbursements for manufacturing overhead for November are . $90,000, then the budgeted direct labor-hours for November must be: A. B. C. D. 11,000 direct labor-hours 22,500 direct labor-hours 6,500 direct labor-hours 2,000 direct labor-hours 127 If the budgeted direct labor time for December is 4,000 hours, then the average . budgeted manufacturing overhead per direct labor-hour is: A. B. C. D. $16.00 per direct labor-hour $15.50 per direct labor-hour $20.00 per direct labor-hour $24.50 per direct labor-hour Cartier Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $5.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $39,930 per month, which includes depreciation of $12,870. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,300 direct labor-hours will be required in April. 8-41 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 140 129 The company recomputes its predetermined overhead rate every month. B. All rights reserved.10 per direct labor-hour Davey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. of which $10.000 131 If the budgeted direct labor time for November is 9. $28.000 $37. C. then the total . D.000 8-42 Copyright © 2015 McGraw-Hill Education.00 per direct labor-hour.000 $74. 130 If the budgeted direct labor time for October is 6.00 per direct labor-hour $5.070 $46. $56.000 $93. $59.000 $83. C. budgeted cash disbursements for manufacturing overhead for November must be: A.80 per direct labor-hour $17. B. manufacturing overhead for October is: A.060 $19. overhead budget should be: A.128 The April cash disbursements for manufacturing overhead on the manufacturing .000 hours. The budgeted variable manufacturing overhead rate is $3. B. C. B. the budgeted fixed manufacturing overhead is $66. predetermined overhead rate for April should be: A. then the total budgeted . D.90 per direct labor-hour $12. D.000 is factory depreciation.000 $84. D.000 $56.000 per month.200 $27. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The .000 hours. C. . $14. B.060 per month. The company's budgeted fixed manufacturing overhead is $28. The variable overhead rate is $1.600. All rights reserved. $3. D.300 direct labor-hours will be required in January. predetermined manufacturing overhead per direct labor-hour for December would be: A.20 per direct labor-hour 134 The January cash disbursements for manufacturing overhead on the manufacturing . B.300 $23. C.360 $2.000 hours. predetermined overhead rate for January should be: A.20 per direct labor-hour $11. The direct labor budget indicates that 2. $1. D. D.50 $17.00 per direct labor-hour.00 The manufacturing overhead budget at Cardera Corporation is based on budgeted direct labor-hours.00 $19.20 per direct labor-hour $13.00 per direct labor-hour $12.460 $25. The . which includes depreciation of $4. All other fixed manufacturing overhead costs represent current cash flows. B. No reproduction or distribution without the prior written consent of McGraw-Hill Education. $30. then the . overhead budget should be: A.132 If the budgeted direct labor time for December is 4.50 $5. .760 8-43 Copyright © 2015 McGraw-Hill Education. 133 The company recomputes its predetermined overhead rate every month. C. C. 000 Yutes in November. B. .000 $280. 135 If the company has budgeted to sell 19. . budgeted selling and administrative expenses for November would be: A.200. B.000 $494. C.000 $266.000 $536. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred.500 units 13.Poriss Corporation makes and sells a single product called a Yute.000 Yutes in December.300 units 12. C.000 136 If the company has budgeted to sell 16. D.000 $504.000 137 If the total budgeted selling and administrative expense for October is $459. 13. total cash disbursements for selling and administrative expenses for December would be: A. D. D.000 units 12. then how many Yutes does the company plan to sell in October? A. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the year. $280.000 $224. B. C.800 units 8-44 Copyright © 2015 McGraw-Hill Education. then the total . All rights reserved. $546. then the budgeted . No reproduction or distribution without the prior written consent of McGraw-Hill Education. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. B.000 Debs in March. D. then the average .000 $39.000 $100.00 per unit $8.000 Debs in January. The company is in the process of preparing its Selling and Administrative Expense Budget for next year.000 Debs in February.80 per unit 8-45 Copyright © 2015 McGraw-Hill Education. budgeted selling and administrative expenses per unit sold for March is closest to: A. All rights reserved. C. $34. then the total budgeted . $75.000 140 If the company has budgeted to sell 20. then the total .The Prattle Corporation makes and sells only one product called a Deb.50 per unit $6. B. C. budgeted fixed selling and administrative expenses for February is: A. $7. C. D. 138 If the company has budgeted to sell 17.500 139 If the company has budgeted to sell 16. variable selling and administrative expenses for January will be: A.80 per unit $9. No reproduction or distribution without the prior written consent of McGraw-Hill Education.100 $18. D. B.700 $25. .000 $70.000 $110. Budgeted cash receipts total $150.000 $0 $50. A. B.000 $27. A. B. . C. $18.000) 145 To attain its desired ending cash balance for April. 144 The excess (deficiency) of cash available over disbursements for April will be: . the company needs to borrow: .000 and budgeted cash disbursements total $139. C.141 If the budgeted cash disbursements for selling and administrative expenses for April .000 $2.000 units 19. C. Budgeted cash receipts total $141. D. The desired ending cash balance is $50.000.000 $57. D. A. then how many Debs does the company plan to sell in April? A.000 Muecke Inc. D. $32. B. B.000. total $144.000 $48. $30. D.390.000.000 $0 $3.000 143 To attain its desired ending cash balance for July.250 units 20. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 ($8. All rights reserved. the company should borrow: . A.500 units 18. The budgeted beginning cash balance is $40.000. C.000 and budgeted cash disbursements total $158. The budgeted beginning cash balance is $25. 17. is working on its cash budget for April.000. The desired ending cash balance is $30.000 $82. 142 The excess (deficiency) of cash available over disbursements for July is: .300 units Rogers Corporation is preparing its cash budget for July. B.000 $166.000 8-46 Copyright © 2015 McGraw-Hill Education. C.000.000 $190. $23. D. • The planned merchandise inventory on November 30 is $230.000 147 The budgeted cash disbursements for November are: . All rights reserved.000.The Adams Corporation.000 8-47 Copyright © 2015 McGraw-Hill Education.000. C. No reproduction or distribution without the prior written consent of McGraw-Hill Education. C.000 for November and are paid for in cash. A. D.000 $135. C.000 $75. has budgeted its activity for November according to the following information: • Sales at $450.000 $530.000 $68. all for cash. • The cost of goods sold is 70% of the selling price. • There is no interest expense or income tax expense.000 $405. B. A.000 148 The budgeted net income for November is: .000 $375.000 $135.000 $475.000. $345. $50. .000. • Merchandise inventory on October 31 was $200. 146 The budgeted cash receipts for November are: . A. • Budgeted depreciation for November is $25. B. • All purchases are paid for in cash. D. a merchandising firm. D.000. • The cash balance November 1 was $18.000 $450. B. • Selling and administrative expenses are budgeted at $60. $315. Payment for merchandise is made in the month following the purchase.000 $195.000. • The cost of goods sold is 65% of sales. $390. • The company desires to have an ending merchandise inventory equal to 80% of the following month's cost of goods sold.800 150 The cash balance at the end of December would be: .400 $82. and 3% uncollectible.400 $114.000 for December.000 for January.000. D. All rights reserved. • Other monthly expenses to be paid in cash are $22. D.400 $13. C.Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. • Monthly depreciation is $20.000 for November. Data regarding the store's operations follow: • Sales are budgeted at $380. . • Collections are expected to be 70% in the month of sale. A.400 8-48 Copyright © 2015 McGraw-Hill Education. B. $182. and $400.500 $94. 27% in the month following the sale.500 $101. C. $114. B. 149 The net income for December would be: . No reproduction or distribution without the prior written consent of McGraw-Hill Education. • Ignore taxes. A. All rights reserved.000 $258. at the end of .700 $208.151 The accounts receivable balance. B. D.400 $422. C. C. $105.700 $117.000 $207. B.900 152 Accounts payable at the end of December would be: .300 $88.500 $50.000 $445. No reproduction or distribution without the prior written consent of McGraw-Hill Education. B. $259. December would be: A.700 153 Retained earnings at the end of December would be: .600 $342. $253. . D. C. D. net of uncollectible accounts.100 Essay Questions 8-49 Copyright © 2015 McGraw-Hill Education. A. A. 000. 16% in the month following the sale. Prepare a Schedule of Expected Cash Collections for November and December. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. • The November beginning balance in the accounts receivable account is $78. b. • The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month.154 Caprice Corporation is a wholesaler of industrial goods. and 4% uncollectible. • The cost of goods sold is 70% of sales. and $300. Prepare a Merchandise Purchases Budget for November and December. Required: a. $320. Payment for merchandise is made in the month following the purchase.000 for January. 8-50 Copyright © 2015 McGraw-Hill Education.000.000 for December. operations follow: • Sales are budgeted at $350.000 for November. Data regarding the store's . • The November beginning balance in the accounts payable account is $254. . • Collections are expected to be 80% in the month of sale. Selling and administrative expenses will amount to $100. Prepare a schedule for each month showing budgeted cash disbursements for Clay Corporation. b. of the coming year as follows: Cash-related production costs are budgeted at $5 per unit produced.000 per month. Cash collections from sales are budgeted at 60% in the month of sale.000. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . All units are sold on account for $14 each. which will be paid in April. and the remaining 10% in the second month following the month of sale. Prepare a schedule for each month showing budgeted cash receipts for Clay Corporation.155 Clay Corporation has projected sales and production in units for the second quarter . 40% are paid in the month in which they are incurred and the balance in the following month.000 from March's sales). Required: a.000 from February's sales and $410.000 ($90. Accounts receivable on April 1 totaled $500. The accounts payable balance on March 31 totals $190. Of these production costs. 30% in the month following the month of sale. 8-51 Copyright © 2015 McGraw-Hill Education. boomerang sales (in units) for the upcoming months are as follows: Mate likes to maintain a finished goods inventory equal to 10% of the next month's estimated sales.156 Mate Boomerang Corporation manufactures and sells plastic boomerangs. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Required: How many ounces of plastic resin should Mate plan on purchasing during the month of October? 8-52 Copyright © 2015 McGraw-Hill Education. Mate likes to have enough plastic resin on hand at the end of the month to cover 25% of the next month's production requirements. Seven ounces of plastic resin are needed to produce every boomerang. . Expected . All rights reserved. • Collections are expected to be 75% in the month of sale. Prepare a Schedule of Expected Cash Collections for November and December. and 5% uncollectible.000 for December. $380. c. Prepare Budgeted Income Statements for November and December. • Monthly depreciation is $20.000 for January. d. Data regarding the store's operations follow: • Sales are budgeted at $360.000 for November. Prepare a Budgeted Balance Sheet for the end of December. • The cost of goods sold is 65% of sales. All rights reserved. 8-53 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000. • Ignore taxes. .900. Prepare Cash Budgets for November and December.157 Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to . • The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month. e. b. Prepare a Merchandise Purchases Budget for November and December. Required: a. and $350. industry. • Payment for merchandise is made in the month following the purchase. • Other monthly expenses to be paid in cash are $21. 20% in the month following the sale. All rights reserved. McCracken expects to have $24.000. and the remaining 2% are uncollectible. 8-54 Copyright © 2015 McGraw-Hill Education. 58% in the month following the sale. No reproduction or distribution without the prior written consent of McGraw-Hill Education. McCracken wants to maintain a cash balance of $15. . Forty percent are collected in the month of sale.000 of cash on hand at the beginning of May. Merchandise purchases are paid in full the month following the month of purchase. Required: Prepare McCracken's cash budget for May. All other selling and administrative expenses are paid as incurred.000. Any amount below this can be borrowed from a local bank as needed in increments of $1. All borrowings are made at month end.158 The following information is budgeted for McCracken Plumbing Supply Corporation . The selling and administrative expenses above include $8.000 of depreciation on display fixtures and warehouse equipment. for next quarter: All sales at McCracken are on credit. . From experience. along with your answer to part (a) above. All rights reserved. Required: a. The company can borrow in any dollar amount. has planned the following sales for the . Compute the budgeted cash receipts for June. a merchandising firm. b. Clearly show any borrowing needed during the month.000 to start a month. No reproduction or distribution without the prior written consent of McGraw-Hill Education. prepare a cash budget for June. Assume the following budgeted data for June: Using this data. but will not pay any interest until the following month. 8-55 Copyright © 2015 McGraw-Hill Education. the company has learned that a month's sales on account are collected according to the following pattern: The company requires a minimum cash balance of $4. next four months: Sales are made 40% for cash and 60% on account.159 The Fraley Corporation. . August and September).160 Bredder Supply Corporation manufactures and sells cotton gauze. Include a column for each month and a total column for the entire quarter. 