ACCT CH22 QUESTIONS
Rose Company is preparing its direct labor budget for May. Projections for the month show that 8,350 units are to be produced and that direct labor time is 3 hours per unit. If the direct labor cost per hour is $9, what is the total budgeted direct labor cost for May?
225,450
Exceptional Cleaners is a commercial cleaning company. When developing their cash budget, they identified the following budgeted items: What amount will it include as cash outlays on the cash budget? $58,800 $42,800 $61,800 $45,800
$27,000 + $14,000 + $1,800 = $42,800
B&R Tax Services is preparing its direct labor budget for the first quarter of the year. The total direct labor budget for the first quarter is $55,500. The firm expects to prepare 300 small returns which take 1 hour each, 200 medium returns which take 1.75 hours each, and 100 complicated returns which take 2.75 each. What is B&R's direct labor cost per hour? $33.64 $52.86 $60.00 $92.50
$60 $55,500 / [(300 x 1) + (200 x 1.75) + (100 x 2.75)] = $60 per hour.
Josey manufactures dolls and estimates sales of $120,000 for November, $100,000 for December, and $150,000 for January. She sells each doll for $20 and the cost to make each one is $10. She expects 50% of the sales will be collected in the month of sale and the remaining 50% the following month. The beginning cash balance for November is $20,000. Beginning inventory in November is 2,000 dolls and Josey estimates to maintain at least 20% of next month's sales for ending inventory. Fixed costs each month are $10,000. Production and fixed costs are all paid in cash. Ignoring October's sales, what is Josey's estimated cash balance at the end of November? $70,000 $60,000 $20,000 $80,000
($120,000/$20) + ($100,000/$20 x 20%) - 2,000 = 5,000 units.5,000 units x $10 = $50,000.Ending cash = beginning cash + cash inflows - cash outflows.$20,000 + ($120,000 x 50%) - $50,000 - $10,000 = $20,000 cash balance at the end of November.
Will's Tooling Shop's cash budget for 2022 shows a planned purchase of new machinery costing $175,000. Will's manufacturing overhead budget shows annual depreciation on machinery of $10,174. Will also owns office equipment that costs $52,000. Depreciation on that equipment is expected to be $6,595 in 2022. Will's December 31, 2021 balance sheet shows net machinery at $245,000. Calculate Will's net machinery and equipment balance on the budgeted balance sheet for December 31, 2022. $455,231 $351,231 $403,231 $420,231
175000-10174=164826 52000-6595=45405 245000+164826+45405= 455231 Total net ending balance for tangible assets includes beginning balance plus purchases in the current period less depreciation. The problem identified two tangible assets: machinery and equipment. Machinery balance = $245,000 + $175,000 - $10,174 = $409,826Equipment balance = $52,000 - $6,595 = $45,405Net machinery and equipment at December 31, 2022 = $409,826 + $45,405 = $455,231.
E&D Clothing manufactures and sells 100% organic clothing. The company is preparing the budget for the third quarter and estimates that cash sales will be $124,000, $140,000, and $138,000 for July, August, and September, respectively. Credit sales during this time are expected to be $204,000, $210,000, and $234,000, respectively. The company collects its credit sales in the following pattern: 30% in the month of sale, 60% in the month following the sale, and 10% in the second month after the sale. What amount will be reported for accounts receivable on the budgeted September balance sheet? $184,800 $167,400 $331,200 $110,600
At the end of September, credit sales uncollected from August are 10% of $210,000 and credit sales uncollected from September are 70% of $234,000.($210,000 x 10%) + ($234,000 x 70%) = $184,800 budgeted accounts receivable balance at the end of September. 184,800
McKinnon Grocers expects to have sales of $800,000 in September and $810,000 in October. Their cost of goods sold is usually 65% of their sales. If they plan to purchase $520,520 in September, what percent of their next month's inventory do they plan to keep in stock? 10% 8% 12% 6%
Cost of goods sold = beginning inventory + purchases - ending inventory. In the problem, cost of goods sold is 65% of sales. The budgeted purchase amount is already determined, therefore, the formula can be adjusted as: Cost of Goods Sold + Ending Inventory - Beginning Inventory = Required Purchases. X is the percentage of inventory to keep in stock. 65% ($800,000 + $810,000X - $800,000X) = $520,520 $520,000 + $526,500X - $520,000X = $520,520 $6,500X = $520X = 8% Ending inventory is 8% of the next month's cost of goods sold.
Acme Gears produces gear boxes. The company has projected sales of 45,000 gear boxes for the month. Each gear box requires five gears. The company has projected beginning inventory of 22,000 gears and it plans to have 5% less than that in ending inventory. Production of one gear takes 0.5 pounds of raw material. What are the standard pounds of raw material needed for the month to meet production and achieve the desired inventory reduction? 112,500 pounds 117,842 pounds 111,950 pounds 113,050 pounds
Production = Projected Sales + Ending Inventory - Beginning Inventory Projected Sales = 45,000 gear boxes, each box requires 5 gears Ending Inventory = 5% less of beginning inventory of 22,000 gears Beginning Inventory = 22,000 gears Raw Material Needed for 1 gear = 0.5 pound 0.5 pounds [ (45,000 x 5) + (22,000 x 95%) - 22,000 ] = 111,950 pounds of raw material
Alonzo Company expects to produce 5,000 units in the first quarter of 2022, and they expect that to increase by 5% in each succeeding quarter. Each unit requires 1.5 labor hours at a cost of $13 per