8-56 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved. Required: Prepare the company's production budget for the third quarter of this year (the months of July. Expected sales of . gauze (in boxes) for upcoming months are as follows: Management likes to maintain a finished goods inventory equal to 20% of the next month's estimated sales. March. However. b.000 units. February. Prepare a budget showing the required production each month for January. and March. The inventory of finished goods at the end of each month must equal 20% of the next month's sales. This requirement had been met on January 1 of the current year. All rights reserved. the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs. Prepare a budget showing the quantity of switches to be purchased each month for January.161 A sales budget is given below for one of the products manufactured by the OMI Co. February. 8-57 Copyright © 2015 McGraw-Hill Education. Each unit of product requires three pounds of specialized material. Required: a.: . Since the production of this specialized material by OMI's suppliers is sometimes irregular. and April. on December 31 the finished goods inventory totaled only 4. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . 500 units. All rights reserved. b.162 Chow Corporation manufactures children's chairs made of PVS plastic tubing and . Prepare schedules showing purchase requirements for PVC tubing and for material for each of the months of June. Prepare a production budget for each of the months of June.000 feet of PVC tubing and 6. July and August. Assume 16. Budgeted sales are 20.000 chairs for July and 30. heavy canvas material.000 chairs for June. 25. July and August. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Assume the beginning inventory of chairs in June will be 2. Each chair requires eight feet of the PVC tubing and three yards of material. .000 chairs for August. 8-58 Copyright © 2015 McGraw-Hill Education.000 yards of material are on hand at the beginning of June. Required: a. Ending finished goods inventory is budgeted at 10% of the current month's sales. Ending materials inventories are budgeted at 10% of the current month's production. To prevent against stock outs of the fabric. Budgeted production of blouses is given below for the fourth quarter and the first month of the following quarter. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Required: Prepare a direct materials budget for the fabric.163 Two yards of a fabric are required for each blouse produced by Northern Shirt . 8-59 Copyright © 2015 McGraw-Hill Education.600 yards. The cost of the fabric is $4 per yard. The beginning inventory of the fabric in October will be 3. by month and in total for the fourth quarter. the company maintains an ending inventory each month equal to 10% of the next month's production needs. All rights reserved. Be sure to include both the quantity to be purchased and its cost for each month. Corporation. . The direct labor rate is $8. Required: Prepare a direct labor budget for the upcoming fiscal year. Each unit requires 0. 165 Rehmer Corporation is working on its direct labor budget for the next two months. The production budget calls for producing 2.164 The production department of Tadris Corporation has submitted the following .90 per direct labor-hour. assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month. Required: Construct the direct labor budget for the next two months. 8-60 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education.600 units in June and 2. . forecast of units to be produced by quarter for the upcoming fiscal year.61 direct labor-hours. assuming that the direct labor work force is adjusted each quarter to match the number of hours required to produce the budgeted production.100 units in July. All rights reserved.00 per hour.25 direct labor-hours at $18. Each unit of output requires 0. . The company guarantees its direct labor workers a 40-hour paid work week. The production budget calls for producing 4. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.166 Kouba Corporation is working on its direct labor budget for the next two months.000 units in April and 3. . With the number of workers currently employed. Required: Construct the direct labor budget for the next two months. 8-61 Copyright © 2015 McGraw-Hill Education.400 units in May.20 per direct labor-hour.23 direct labor-hours. Each unit of output requires 0. . that means that the company is committed to paying its direct labor work force for at least 920 hours in total each month even if there is not enough work to keep them busy. The direct labor rate is $11. No reproduction or distribution without the prior written consent of McGraw-Hill Education. .50 per direct labor-hour. The only noncash item included in the fixed manufacturing overhead is depreciation which is $22. Show both manufacturing overhead expense and cash disbursements for manufacturing overhead.000 per quarter. Required: Prepare Faier Corporation's manufacturing overhead budget for the upcoming fiscal year. and the company's fixed manufacturing overhead is $65. All rights reserved.000 per quarter. 8-62 Copyright © 2015 McGraw-Hill Education. The company's variable manufacturing overhead rate is $3. following details concerning budgeted direct labor-hours.167 The direct labor budget of Faier Corporation for the upcoming year contains the . Required: a.000 direct labor-hours will be required in that month.200 per month. b.590 per month.00 per direct labor-hour. Show your work! 8-63 Copyright © 2015 McGraw-Hill Education. Determine the predetermined overhead rate for November. 169 The manufacturing overhead budget of Paparella Corporation is based on budgeted . Determine the cash disbursements for manufacturing overhead for November. .90 per direct labor-hour.168 Edgington Inc. All rights reserved. The company's budgeted fixed manufacturing overhead is $79.700 direct labor-hours will be required in that month. which includes depreciation of $5. Required: a. The company's budgeted fixed manufacturing overhead is $39. The variable overhead rate is $2. All other fixed manufacturing overhead costs represent current cash flows. bases its manufacturing overhead budget on budgeted direct labor. Determine the predetermined overhead rate for November. All other fixed manufacturing overhead costs represent current cash flows. The variable overhead rate is $4. direct labor-hours. Show your work! b. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The November direct labor budget indicates that 6. Determine the cash disbursements for manufacturing overhead for November. hours. which includes depreciation of $21. The November direct labor budget indicates that 3.920.000. which are budgeted to be 2. which includes depreciation of $7.290.360. Required: Prepare the selling and administrative expense budget for April. 171 Skeete Inc. the number of units sold.640 per month.700 units in April. . The variable selling and administrative expense is $1.70 per unit. 8-64 Copyright © 2015 McGraw-Hill Education.720 per month.170 The selling and administrative expense budget of Gullette Corporation is based on . The remainder of the fixed selling and administrative expense represents current cash flows. The budgeted fixed selling and administrative expense is $35. units sold. All rights reserved. The variable selling and administrative expense is $1. bases its selling and administrative expense budget on the number of . The remainder of the fixed selling and administrative expense represents current cash flows.90 per unit. Required: Prepare the selling and administrative expense budget for November. The sales budget shows 3.900 units are planned to be sold in November. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The budgeted fixed selling and administrative expense is $57. which includes depreciation of $9. beginning cash balance is $12. The company can borrow up to $160. 173 Freet Inc. Budgeted cash receipts total $159. Budgeted cash receipts total $126.000. with interest not due until the following month. All rights reserved. . The company can borrow up to $170. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The desired ending cash balance is $20.000. would be needed to attain the desired ending cash balance.000 at any time from a local bank. Required: Prepare the company's cash budget for August in good form. with interest not due until the following month.000 and budgeted cash disbursements total $162.172 Parliman Corporation is preparing its cash budget for August. Required: Prepare the company's cash budget for November in good form. is preparing its cash budget for November. 8-65 Copyright © 2015 McGraw-Hill Education. The desired ending cash balance is $20.000 at any time from a local bank.000.000. The budgeted beginning cash . if any. Make sure to indicate what borrowing. The budgeted .000.000. balance is $11.000 and budgeted cash disbursements total $130. Chapter 08 Master Budgeting Answer Key True / False Questions 1. The basic idea underlying responsibility accounting is that each manager should be held responsible for the overall profit of the company to ensure that all managers are acting together. The cash budget is usually prepared after the budgeted income statement. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement 8-66 Copyright © 2015 McGraw-Hill Education. 3. The manufacturing overhead budget is typically prepared before the production budget. Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management. 2. All rights reserved. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. . FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. 4. No reproduction or distribution without the prior written consent of McGraw-Hill Education. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. a budget is a method for putting a limit on spending. No reproduction or distribution without the prior written consent of McGraw-Hill Education. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. 6. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. . FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement 8-67 Copyright © 2015 McGraw-Hill Education. A continuous or perpetual budget is a budget that almost never needs to be revised. All rights reserved. 7. In business. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets.Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. 8. 5. The sales budget is usually prepared before the production budget. The cash budget is typically prepared before the direct materials budget. Budgets are used to plan and to control operations. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. 9. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved. 13. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. 12. The first budget a company prepares in a master budget is the production budget. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. 8-68 Copyright © 2015 McGraw-Hill Education. 10. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets.Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. 11. A benefit of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack. Planning involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change. One disadvantage of a self-imposed budget is that budget estimates prepared by front-line managers are often less accurate and reliable than estimates prepared by top managers. . No reproduction or distribution without the prior written consent of McGraw-Hill Education. A self-imposed budget is a budget that is prepared with the full cooperation and participation of managers at all levels. The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory. the required merchandise purchases for a period are determined by subtracting the desired ending inventory from the sum of the units to be sold during the period and the units in beginning inventory. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking 8-69 Copyright © 2015 McGraw-Hill Education. All rights reserved. . 17. 18. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. The sales budget often includes a schedule of expected cash collections. 15. including a schedule of expected cash collections. The direct materials budget is typically prepared before the production budget.14. 16. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-02 Prepare a sales budget. In a merchandising company. In companies that do not have "no lay-off" policies. the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate. 22. 20. All rights reserved. 21. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-04 Prepare a direct materials budget. including a schedule of expected cash disbursements for purchases of materials. The manufacturing overhead budget lists all costs of production other than selling and administrative expenses. When preparing a direct materials budget. the units of raw material needed to meet production should be added to desired ending inventory and the beginning inventory for raw materials should be subtracted to determine the amount of raw materials to be purchased.AICPA FN: Measurement Blooms: Remember Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 08-05 Prepare a direct labor budget. 19. The direct labor budget shows the direct labor-hours required to produce the desired ending inventory. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy 8-70 Copyright © 2015 McGraw-Hill Education. . No reproduction or distribution without the prior written consent of McGraw-Hill Education. Multiple Choice Questions 8-71 Copyright © 2015 McGraw-Hill Education. 26. 25. All rights reserved. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-07 Prepare a selling and administrative expense budget.Learning Objective: 08-06 Prepare a manufacturing overhead budget. 24. . TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 08-08 Prepare a cash budget. On a cash budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget. the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment. Only variable manufacturing overhead costs are included in the manufacturing overhead budget. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 08-07 Prepare a selling and administrative expense budget. Both variable and fixed manufacturing overhead costs are included in the selling and administrative expense budget. The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and administrative expense per unit. 23. To communicate management's plans throughout the entire organization. Sales Budget. Budgeted Income Statement Budgeted Balance Sheet.27. B. 28. Budgeted Income Statement Sales Budget. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. To provide a means of allocating resources to those parts of the organization where they can be used most effectively. C. D. . D. 8-72 Copyright © 2015 McGraw-Hill Education. D. 29. Which of the following budgets are prepared before the production budget? A. C. C. Budgeted Balance Sheet AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. Which of the following represents the normal sequence in which the below budgets are prepared? A. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Option A Option B Option C Option D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. Budgeted Income Statement. Sales Budget. B. Budgeted Balance Sheet. All rights reserved. B. Sales Budget. To ensure that the company continues to grow. Budgeted Balance Sheet Budgeted Income Statement. To uncover potential bottlenecks before they occur. Which of the following is NOT an objective of the budgeting process? A. All rights reserved. B. B. The budget method that maintains a constant twelve-month planning horizon by adding a new month on the end as the current month is completed is called: A. D. D. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. C. . 31. 8-73 Copyright © 2015 McGraw-Hill Education. Option A Option B Option C Option D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. Which of the following benefits could an organization reasonably expect from an effective budget program? A.30. a continuous budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. a master budget. a capital budget. C. an operating budget. Individuals at all organizational levels are recognized as being part of a team. 8-74 Copyright © 2015 McGraw-Hill Education. The budget estimates are prepared by those in directly involved in activities. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. the beginning inventory of finished goods. the desired ending inventory of finished goods. Source: CMA. the required materials purchases for the period. C. the required production equals: A. D.desired ending inventory. adapted 33. B.32. When managers set their own targets for the budget. Managers are held responsible for reaching their goals and cannot easily shift responsibility by blaming unrealistic goals set by others.beginning inventory + desired ending inventory. No reproduction or distribution without the prior written consent of McGraw-Hill Education. budgeted sales + beginning inventory . budgeted sales + beginning inventory + desired ending inventory. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-01 Understand why organizations budget and the processes they use to create budgets. Source: CIMA.beginning inventory . this results in greater support for the organization. The direct labor budget is based on: A. D. All rights reserved. B. .desired ending inventory. B. adapted 34. budgeted sales . When preparing a production budget. C. C. budgeted sales . D. except for: A. All the following are considered to be benefits of participative budgeting. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget. top management need not be concerned with the overall profitability of operations. the required production for the period. . Which of the following might be included as a disbursement on a cash budget? A.35. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved. Option A Option B Option C Option D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. D. C. B. 8-75 Copyright © 2015 McGraw-Hill Education. including a schedule of expected cash collections. $27. 8-76 Copyright © 2015 McGraw-Hill Education.500 Cash collections for June: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget. .500 $98. C. No reproduction or distribution without the prior written consent of McGraw-Hill Education.36. The WRT Corporation makes collections on sales according to the following schedule: 25% in month of sale 65% in month following sale 5% in second month following sale 5% uncollectible The following sales have been budgeted: Budgeted cash collections in June would be: A. D. All rights reserved.000 $115. B.500 $71. Source: CMA. Trumbull Corporation budgeted sales on account of $120.000 $192.500 $320. $169. D. including a schedule of expected cash collections. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 for August. D. and the remaining 5% being uncollectible. how much cash should Sioux expect to collect during the month of April? A. C.37. Sioux Corporation is estimating the following sales for the first four months of next year: Sales are normally collected 60% in the month of sale. B.760 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget.880 $194.800 $147.960 $197. 60% will be collected the month after the sale.000 for July. $211. 36% in the second month. Experience indicates that none of the sales on account will be collected in the month of the sale. Based on this information. All rights reserved. . $286. 35% in the month following the sale.500 AACSB: Analytic 8-77 Copyright © 2015 McGraw-Hill Education.000 $94. and $198. B.000 for September. C. The cash receipts from accounts receivable that should be budgeted for September would be: A. and 4% will be uncollectible. adapted 38. 39. B. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 $125. D. Seventy percent of Parlee Corporation's sales are collected in the month of sale. .000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-02 Prepare a sales budget. 25% in the month following sale. 8-78 Copyright © 2015 McGraw-Hill Education. The following are budgeted sales data for the company: Total budgeted cash collections in April would be: A. including a schedule of expected cash collections.000 $210. All rights reserved. $35. C.000 $370. including a schedule of expected cash collections. and 5% in the second month following sale.AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget. 40. Budgeted sales in Acer Corporation over the next four months are given below: Twenty-five percent of the company's sales are for cash and 75% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder are uncollectible. Given these data, cash collections for December should be: A. B. C. D. $103,875 $98,125 $136,375 $119,500 Cash collections for December: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget; including a schedule of expected cash collections. 8-79 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 41. All of Porter Corporation's sales are on account. Sixty percent of the credit sales are collected in the month of sale, 25% in the month following sale, and 10% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data for the company: Cash receipts in April are expected to be: A. B. C. D. $420,000 $545,000 $605,000 $185,000 Cash collections for April: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-02 Prepare a sales budget; including a schedule of expected cash collections. 8-80 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 42. Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. *Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 480,000 units during next year, the number of units it would have to manufacture during the year would be: A. B. C. D. 440,000 480,000 510,000 450,000 units units units units Finished goods: Beginning inventory + Units produced = Ending inventory + Units sold 80,000 + Units produced = 50,000 + 480,000 Units produced = 50,000 + 480,000 - 80,000 = 450,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. Source: CMA, adapted 8-81 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. C.200 = 52. Budgeted sales for September would be (in units): A.10X = 56.650 0. October sales are expected to be 71.150 + X . Frodic Corporation has budgeted sales and production over the next quarter as follows: The company has 4. No reproduction or distribution without the prior written consent of McGraw-Hill Education.10X = 5.000 52.43.5. 8-82 Copyright © 2015 McGraw-Hill Education.000 57. 65. D.90X = 49.000 or 7.0.500 X = 55.000 units of product on hand at July 1. B.000 61.000 55.300 0. All rights reserved.10X . 10% of the next month's sales in units should be on hand at the end of each month. .000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-03 Prepare a production budget.500 units.500 X = 55.000 + 0. JT Department Store expects to generate the following sales for the next three months: JT's cost of gods sold is 60% of sales dollars.400 $314.800 $327. All rights reserved. What dollar amount of merchandise inventory should JT plan to purchase in August? A.44. JT wants a merchandise inventory balance equal to 20% of the following month's expected cost of goods sold. D. B. . C. $257. At the end of each month.800 Merchandise Purchases Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. 8-83 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education.600 $352. Expected mug sales at Fab (in units) for the next three months are as follows: Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales. How many mugs should Fab plan on producing during the month of November? A. 8-84 Copyright © 2015 McGraw-Hill Education. 23. Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs.900 34. No reproduction or distribution without the prior written consent of McGraw-Hill Education. .200 26.800 25. All rights reserved. B. D.45.300 mugs mugs mugs mugs AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. C. The following information was taken from the production budget of Paeke Corporation for next quarter: How many units is the company expecting to sell in the month of February? A.000 135. 132.000 . No reproduction or distribution without the prior written consent of McGraw-Hill Education. .32. B.000 + 32.000 35. C. 8-85 Copyright © 2015 McGraw-Hill Education. All rights reserved.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-03 Prepare a production budget.000 X = 138.46.000 + X . D.35.000 = 138.000 140.000 = 135.000 138. 47.000 units of Product A.500 31.000 units of Product A on hand. All rights reserved. During the month.500 30. D. .000 36.500 units on hand at end of the month. and plans to have 6.500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. C. Barnes Corporation has 8. 8-86 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education. the company plans to sell 30. How many units of Product A must be produced during the month? A. B. 28. On November 1. To guard against stockouts. .000 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. Mutskic Corporation produces and sells Product BetaC. 8-87 Copyright © 2015 McGraw-Hill Education.000 units 80. 83.000 units 77.48. No reproduction or distribution without the prior written consent of McGraw-Hill Education. D. Budgeted sales of Product BetaC over the next four months are: Budgeted production for August would be: A. B. the company requires that 30% of the next month's sales be on hand at the end of each month. C.000 units 107. All rights reserved. 000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. B.500 17. 32.000 units during August. D. and plans to have 7.000 27. . Starg Corporation. B.000 units on hand at the end of the month.500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. If the company has 5.000 25.000 units on hand at the start of the month. 24. a retailer. D.000 18. Parsons Corporation plans to sell 18.500 units on hand at the start of the month. If the company has 9. All rights reserved. 50.000 units of Product X during the month of August.000 units on hand at the end of the month. C. how many units must be produced during the month? A. 8-88 Copyright © 2015 McGraw-Hill Education.500 19. and plans to have 6. plans to sell 25.000 23. C.49. how many units of Product X must be purchased from the supplier during the month? A. B.000 398. 8-89 Copyright © 2015 McGraw-Hill Education. 360.000 units units units units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget.000 362. D. C. All rights reserved. The following information relates to Marter Manufacturing Corporation for next quarter: How many units should the company plan on producing for the month of February? A.51.000 358. . No reproduction or distribution without the prior written consent of McGraw-Hill Education. B.800 8. adapted 8-90 Copyright © 2015 McGraw-Hill Education.52. Source: CMA.400 units units units units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. 7.200 8. Budgeted production for the second quarter of the next year would be: A. D. C. Shocker Corporation's sales budget shows quarterly sales for the next year as follows: Unit sales Corporation policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 8. . All rights reserved. C. All rights reserved. 39.000 36. The inventory of materials at the end of each month should equal 20% of the following month's production needs. 8-91 Copyright © 2015 McGraw-Hill Education.000 pounds pounds pounds pounds AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget.800 38. including a schedule of expected cash disbursements for purchases of materials. Purchases of raw materials for May should be: A. B. D. The following are budgeted data: Two pounds of material are required for each finished unit. No reproduction or distribution without the prior written consent of McGraw-Hill Education.53.200 52. . Inc. 8-92 Copyright © 2015 McGraw-Hill Education. 397. G also likes to have enough garlic on hand at the end of the month to cover 10% of the next month's production requirements for garlic. G's production budget indicated the following units (jars) of gravy to be produced for the upcoming months indicated: Five grams of garlic are needed for every jar of gravy. B. All rights reserved. manufactures garlic gravy. C.500 grams grams grams grams AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget. How many grams of garlic should G plan on purchasing during the month of May? A.500 437. No reproduction or distribution without the prior written consent of McGraw-Hill Education.54. . including a schedule of expected cash disbursements for purchases of materials. G Products.500 399. D.500 407. 60.000 units Direct Materials Budget 132. No reproduction or distribution without the prior written consent of McGraw-Hill Education.0.000 = 48.55.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-04 Prepare a direct materials budget.6X 1. The company is expected to have 30. B.000 X = 60. Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below: Two pounds of raw materials are required to produce one unit of product. All rights reserved. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs.000 pounds of raw materials on hand on January 1. D. 8-93 Copyright © 2015 McGraw-Hill Education. Budgeted production for February should be: A. .000 units 84.4X = 84. C.000 units 54. including a schedule of expected cash disbursements for purchases of materials.000 + 2X .000 units 108. D.000 18.800 pounds pounds pounds pounds Direct Materials Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget. The following are budgeted data: One pound of material is required for each finished unit.000 19. 19. The inventory of materials at the end of each month should equal 20% of the following month's production needs. All rights reserved. 8-94 Copyright © 2015 McGraw-Hill Education. including a schedule of expected cash disbursements for purchases of materials. C.200 23.56. . Purchases of raw materials for February would be budgeted to be: A. No reproduction or distribution without the prior written consent of McGraw-Hill Education. B. D.700 96. C.800 yards yards yards yards Direct Materials Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget.700 98. B. Selected data from Rhett's master budget for next quarter are shown below: How many yards of cloth should Rhett plan on purchasing in May? A. Rhett Corporation manufactures and sells dress shirts. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . including a schedule of expected cash disbursements for purchases of materials.57. 84.100 98. 8-95 Copyright © 2015 McGraw-Hill Education. Each shirt (unit) requires 3 yards of cloth. 58.000 pounds of material A are on hand to start the year. 145. C.000 pounds pounds pounds pounds Direct Materials Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-04 Prepare a direct materials budget.000 180. including a schedule of expected cash disbursements for purchases of materials. . D.000 140. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Prester Corporation has budgeted production for next year as follows: Two pounds of material A are required for each unit produced. B.000 135. All rights reserved. Budgeted purchases of material A for the second quarter would be: A. 8-96 Copyright © 2015 McGraw-Hill Education. A total of 30. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. Each unit of output requires 0.360 $62. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved. Milano Corporation is working on its direct labor budget for the next two months. The production budget calls for producing 6.870 $31.80 per direct labor-hour.230 $31.50 direct labor-hours. 8-97 Copyright © 2015 McGraw-Hill Education.59. C. . If the direct labor work force is fully adjusted to the total direct labor-hours needed each month. D. The direct labor rate is $9.300 units in November.115 Direct Labor Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget.400 units in October and 6. B. what would be the total combined direct labor cost for the two months? A. $30. 60. Each unit of output requires 0.50 Direct Labor Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-05 Prepare a direct labor budget.228.00 $28.75 direct labor-hours. With the number of workers currently employed. Morie Corporation is working on its direct labor budget for the next two months. $28.406. The company guarantees its direct labor workers a 40-hour paid work week.000 units in March and 2. What would be the total combined direct labor cost for the two months? A.300 units in April. D.50 $26. . B. The production budget calls for producing 2.512. The direct labor rate is $8.10 per direct labor-hour. All rights reserved.122. that means that the company is committed to paying its direct labor work force for at least 1.760 hours in total each month even if there is not enough work to keep them busy. 8-98 Copyright © 2015 McGraw-Hill Education. C.00 $26. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 10 direct labor-hours at a cost of $8.000 units. All rights reserved.100 Direct Labor Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget.50 per direct labor-hour. For July. White Corporation has budgeted production of 6. C. D.160 $600 $5. Each unit requires 0. No reproduction or distribution without the prior written consent of McGraw-Hill Education. $51.61. How much will White Corporation budget for labor in July? A.000 $5. B. . 8-99 Copyright © 2015 McGraw-Hill Education. 62. Triste Corporation manufactures and sells women's skirts. C. and the average hourly cost of Triste's direct labor is $15. 8-100 Copyright © 2015 McGraw-Hill Education. B.000 $240. Selected data from Triste's master budget for next quarter are shown below: Each unit requires 1. D.6 hours of direct labor. Each skirt (unit) requires 2. .000 Direct Labor Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-05 Prepare a direct labor budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. $336.000 $210.000 $150. What is the cost of Triste Corporation's direct labor in September? A.6 yards of cloth. All rights reserved. 690 $134. The manufacturing overhead budget at Amrein Corporation is based on budgeted direct labor-hours.63. D. C. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 8-101 Copyright © 2015 McGraw-Hill Education. $88. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. The direct labor budget indicates that 4.900 direct labor-hours will be required in August. .350.100 Manufacturing Overhead Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget.040 per month. The company's budgeted fixed manufacturing overhead is $96. B.060 $142.40 per direct laborhour. The variable overhead rate is $9.750 $46. All other fixed manufacturing overhead costs represent current cash flows. All rights reserved. which includes depreciation of $7. No reproduction or distribution without the prior written consent of McGraw-Hill Education.50 $15. The direct labor budget indicates that 8. The manufacturing overhead budget at Pendley Corporation is based on budgeted direct labor-hours. .260. which includes depreciation of $30.50 $17.900 direct labor-hours will be required in August. 8-102 Copyright © 2015 McGraw-Hill Education. The company's budgeted fixed manufacturing overhead is $133. The predetermined overhead rate for August should be: A. The company recomputes its predetermined overhead rate every month. D.64.10 $20.50 per direct laborhour. The variable overhead rate is $5. B. C. $5. All rights reserved. All other fixed manufacturing overhead costs represent current cash flows.00 Manufacturing Overhead Rate AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget.500 per month. 300 direct labor-hours will be required in March. The company recomputes its predetermined overhead rate every month.30 $24. 8-103 Copyright © 2015 McGraw-Hill Education. B. C. The company's budgeted fixed manufacturing overhead is $20.65. The direct labor budget indicates that 1. The variable overhead rate is $8.30 $15. Axsom Inc.40 $8.020 per month. $22.90 per direct labor-hour. The predetermined overhead rate for March should be: A. All other fixed manufacturing overhead costs represent current cash flows. No reproduction or distribution without the prior written consent of McGraw-Hill Education.90 Manufacturing Overhead Rate AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget. bases its manufacturing overhead budget on budgeted direct laborhours. . D. which includes depreciation of $2.600. All rights reserved. C. All other fixed manufacturing overhead costs represent current cash flows. Morrish Inc.80 per direct labor-hour. . The direct labor budget indicates that 7. 8-104 Copyright © 2015 McGraw-Hill Education.66.850 $12.070 Manufacturing Overhead Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget.880. $115. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A.780 $83.950 per month.100 direct labor-hours will be required in January. The company's budgeted fixed manufacturing overhead is $102. bases its manufacturing overhead budget on budgeted direct laborhours. No reproduction or distribution without the prior written consent of McGraw-Hill Education. B. The variable overhead rate is $1.730 $95. All rights reserved. which includes depreciation of $19. D. which includes depreciation of $16. 8-105 Copyright © 2015 McGraw-Hill Education. D.520 per month. The budgeted fixed selling and administrative expense is $71. The cash disbursements for selling and administrative expenses on the February selling and administrative expense budget should be: A.600 Selling and Administrative Expense Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-07 Prepare a selling and administrative expense budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The remainder of the fixed selling and administrative expense represents current cash flows. The selling and administrative expense budget of Ruffing Corporation is based on budgeted unit sales. B. $38.400 $93.800 per month.880 $54.720 $110. which are 4.67.800 units for February.10 per unit. C. All rights reserved. . The variable selling and administrative expense is $8. B. bases its selling and administrative expense budget on budgeted unit sales.820 Selling and Administrative Expense Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-07 Prepare a selling and administrative expense budget. D.380 per month.800 $64.600 units are planned to be sold in April.580 per month.400 $118. 8-106 Copyright © 2015 McGraw-Hill Education. The remainder of the fixed selling and administrative expense represents current cash flows. $191. C. . No reproduction or distribution without the prior written consent of McGraw-Hill Education.68.70 per unit. The sales budget shows 6.020 $182. which includes depreciation of $8. All rights reserved. The budgeted fixed selling and administrative expense is $127. Vandel Inc. The variable selling and administrative expense is $9. The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be: A. D.000 $155. B. C. All rights reserved.000 $0 $60.000 $10. is working on its cash budget for January. Budgeted cash receipts total $114. The desired ending cash balance is $60.000. The budgeted beginning cash balance is $41. $42. The desired ending cash balance is $60. D.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget.000.000.000. Laurey Inc. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 and budgeted cash disbursements total $124. 70. The budgeted beginning cash balance is $45. is working on its cash budget for May. C.000 and budgeted cash disbursements total $113.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. $110. The excess (deficiency) of cash available over disbursements for January will be: A. B.000 $40. Arakaki Inc.000 $1.000.69. Budgeted cash receipts total $129. 8-107 Copyright © 2015 McGraw-Hill Education. the company needs to borrow: A. To attain its desired ending cash balance for May.000. . C. then how much cash must the company borrow during the month (before considering any interest payments)? A. During April. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement 8-108 Copyright © 2015 McGraw-Hill Education.000 $16. Sparks Corporation has a cash balance of $7. 72.500 $6. $3. All rights reserved.000 The company will need to borrow $16. Cash disbursements during the month are expected to total $52. The company must maintain a minimum cash balance of $6.000. B.000 to have an ending cash balance of $20.500 $2. Young Corporation has budgeted its cash receipts at $125.000.000 $8.000.71. . AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. D.500 on April 1.000 and its cash disbursements at $138. Ignoring interest payments. D.000. C. $4. For May.000 The company will need to borrow $2.000 $4. The company's cash balance on May 1 is $17. No reproduction or distribution without the prior written consent of McGraw-Hill Education. expected cash receipts are $48. during April the company will need to borrow: A. If the desired May 31 cash balance is $20.000.000 $12. B.500 to maintain its minimum cash balance of $6.000.000.000. 500 $214. D. C. Harrti Corporation has budgeted for the following sales: Sales are collected as follows: 10% in the month of sale. . 60% in the month following the sale. No reproduction or distribution without the prior written consent of McGraw-Hill Education. at what amount will accounts receivable be shown? A. 50% in the month following sale. All rights reserved. 73. In Razz's budgeted balance sheet at December 31. B. 8-109 Copyright © 2015 McGraw-Hill Education. The Khaki Corporation has the following budgeted sales data: The regular pattern of collection of credit sales is 40% in the month of sale. $680.500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-10 Prepare a budgeted balance sheet. and the remainder in the second month following the month of sale. There are no bad debts.000 $826.000 $612. and the remaining 30% in the second month following the sale.Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. including a schedule of expected cash collections. C.000 $215.000 $175. B.000 $383. D.000 $210.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget. $250. including a schedule of expected cash collections. The budgeted cash receipts for April would be: A. C. .74. B. The budgeted accounts receivable balance on February 28 would be: A.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 $320. D. All rights reserved.000 $313. 75. 8-110 Copyright © 2015 McGraw-Hill Education. $350. 000 100% × $40. with the balance collected in the second month following the month of sale. B.000 $60. D. C. B. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Based on these data. C.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget.000 $58. $100.000 $12.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-02 Prepare a sales budget.000 = $40. 8-111 Copyright © 2015 McGraw-Hill Education. 76. 77. All rights reserved. . including a schedule of expected cash collections. Home Corporation is making the following sales projections: Home Corporation estimates that 70% of the credit sales will be collected in the month following the month of sale.000 $95. including a schedule of expected cash collections. Based on experience from its other retail outlets.000 $28. the balance in accounts receivable on January 31 will be: A.Home Corporation will open a new store on January 1. $40. D. The March 31 balance in accounts receivable will be: A.000 $75. 000 $97. the following information has been assembled: The accounts receivable balance on January 1 is $70.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget. C.000 $57. .000 represents uncollected November sales. 8-112 Copyright © 2015 McGraw-Hill Education.000 represents uncollected December sales and $10. To this end. $60. In a cash budget for April. $74.78.000. D. No reproduction or distribution without the prior written consent of McGraw-Hill Education. the total cash receipts will be: A. All rights reserved. Richards Corporation has the following budgeted sales for the first half of next year: The company is in the process of preparing a cash budget and must determine the expected cash collections by month. Of this amount.000 $114. B. including a schedule of expected cash collections. 79. $81. 80. $270.000 $141.000 $360. C. including a schedule of expected cash collections. 8-113 Copyright © 2015 McGraw-Hill Education. C. B. D.000 = (30% + 10%) × December credit sales December credit sales = $60.000 $68. The total cash collected during January would be: A. No reproduction or distribution without the prior written consent of McGraw-Hill Education. .000 ÷ (30% + 10%) = $150.000 May 30 accounts receivable balance: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-02 Prepare a sales budget.000 $60.000 $345. including a schedule of expected cash collections.000 Cash collections for January: *Accounts receivables representing December credit sales = $60. What is the budgeted accounts receivable balance on May 30? A. B. D. All rights reserved.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-02 Prepare a sales budget.000 $420. No reproduction or distribution without the prior written consent of McGraw-Hill Education. B. • The cost of goods sold is 75% of sales. • Ignore taxes. $340. • Monthly depreciation is $19.000 $328. and 3% uncollectible. • Collections are expected to be 80% in the month of sale. and $340.800. All rights reserved. Data regarding the store's operations follow: • Sales are budgeted at $330.000.100 $272. $340. D. • Other monthly expenses to be paid in cash are $21. Expected cash collections in December are: A.Bracken Corporation is a small wholesaler of gourmet food products.000 for January.000 for November. . 17% in the month following the sale. 81. • The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold.000 for December.000 $56.100 Cash collections for December: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard 8-114 Copyright © 2015 McGraw-Hill Education. Payment for merchandise is made in the month following the purchase. C. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The cost of December merchandise purchases would be: A. C.000 $178. 82.500 $255.000 December merchandise purchases: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-04 Prepare a direct materials budget. 8-115 Copyright © 2015 McGraw-Hill Education.500 $247. including a schedule of expected cash collections. D.Learning Objective: 08-02 Prepare a sales budget. $225. All rights reserved. B. . including a schedule of expected cash disbursements for purchases of materials. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . including a schedule of expected cash disbursements for purchases of materials. the company will pay for November's purchases of $252.000 $252. 8-116 Copyright © 2015 McGraw-Hill Education.83. All rights reserved. C. D.750. $178.000 $255. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-04 Prepare a direct materials budget.500 $225.750 In December. December cash disbursements for merchandise purchases would be: A. B. No reproduction or distribution without the prior written consent of McGraw-Hill Education. .84.550 Cash receipts in December: Cash disbursements for purchases of merchandise inventory in December: In December. the company will pay for November's purchases of $252. $34.550 $53.000 $19. B.750. C. 8-117 Copyright © 2015 McGraw-Hill Education.550 $87. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-08 Prepare a cash budget. D. All rights reserved. The difference between cash receipts and cash disbursements for December would be: A. B. Data regarding the store's operations follow: • Sales are budgeted at $260. Payment for merchandise is made in the month following the purchase. All rights reserved.Dilbert Farm Supply is located in a small town in the rural west.000.000 $184. • Collections are expected to be 80% in the month of sale. C.000 for January. $230. . • Monthly depreciation is $20. and 1% uncollectible. • The company desires to have an ending merchandise inventory at the end of each month equal to 60% of the next month's cost of goods sold. No reproduction or distribution without the prior written consent of McGraw-Hill Education.400 Cash collections for December: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard 8-118 Copyright © 2015 McGraw-Hill Education.400 $49. Expected cash collections in December are: A. • The cost of goods sold is 65% of sales.000 $233. 85.300. • Ignore taxes. and $210.000 for November. D. $230. • Other monthly expenses to be paid in cash are $20.000 for December. 19% in the month following the sale. so the cash disbursements in December would equal the November purchases of $157. including a schedule of expected cash disbursements for purchases of materials. .500 $157.Learning Objective: 08-02 Prepare a sales budget.700 $149. C. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement 8-119 Copyright © 2015 McGraw-Hill Education. All rights reserved. including a schedule of expected cash collections.300 $81. B. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The cost of December merchandise purchases would be: A. B.900 $149. D. December cash disbursements for merchandise purchases would be: A. $141.300. $141.000 $81. 87. D.700 $169. C.900 The company pays for its purchases in the month following purchase.500 December merchandise purchases: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-04 Prepare a direct materials budget. 86. B. so the cash disbursements in December would equal the November purchases of $157. All rights reserved.900 $93. .900 Cash collections for December: Cash disbursements for merchandise in December: The company pays for its purchases in the month following purchase. including a schedule of expected cash disbursements for purchases of materials.700 $17. $55. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Total cash disbursements in December: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply 8-120 Copyright © 2015 McGraw-Hill Education.300.Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-04 Prepare a direct materials budget. C. The difference between cash receipts and cash disbursements for December would be: A. D. 88.800 $37. B.Difficulty: 3 Hard Learning Objective: 08-08 Prepare a cash budget.200 $55. C. 89. D. $60. The net income for December would be: A. All rights reserved.800 Budgeted Income Statement AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-09 Prepare a budgeted income statement. No reproduction or distribution without the prior written consent of McGraw-Hill Education. .200 $37.900 $40. 8-121 Copyright © 2015 McGraw-Hill Education. B.300 December accounts receivable balance: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement 8-122 Copyright © 2015 McGraw-Hill Education. C. 91. $46.800 $27. The accounts receivable balance. C.90.000 $93. $180. The cash balance at the end of December would be: A. B. net of uncollectible accounts.700 $81. All rights reserved.500 $153. D. at the end of December would be: A.500 $82. . D.000 Cash Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-08 Prepare a cash budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Learning Objective: 08-10 Prepare a budgeted balance sheet.100 $43. 900 $141. 92. B. Accounts payable at the end of December would be: A.800 $149.Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-10 Prepare a budgeted balance sheet. All rights reserved. . No reproduction or distribution without the prior written consent of McGraw-Hill Education. $81.500 December accounts payable balance: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-10 Prepare a budgeted balance sheet. C. 8-123 Copyright © 2015 McGraw-Hill Education.700 $59. D. 400 $418. The following are budgeted data for the Bingham Corporation.300 $466. All rights reserved.300 $471. a merchandising company: 8-124 Copyright © 2015 McGraw-Hill Education. B. Retained earnings at the end of December would be: A. C. Learning Objective: 08-10 Prepare a budgeted balance sheet. $380. .93. No reproduction or distribution without the prior written consent of McGraw-Hill Education. D.400 Budgeted Income Statement AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-09 Prepare a budgeted income statement. 000 = $180. $180. . B.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. D. C. Assuming that the Bingham Corporation had inventory on hand of $70. 8-125 Copyright © 2015 McGraw-Hill Education.000 $263. 95. $180.000 Merchandise Purchases Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. All rights reserved.000 February desired ending inventory = 75% × 60% × $400.000 $160.000 $300.000 $110.94. The desired ending inventory (at cost) for February would be: A.000 (at cost) on January 1. B. C. No reproduction or distribution without the prior written consent of McGraw-Hill Education. D. the purchases for January (at cost) would be: A.000 $240.000 $250. The cash disbursements for purchases that would appear in the April cash budget would be: A. The inventory on May 31 contained 1. Inc.. Harris. Assume that all purchases are paid for in the month following the month of purchase.500 $240.96. B. No reproduction or distribution without the prior written consent of McGraw-Hill Education. C. 8-126 Copyright © 2015 McGraw-Hill Education.880 units. D. .000 $217.000 $157. has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units. $180.500 Merchandise Purchases Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. All rights reserved. The company needs to prepare a production budget for the next five months. 080 units Beginning inventory for September = Ending inventory for August = 20% of September's sales = 20% × 5. 820 units 1. The total number of units produced in July should be: A. No reproduction or distribution without the prior written consent of McGraw-Hill Education. B. . C. 8-127 Copyright © 2015 McGraw-Hill Education. The beginning inventory for September should be: A.800 7.080 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. D.97. 9. 98. B. C. D. All rights reserved.260 7.880 units 1.700 7.400 units = 1.900 units units units units Production Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget.460 units 1. D.050 $91. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 99.000. a merchandising firm. .000 = $59.000 $59.150 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. B. C.May Corporation. The inventory on June 30 is less than this ideal since it is only $65.150 Desired beginning inventory for September = 130% × 65% × $70. has budgeted sales as follows for the third quarter of the year: Cost of goods sold is equal to 65% of sales.000 $76. $117. 8-128 Copyright © 2015 McGraw-Hill Education. The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month. The desired beginning inventory for September is: A. The company is now preparing a Merchandise Purchases Budget. The budgeted purchases for July are: A. $52. All rights reserved. The inventory on May 31 contained 400 units. D. C.050 $47. B.000 $63. The company needs to prepare a production budget for the second quarter of the year. Noel Enterprises has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units.450 $91.050 Merchandise Purchases Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. 8-129 Copyright © 2015 McGraw-Hill Education.100. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . 220 units units units units Production Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. . C. B.600 units = 460 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. The total number of units to be produced in July is: A. 102. The beginning inventory in units for September is: A. D. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 380 units 460 units 4.101.400 6. All rights reserved. B. 5.600 units 720 units Beginning inventory for September = Ending inventory for August = 10% of September sales = 10% × 4. D. 8-130 Copyright © 2015 McGraw-Hill Education. C.580 5.120 5. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 830. 104. D. Sarter Corporation is in the process of preparing its annual budget. 720 460 540 380 units units units units Ending inventory for August = 10% of September sales = 10% × 4. The following beginning and ending inventory levels are planned for the year. The number of units the company would have to manufacture during the year would be: A. B. B.600 units = 460 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. All rights reserved. The desired ending inventory for August is: A.000 930. D. Each unit of finished goods requires 3 grams of raw material.000 880.103. C.000 units during the year. . C.000 units units units units Production Budget AACSB: Analytic AICPA BB: Critical Thinking 8-131 Copyright © 2015 McGraw-Hill Education. 900. The company plans to sell 880. No reproduction or distribution without the prior written consent of McGraw-Hill Education. including a schedule of expected cash disbursements for purchases of materials.000 2.490. 8-132 Copyright © 2015 McGraw-Hill Education. .000 2. 2. All rights reserved. B.000 grams grams grams grams Production Budget Materials Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget.000 2. How much of the raw material should the company purchase during the year? A.AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget. D.500. C.550. 105.480. Learning Objective: 08-04 Prepare a direct materials budget. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in material.500 18.500 13. Four pounds of raw materials are required for each unit produced. D. The finished goods inventory at the start of the year is 2. 106.500 units.200 pounds.The TS Corporation has budgeted sales for the year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. Scheduled production for the third quarter should be: A. B. 14. Raw materials on hand at the start of the year total 4. .500 15. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.500 units units units units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. 8-133 Copyright © 2015 McGraw-Hill Education. C. 000 55.107. Learning Objective: 08-04 Prepare a direct materials budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. including a schedule of expected cash disbursements for purchases of materials. B.800 50. C. . 50.000 pounds pounds pounds pounds AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-03 Prepare a production budget. Scheduled purchases of raw materials for the second quarter should be: A. 8-134 Copyright © 2015 McGraw-Hill Education.800 55. All rights reserved. D. 000 Production Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. 10.000 units of Quickclean to be manufactured in July. All rights reserved.500 14. Assume that on January 1 the inventory of Quickclean was 8.000 units and expected sales in February are 18. Material A is purchased from the supplier for $0.000 14. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Quickclean. The raw materials inventory on hand at the end of each month (for either Material A or Material B) should equal 80% of the following month's production needs. 8-135 Copyright © 2015 McGraw-Hill Education. The number of units needed to be produced in January would be: A.000 units.000 units.500 15.600 pounds of Material A and 104.30 per pound and Material B is purchased for $0. B. requires 2 pounds of Material A and 5 pounds of Material B per unit manufactured. On May 31 there will be 41. One of the products.Roberts Corporation manufactures home cleaning products. C.000 units of Quickclean to be manufactured in June and 32. . D. The finished goods inventory on hand at the end of each month should equal 4. 108. Expected sales in January are 14.50 per pound.000 pounds of Material B in inventory. The production budget calls for 26.000 units plus 25% of the next month's sales. The number of pounds of Material A needed for production during June would be: A. 128.109. C.000 130.600 52. including a schedule of expected cash disbursements for purchases of materials.000 Direct Materials Budget: Material A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget. B. The number of pounds of Material B to be purchased during June would be: A. No reproduction or distribution without the prior written consent of McGraw-Hill Education. C. All rights reserved. including a schedule of expected cash 8-136 Copyright © 2015 McGraw-Hill Education.600 51.200 35. B. .000 154. 61. D.000 Direct Materials Budget: Material A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget.000 160. 110. D. 57 $19. LFM Corporation makes and sells a product called Product WZ. 112.50 $16.000 units of Product WZ in June. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Budgeted direct labor costs for June would be: A. The company plans to sell 31.5 hours of direct labor at the rate of $16.000 Direct Labor Budget AACSB: Analytic 8-137 Copyright © 2015 McGraw-Hill Education.00 $56.disbursements for purchases of materials. All rights reserved. The budgeted direct labor cost per unit of Product WZ would be: A. Management would like you to prepare a Direct Labor Budget for June.00 per direct labor-hour. 111. $4.764.000 $1. $1. respectively. B. B.736.708. D.00 per direct labor-hour = $56. .00 per unit AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget.5 direct labor-hours per unit × $16.000 $504. Each unit of Product WZ requires 3. C. D.00 Budgeted direct labor cost = 3. C.000 $1. The finished goods inventories on June 1 and June 30 are budgeted to be 100 and 600 units. 520 $44. Cashan Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 1.AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. 113.070 kilograms × $4.00 per kilogram. The desired ending inventory of Jurislon for September is: A.460 $44. 8-138 Copyright © 2015 McGraw-Hill Education. B. D. Budgeted production of Miniwarps for the next five months is as follows: The company wants to maintain monthly ending inventories of Jurislon equal to 30% of the following month's production needs. C. $29.280 Ending inventory of Jurislon for September = 30% of October's production needs = 30% × 24. The company wants to prepare a Direct Materials Purchase Budget for the next five months. Learning Objective: 08-05 Prepare a direct labor budget.5 kilograms of the raw material Jurislon. The cost of Jurislon is $4.280 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget. On July 31. No reproduction or distribution without the prior written consent of McGraw-Hill Education.00 per kilogram = $44.400 kilograms of Jurislon were on hand. .600 units × 1. including a schedule of expected cash disbursements for purchases of materials. All rights reserved. this requirement was not met since only 10.070 kilograms Cost of ending inventory of Jurilson = 11.5 kilograms per unit = 11.640 $29. C.114. .400 $191. this requirement was not met because only 3. makes and sells a single product.460 $147.860 $252. including a schedule of expected cash disbursements for purchases of materials.500 yards of Material K were on hand. The total cost of Jurislon to be purchased in August is: A.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Cowles Corporation. D. Budgeted production of Product R for the next five months is as follows: The company wants to maintain monthly ending inventories of Material K equal to 30% of the following month's production needs. Product R. All rights reserved. The cost of Material K is $0. Inc. Three yards of Material K are needed to make one unit of Product R. $149. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year.80 per yard. B. On July 31. 8-139 Copyright © 2015 McGraw-Hill Education. C.500 units × 3 yards per unit = 13. C. D.280 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget. including a schedule of expected cash disbursements for purchases of materials. D.500 13. 8-140 Copyright © 2015 McGraw-Hill Education.115. The desired ending inventory of Material K for September is: A. The total cost of Material K to be purchased in August is: A. 12.650 $38.050 12. All rights reserved. B.750 12.050 yards AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-04 Prepare a direct materials budget.120 $30. 116. No reproduction or distribution without the prior written consent of McGraw-Hill Education.150 yards yards yards yards Desired ending inventory of Material A for March = 30% × 14. including a schedule of expected cash disbursements for purchases of materials. B. . $47.350 $24. 800 44.. The remaining 70% is paid for in the month following the purchase.410 yards yards yards yards AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-04 Prepare a direct materials budget. B. 40.e. The total needs (i. Adi Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Adi. 8-141 Copyright © 2015 McGraw-Hill Education.940 37. . All rights reserved. including a schedule of expected cash disbursements for purchases of materials.380 52. 30% of raw materials purchases are normally paid for in the month of purchase. D. C. No reproduction or distribution without the prior written consent of McGraw-Hill Education. production requirements plus desired ending inventory) of Material K for November are: A.117. 000 $392. $896. 119.20 per direct labor-hour.000 $588. The Gerald Corporation makes and sells a single product called a Clop.000 $644.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-04 Prepare a direct materials budget. . D. No reproduction or distribution without the prior written consent of McGraw-Hill Education. In Adi's budgeted balance sheet at December 31.118. D. $760. Each Clop requires 1.000 $252. including a schedule of expected cash disbursements for purchases of materials. C. 8-142 Copyright © 2015 McGraw-Hill Education. C. How much cash should Adi expect to pay out for raw material purchases during November? A. The direct labor workforce is fully adjusted each month to the required workload. The company is preparing a Direct Labor Budget for the first quarter of the year.000 $228. including a schedule of expected cash disbursements for purchases of materials.000 $532. B. All rights reserved.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-04 Prepare a direct materials budget. B. at what amount will accounts payable for raw materials be shown? A.000 Accounts payable = $760.000 × 70% = $532.1 direct labor-hours at $8. 000 Clops in January. then the budgeted direct labor cost for January is: A. C.600 Budgeted direct labor cost = Budgeted production × 1.02 $9.20 per direct labor-hour = 20. If the company has budgeted to produce 20. $164.000 units × $9. B.1 direct labor-hours per unit × $8. The budgeted direct labor cost per Clop is closest to: A.000 units × 1.400 $172. No reproduction or distribution without the prior written consent of McGraw-Hill Education. D.20 per direct laborhour = $9.20 per direct laborhour = 20. All rights reserved.02 per unit AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget. 8-143 Copyright © 2015 McGraw-Hill Education.000 $180.76 Direct labor cost per unit = 1.1 direct labor-hours per unit × $8. B.45 $8.400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget.200 $195.02 per unit = $180. C. . D. 121.120.20 $9.1 direct labor-hours per unit × $8. $7. 1 direct labor-hours per unit × $8.800 18.20 per direct labor-hour $162.1 direct labor-hours per unit × $8.02 per unit Budgeted production = $162.80 $11.4 direct labor-hours at a rate of $9. D.360 ÷ $9. LFG Corporation needs to prepare a Direct Labor Budget for the second quarter of next year. All rights reserved. C.360 = Budgeted production × 1.000 19. B.72 per unit AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget.360 = Budgeted production × $9. Product T.000 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-05 Prepare a direct labor budget. C. The LFG Corporation makes and sells a single product. The direct labor workforce is fully adjusted each month to the required workload. If the budgeted direct labor cost for February is $162.72 Direct labor cost per unit = 1.200 21.360.83 $7. 23.80 per direct laborhour = $13.4 direct labor-hours per unit × $9.122. .00 $13. 123. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The budgeted direct labor cost per unit of Product T is closest to: A. D. then the budgeted production of Clops for February is: A.20 per direct labor-hour $162. 8-144 Copyright © 2015 McGraw-Hill Education. Each unit of Product T requires 1. $9.000 units units units units Budgeted direct labor cost = Budgeted production × 1.02 per unit = 18. B.80 per direct labor-hour. 000 is factory depreciation.000 hours.80 per direct labor-hour = 24.280 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-05 Prepare a direct labor budget.4 direct labor-hours per unit × $9.024 $329.000 direct labor-hours) = $64.80 per direct laborhour = 24. then the total budgeted manufacturing overhead for October is: A. All rights reserved. The Covey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. $332. D. $96.000 units × 1.000 $76.4 direct labor-hours per unit × $9. the budgeted fixed manufacturing overhead is $64.536 Budgeted direct labor cost = Budgeted production × 1.000 units × $13.000 + $32. Budgeted direct labor costs for June would be: A.00 per direct labor-hour × 8. C.000 per month. B. The budgeted variable manufacturing overhead rate is $4.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget. of which $18.000 $64.000 units of Product T in June. The finished goods inventories on June 1 and June 30 were budgeted at 600 and 800 units. B. . The company has budgeted to produce 24. 8-145 Copyright © 2015 McGraw-Hill Education. D.200 $326. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 = $96.00 per direct labor-hour.000 + ($4.72 per unit = $329.000 $78. respectively. If the budgeted direct labor time for October is 8.280 $235.124.000 Budgeted manufacturing overhead = $64. 125. C. 126. D.00 per direct laborhour × X) $90. C.000 direct labor-hours AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-06 Prepare a manufacturing overhead budget. B.000 = $80.000 direct labor-hours Budgeted cash disbursements = ($64. All rights reserved.000 + $16.000 hours.00 $15.50 $20.000 direct labor-hours) = $64. 11.00 per direct labor-hour × 4.000 = ($64.00 per direct labor-hour × X = $44. .500 direct labor-hours 6.000 .000.000) + ($4.000) + ($4. C.000 + ($4.000 ÷ 4.000 direct labor-hours 22.000 Average budgeted manufacturing overhead per unit = $80.00 per direct labor-hour × X) $4.$18.000 . B. 8-146 Copyright © 2015 McGraw-Hill Education. then the budgeted direct labor-hours for November must be: A. then the average budgeted manufacturing overhead per direct labor-hour is: A.000 per direct labor-hour = $20 per direct labor-hour AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-06 Prepare a manufacturing overhead budget.000 = $46. $16. 127. If the budgeted direct labor time for December is 4.500 direct labor-hours 2.00 per direct labor-hour × X) $90.00 $24. D.000 X = $44. If the budgeted cash disbursements for manufacturing overhead for November are $90.000 ÷ $4.00 per direct labor-hour X = 11.000 + ($4.$18. No reproduction or distribution without the prior written consent of McGraw-Hill Education.50 per per per per direct direct direct direct labor-hour labor-hour labor-hour labor-hour Budgeted manufacturing overhead = $64. B. $14. D. D.140 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget. $59.200 $27. All rights reserved. The predetermined overhead rate for April should be: A. The company recomputes its predetermined overhead rate every month. 129.870.070 $46. The variable overhead rate is $5.Cartier Inc. . C. The direct labor budget indicates that 3.80 per direct labor-hour.80 per direct labor-hour $17.930 per month. The company's budgeted fixed manufacturing overhead is $39. No reproduction or distribution without the prior written consent of McGraw-Hill Education.10 per direct labor-hour AACSB: Analytic 8-147 Copyright © 2015 McGraw-Hill Education. All other fixed manufacturing overhead costs represent current cash flows.90 per direct labor-hour $12. which includes depreciation of $12.060 $19.00 per direct labor-hour $5. B. C. bases its manufacturing overhead budget on budgeted direct laborhours. The April cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A.300 direct labor-hours will be required in April. 128. of which $10.AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget.00 per direct labor-hour.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget. B.000 is factory depreciation.000 $56. 8-148 Copyright © 2015 McGraw-Hill Education. then the total budgeted manufacturing overhead for October is: A. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. If the budgeted direct labor time for October is 6.000 per month.000 $74. Davey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. D. the budgeted fixed manufacturing overhead is $66.000 $84.000 hours. The budgeted variable manufacturing overhead rate is $3. C. . 130. $28. C.000 $83.50 $5. No reproduction or distribution without the prior written consent of McGraw-Hill Education. then the total budgeted cash disbursements for manufacturing overhead for November must be: A. $3. B.00 $19. then the predetermined manufacturing overhead per direct labor-hour for December would be: A. C. D.000 hours. 8-149 Copyright © 2015 McGraw-Hill Education.00 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-06 Prepare a manufacturing overhead budget. All rights reserved.000 $37.000 hours.50 $17.131. If the budgeted direct labor time for December is 4. $56. B. If the budgeted direct labor time for November is 9. D. 132.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-06 Prepare a manufacturing overhead budget. .000 $93. 20 per direct labor-hour $13. which includes depreciation of $4. The company's budgeted fixed manufacturing overhead is $28. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 2.The manufacturing overhead budget at Cardera Corporation is based on budgeted direct labor-hours. All rights reserved. 133. B.060 per month.00 per direct laborhour.00 per direct labor-hour $12.20 per direct labor-hour AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget. 8-150 Copyright © 2015 McGraw-Hill Education.20 per direct labor-hour $11. The variable overhead rate is $1. . D.600. C. The predetermined overhead rate for January should be: A.300 direct labor-hours will be required in January. $1. The company recomputes its predetermined overhead rate every month. B. No reproduction or distribution without the prior written consent of McGraw-Hill Education.760 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred.300 $23. 8-151 Copyright © 2015 McGraw-Hill Education. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the year.134.360 $2. All rights reserved.460 $25. D. $30. Poriss Corporation makes and sells a single product called a Yute. . C. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. C.000 + $266. .000 $266. D.000 $280. All rights reserved.000 Total selling and administrative expenses = Fixed selling and administrative expenses + (Variable selling and administrative expenses per unit × Units sold) = $280.000 units) = $280.000 Yutes in November.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-07 Prepare a selling and administrative expense budget.000 = $546. B.00 per unit × 19. $546. 8-152 Copyright © 2015 McGraw-Hill Education.000 + ($14.135.000 $536. If the company has budgeted to sell 19. then the total budgeted selling and administrative expenses for November would be: A. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 136. If the company has budgeted to sell 16,000 Yutes in December, then the budgeted total cash disbursements for selling and administrative expenses for December would be: A. B. C. D. $280,000 $494,000 $224,000 $504,000 Selling and administrative expenses budget: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-07 Prepare a selling and administrative expense budget. 8-153 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 137. If the total budgeted selling and administrative expense for October is $459,200, then how many Yutes does the company plan to sell in October? A. B. C. D. 13,300 12,500 13,000 12,800 units units units units Total selling and administrative expenses = Fixed selling and administrative expenses + (Variable selling and administrative expenses per unit × Units sold) $459,200 = $280,000 + ($14.00 per unit × Units sold) $14.00 per unit × Units sold = $459,200 - $280,000 $14.00 per unit × Units sold = $179,200 Units sold = $179,200 ÷ $14.00 per unit = 12,800 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-07 Prepare a selling and administrative expense budget. The Prattle Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. 8-154 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 138. If the company has budgeted to sell 17,000 Debs in January, then the total budgeted variable selling and administrative expenses for January will be: A. B. C. D. $34,000 $39,100 $18,700 $25,500 Budgeted variable selling and administrative expense = $2.30 per unit × 17,000 units = $39,100 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-07 Prepare a selling and administrative expense budget. 139. If the company has budgeted to sell 16,000 Debs in February, then the total budgeted fixed selling and administrative expenses for February is: A. B. C. D. $75,000 $70,000 $110,000 $100,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-07 Prepare a selling and administrative expense budget. 8-155 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . No reproduction or distribution without the prior written consent of McGraw-Hill Education. D.000 ÷ 20. C.000 units) = $110.30 per unit × 20.000 units = $7. All rights reserved.000 + ($2.000 Average selling and administrative expense per unit = $156. 8-156 Copyright © 2015 McGraw-Hill Education. If the company has budgeted to sell 20.80 per unit AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-07 Prepare a selling and administrative expense budget.00 $8.000 + $46.000 Debs in March.80 $9.50 $6.000 = $156. then the average budgeted selling and administrative expenses per unit sold for March is closest to: A. $7.80 per per per per unit unit unit unit Budgeted selling and administrative expenses = $110.140. B. 141. If the budgeted cash disbursements for selling and administrative expenses for April total $144,390, then how many Debs does the company plan to sell in April? A. B. C. D. 17,500 18,250 20,000 19,300 units units units units Budgeted cash disbursements for selling and administrative expenses = ($110,000 - $10,000) + ($2.30 per unit × Number of units sold) $144,390 = ($110,000 - $10,000) + ($2.30 per unit × Number of units sold) $144,390 = $100,000 + ($2.30 per unit × Number of units sold) $2.30 per unit × Number of units sold = $144,390 - $100,000 $2.30 per unit × Number of units sold = $44,390 Number of units sold = $44,390 ÷ $2.30 per unit = 19,300 units AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-07 Prepare a selling and administrative expense budget. Rogers Corporation is preparing its cash budget for July. The budgeted beginning cash balance is $25,000. Budgeted cash receipts total $141,000 and budgeted cash disbursements total $139,000. The desired ending cash balance is $30,000. 8-157 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 142. The excess (deficiency) of cash available over disbursements for July is: A. B. C. D. $23,000 $2,000 $166,000 $27,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. 143. To attain its desired ending cash balance for July, the company should borrow: A. B. C. D. $30,000 $0 $3,000 $57,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. Muecke Inc. is working on its cash budget for April. The budgeted beginning cash balance is $40,000. Budgeted cash receipts total $150,000 and budgeted cash disbursements total $158,000. The desired ending cash balance is $50,000. 8-158 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 144. The excess (deficiency) of cash available over disbursements for April will be: A. B. C. D. $32,000 $190,000 $48,000 ($8,000) AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. 145. To attain its desired ending cash balance for April, the company needs to borrow: A. B. C. D. $18,000 $0 $50,000 $82,000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. 8-159 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. • Selling and administrative expenses are budgeted at $60. • The cost of goods sold is 70% of the selling price. B. • The cash balance November 1 was $18. C. . • Budgeted depreciation for November is $25. B. D. all for cash. 147. has budgeted its activity for November according to the following information: • Sales at $450. D. All rights reserved.000 $450.000 $475. 146. The budgeted cash disbursements for November are: A. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000.The Adams Corporation.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium 8-160 Copyright © 2015 McGraw-Hill Education. • There is no interest expense or income tax expense. • All purchases are paid for in cash. C.000 $530.000. a merchandising firm.000. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. • Merchandise inventory on October 31 was $200.000 $135. • The planned merchandise inventory on November 30 is $230.000 $405.000 for November and are paid for in cash.000.000 $375. The budgeted cash receipts for November are: A.000 Sales were all for cash and were $450.000. $345.000. $315. Learning Objective: 08-08 Prepare a cash budget. 8-161 Copyright © 2015 McGraw-Hill Education.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-09 Prepare a budgeted income statement. B. The budgeted net income for November is: A. C. D. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 $135. $50. . All rights reserved. 148.000 $68.000 $75. B. 149. • Collections are expected to be 70% in the month of sale. and $400. • Other monthly expenses to be paid in cash are $22. $114. C. The net income for December would be: A.400 $82. • The company desires to have an ending merchandise inventory equal to 80% of the following month's cost of goods sold.Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. • Ignore taxes.500 $94.000.000. Payment for merchandise is made in the month following the purchase. • Monthly depreciation is $20. D. . $390. 27% in the month following the sale.000 for January.000 for December. • The cost of goods sold is 65% of sales. and 3% uncollectible.000 for November.500 $101.800 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply 8-162 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Data regarding the store's operations follow: • Sales are budgeted at $380. 000 = $105.400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-10 Prepare a budgeted balance sheet. D. The accounts receivable balance. $182. 150.Difficulty: 3 Hard Learning Objective: 08-09 Prepare a budgeted income statement. 151. The cash balance at the end of December would be: A. D. net of uncollectible accounts.400 $13. . $105. B.700 $117. No reproduction or distribution without the prior written consent of McGraw-Hill Education. C. C. All rights reserved. B.000 $207.300 $88.300 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply 8-163 Copyright © 2015 McGraw-Hill Education.900 December accounts receivable balance = 27% of December sales = 27% × $390.400 $114.000 $195. at the end of December would be: A. 152.700 $208. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved. D.000 $258. the accounts payable at the end of December should be $258. $253. .700.700 Since purchases are paid in the month following purchase.Difficulty: 3 Hard Learning Objective: 08-10 Prepare a budgeted balance sheet. B. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-10 Prepare a budgeted balance sheet. Accounts payable at the end of December would be: A. 8-164 Copyright © 2015 McGraw-Hill Education.500 $50. C. B.153.400 $422. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . Essay Questions 8-165 Copyright © 2015 McGraw-Hill Education.100 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-10 Prepare a budgeted balance sheet. Retained earnings at the end of December would be: A. C.000 $445. D.600 $342. $259. including a schedule of expected cash collections. • The cost of goods sold is 70% of sales. and $300. Data regarding the store's operations follow: • Sales are budgeted at $350.000 for January. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget. b. 16% in the month following the sale. Required: a.000 for December.000. • The November beginning balance in the accounts payable account is $254. Prepare a Schedule of Expected Cash Collections for November and December. Prepare a Merchandise Purchases Budget for November and December. . • The November beginning balance in the accounts receivable account is $78. and 4% uncollectible. • The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month. 8-166 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education.154.000 for November. All rights reserved. $320. Caprice Corporation is a wholesaler of industrial goods. Payment for merchandise is made in the month following the purchase.000. • Collections are expected to be 80% in the month of sale. Learning Objective: 08-03 Prepare a production budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. .8-167 Copyright © 2015 McGraw-Hill Education. All rights reserved. Clay Corporation has projected sales and production in units for the second quarter of the coming year as follows: Cash-related production costs are budgeted at $5 per unit produced. Prepare a schedule for each month showing budgeted cash disbursements for Clay Corporation. Selling and administrative expenses will amount to $100. 30% in the month following the month of sale. All rights reserved.000 ($90. which will be paid in April.000 from February's sales and $410. 40% are paid in the month in which they are incurred and the balance in the following month.155. Cash collections from sales are budgeted at 60% in the month of sale. Required: a. The accounts payable balance on March 31 totals $190. and the remaining 10% in the second month following the month of sale. Of these production costs. Accounts receivable on April 1 totaled $500. a. .000 per month.000 from March's sales). No reproduction or distribution without the prior written consent of McGraw-Hill Education.000. Cash disbursements: *Payments relating to the prior month (March) in April represent the balance of accounts payable at March 31. b. All units are sold on account for $14 each. 8-168 Copyright © 2015 McGraw-Hill Education. Prepare a schedule for each month showing budgeted cash receipts for Clay Corporation. 60 × $560.30 × $1.000 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-02 Prepare a sales budget.10 × $700.000. .000 = $307.60 × $840.000 = 0.025.30 × $700. 8-169 Copyright © 2015 McGraw-Hill Education.500 March sales collected in May = 0.30 × $560.b. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000.025. 0. 0. Cash receipts: *$410.000 March sales collected in April = 0. All rights reserved.000 ****0. Learning Objective: 08-03 Prepare a production budget.000 ÷ 0. 0.10 × $1.025.000 = $102.60 × $700. including a schedule of expected cash collections.40 = $1.40 × March sales March sales = $410.500 **0.000.000 ***0. Expected boomerang sales (in units) for the upcoming months are as follows: Mate likes to maintain a finished goods inventory equal to 10% of the next month's estimated sales.156. Mate Boomerang Corporation manufactures and sells plastic boomerangs. Seven ounces of plastic resin are needed to produce every boomerang. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . 8-170 Copyright © 2015 McGraw-Hill Education. Learning Objective: 08-03 Prepare a production budget. Mate likes to have enough plastic resin on hand at the end of the month to cover 25% of the next month's production requirements. including a schedule of expected cash collections. Required: How many ounces of plastic resin should Mate plan on purchasing during the month of October? Production Budget Direct Materials Budget AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-02 Prepare a sales budget. All rights reserved. All rights reserved.8-171 Copyright © 2015 McGraw-Hill Education. . No reproduction or distribution without the prior written consent of McGraw-Hill Education. 8-172 Copyright © 2015 McGraw-Hill Education. All rights reserved. . No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved. and $350. c. • Collections are expected to be 75% in the month of sale. 8-173 Copyright © 2015 McGraw-Hill Education. • Other monthly expenses to be paid in cash are $21. • The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month. • The cost of goods sold is 65% of sales. Required: a. b. • Ignore taxes. • Payment for merchandise is made in the month following the purchase. 20% in the month following the sale. Prepare Cash Budgets for November and December. Prepare a Schedule of Expected Cash Collections for November and December. $380.000 for November. d. e.157.900. Prepare Budgeted Income Statements for November and December.000 for January. and 5% uncollectible. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: • Sales are budgeted at $360. Prepare a Budgeted Balance Sheet for the end of December.000. Prepare a Merchandise Purchases Budget for November and December.000 for December. • Monthly depreciation is $20. . including a schedule of expected cash collections. .AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 08-02 Prepare a sales budget. All rights reserved. 8-174 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Required: Prepare McCracken's cash budget for May. The following information is budgeted for McCracken Plumbing Supply Corporation for next quarter: All sales at McCracken are on credit. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget. Forty percent are collected in the month of sale.Learning Objective: 08-03 Prepare a production budget. .000 of depreciation on display fixtures and warehouse equipment. including a schedule of expected cash collections. McCracken wants to maintain a cash balance of $15.000. Learning Objective: 08-09 Prepare a budgeted income statement. and the remaining 2% are uncollectible.000 of cash on hand at the beginning of May. McCracken expects to have $24. All other selling and administrative expenses are paid as incurred. The selling and administrative expenses above include $8. Any amount below this can be borrowed from a local bank as needed in increments of $1. Merchandise purchases are paid in full the month following the month of purchase. Learning Objective: 08-10 Prepare a budgeted balance sheet. 8-175 Copyright © 2015 McGraw-Hill Education. All rights reserved.000. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 158. 58% in the month following the sale. Learning Objective: 08-08 Prepare a cash budget. All borrowings are made at month end. Learning Objective: 08-07 Prepare a selling and administrative expense budget. . Learning Objective: 08-08 Prepare a cash budget. All rights reserved. 8-176 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved.8-177 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education. . 159. Required: a. Compute the budgeted cash receipts for June. The Fraley Corporation. 8-178 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Assume the following budgeted data for June: Using this data. but will not pay any interest until the following month. prepare a cash budget for June. Clearly show any borrowing needed during the month. a merchandising firm. the company has learned that a month's sales on account are collected according to the following pattern: The company requires a minimum cash balance of $4.000 to start a month. has planned the following sales for the next four months: Sales are made 40% for cash and 60% on account. All rights reserved. along with your answer to part (a) above. The company can borrow in any dollar amount. b. . From experience. including a schedule of expected cash collections. All rights reserved. .AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-02 Prepare a sales budget. Learning Objective: 08-08 Prepare a cash budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 8-179 Copyright © 2015 McGraw-Hill Education. Include a column for each month and a total column for the entire quarter. 8-180 Copyright © 2015 McGraw-Hill Education. Bredder Supply Corporation manufactures and sells cotton gauze. All rights reserved. August and September). AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-03 Prepare a production budget.160. . Expected sales of gauze (in boxes) for upcoming months are as follows: Management likes to maintain a finished goods inventory equal to 20% of the next month's estimated sales. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Required: Prepare the company's production budget for the third quarter of this year (the months of July. . No reproduction or distribution without the prior written consent of McGraw-Hill Education.8-181 Copyright © 2015 McGraw-Hill Education. All rights reserved. Prepare a budget showing the quantity of switches to be purchased each month for January. Required: a. Each unit of product requires three pounds of specialized material. the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs. b. The company's production budget is as follows: b. March. Since the production of this specialized material by OMI's suppliers is sometimes irregular.: The inventory of finished goods at the end of each month must equal 20% of the next month's sales. Prepare a budget showing the required production each month for January.000 units. on December 31 the finished goods inventory totaled only 4. All rights reserved. and April. The materials purchase budget (based on the above production budget) would be as follows: 8-182 Copyright © 2015 McGraw-Hill Education.161. A sales budget is given below for one of the products manufactured by the OMI Co. a. February. No reproduction or distribution without the prior written consent of McGraw-Hill Education. This requirement had been met on January 1 of the current year. February. However. and March. . .AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 8-183 Copyright © 2015 McGraw-Hill Education. Learning Objective: 08-04 Prepare a direct materials budget. All rights reserved. including a schedule of expected cash disbursements for purchases of materials. Chow Corporation manufactures children's chairs made of PVS plastic tubing and heavy canvas material. Prepare a production budget for each of the months of June. 25. Budgeted sales are 20. Ending finished goods inventory is budgeted at 10% of the current month's sales. Each chair requires eight feet of the PVC tubing and three yards of material. Assume the beginning inventory of chairs in June will be 2.000 chairs for July and 30. 8-184 Copyright © 2015 McGraw-Hill Education. Ending materials inventories are budgeted at 10% of the current month's production.162. Prepare schedules showing purchase requirements for PVC tubing and for material for each of the months of June. b. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-03 Prepare a production budget. July and August. All rights reserved. Required: a.000 yards of material are on hand at the beginning of June. including a schedule of expected cash disbursements for purchases of materials.000 chairs for August. Learning Objective: 08-04 Prepare a direct materials budget. Assume 16.500 units. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 chairs for June. .000 feet of PVC tubing and 6. July and August. .600 yards. by month and in total for the fourth quarter. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Required: Prepare a direct materials budget for the fabric. To prevent against stock outs of the fabric. the company maintains an ending inventory each month equal to 10% of the next month's production needs. The cost of the fabric is $4 per yard. The beginning inventory of the fabric in October will be 3. Two yards of a fabric are required for each blouse produced by Northern Shirt Corporation. Be sure to include both the quantity to be purchased and its cost for each month. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-04 Prepare a direct materials budget.163. including a schedule of expected cash disbursements for purchases of materials. 8-185 Copyright © 2015 McGraw-Hill Education. Budgeted production of blouses is given below for the fourth quarter and the first month of the following quarter. All rights reserved. Each unit requires 0.25 direct labor-hours at $18.164. All rights reserved. The production department of Tadris Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year.00 per hour. No reproduction or distribution without the prior written consent of McGraw-Hill Education. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget. assuming that the direct labor work force is adjusted each quarter to match the number of hours required to produce the budgeted production. Required: Prepare a direct labor budget for the upcoming fiscal year. 8-186 Copyright © 2015 McGraw-Hill Education. . assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved. Each unit of output requires 0. The direct labor rate is $8.90 per direct labor-hour. Rehmer Corporation is working on its direct labor budget for the next two months. Required: Construct the direct labor budget for the next two months. . The production budget calls for producing 2. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-05 Prepare a direct labor budget. 8-187 Copyright © 2015 McGraw-Hill Education.165.61 direct labor-hours.600 units in June and 2.100 units in July. 000 units in April and 3. The direct labor rate is $11. Each unit of output requires 0. With the number of workers currently employed.166. .400 units in May. The company guarantees its direct labor workers a 40-hour paid work week. 8-188 Copyright © 2015 McGraw-Hill Education. Kouba Corporation is working on its direct labor budget for the next two months. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 2 Medium Learning Objective: 08-05 Prepare a direct labor budget.20 per direct labor-hour. Required: Construct the direct labor budget for the next two months. All rights reserved. that means that the company is committed to paying its direct labor work force for at least 920 hours in total each month even if there is not enough work to keep them busy. The production budget calls for producing 4. No reproduction or distribution without the prior written consent of McGraw-Hill Education.23 direct labor-hours. 000 per quarter. . No reproduction or distribution without the prior written consent of McGraw-Hill Education.000 per quarter. and the company's fixed manufacturing overhead is $65. The direct labor budget of Faier Corporation for the upcoming year contains the following details concerning budgeted direct labor-hours.50 per direct laborhour. The only noncash item included in the fixed manufacturing overhead is depreciation which is $22. 8-189 Copyright © 2015 McGraw-Hill Education. All rights reserved. The company's variable manufacturing overhead rate is $3. Show both manufacturing overhead expense and cash disbursements for manufacturing overhead. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget. Required: Prepare Faier Corporation's manufacturing overhead budget for the upcoming fiscal year.167. 168. . AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget. Edgington Inc.590 per month. Determine the cash disbursements for manufacturing overhead for November.700 direct labor-hours will be required in that month. Required: a. bases its manufacturing overhead budget on budgeted direct laborhours. The company's budgeted fixed manufacturing overhead is $39. 8-190 Copyright © 2015 McGraw-Hill Education.920. Determine the predetermined overhead rate for November. b. All other fixed manufacturing overhead costs represent current cash flows. The November direct labor budget indicates that 3. which includes depreciation of $5. The variable overhead rate is $4.90 per direct labor-hour. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved. 200 per month. The variable overhead rate is $2. Determine the predetermined overhead rate for November. Show your work! AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-06 Prepare a manufacturing overhead budget.000 direct labor-hours will be required in that month.00 per direct labor-hour. The manufacturing overhead budget of Paparella Corporation is based on budgeted direct labor-hours.000. 8-191 Copyright © 2015 McGraw-Hill Education. No reproduction or distribution without the prior written consent of McGraw-Hill Education. which includes depreciation of $21.169. Required: a. Determine the cash disbursements for manufacturing overhead for November. All other fixed manufacturing overhead costs represent current cash flows. The company's budgeted fixed manufacturing overhead is $79. All rights reserved. The November direct labor budget indicates that 6. . Show your work! b. The variable selling and administrative expense is $1. Required: Prepare the selling and administrative expense budget for April. which includes depreciation of $7.290. which are budgeted to be 2.90 per unit.170. The remainder of the fixed selling and administrative expense represents current cash flows. . AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-07 Prepare a selling and administrative expense budget. The selling and administrative expense budget of Gullette Corporation is based on the number of units sold. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The budgeted fixed selling and administrative expense is $35. All rights reserved.700 units in April. 8-192 Copyright © 2015 McGraw-Hill Education.640 per month. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The budgeted fixed selling and administrative expense is $57. The sales budget shows 3. Skeete Inc. All rights reserved. bases its selling and administrative expense budget on the number of units sold.171.720 per month. The remainder of the fixed selling and administrative expense represents current cash flows. 8-193 Copyright © 2015 McGraw-Hill Education. which includes depreciation of $9. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-07 Prepare a selling and administrative expense budget.70 per unit. . Required: Prepare the selling and administrative expense budget for November.360. The variable selling and administrative expense is $1.900 units are planned to be sold in November. No reproduction or distribution without the prior written consent of McGraw-Hill Education.000.000 and budgeted cash disbursements total $162.000. with interest not due until the following month. All rights reserved. Parliman Corporation is preparing its cash budget for August. The company can borrow up to $160. Budgeted cash receipts total $159. The budgeted beginning cash balance is $12.000 at any time from a local bank. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget.000. .172. 8-194 Copyright © 2015 McGraw-Hill Education. The desired ending cash balance is $20. Required: Prepare the company's cash budget for August in good form. 8-195 Copyright © 2015 McGraw-Hill Education. if any.000. Required: Prepare the company's cash budget for November in good form. would be needed to attain the desired ending cash balance.000 at any time from a local bank.173. The company can borrow up to $170. . The desired ending cash balance is $20. The budgeted beginning cash balance is $11. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 08-08 Prepare a cash budget. is preparing its cash budget for November. Budgeted cash receipts total $126.000. Freet Inc. with interest not due until the following month. No reproduction or distribution without the prior written consent of McGraw-Hill Education. All rights reserved. Make sure to indicate what borrowing.000 and budgeted cash disbursements total $130.000.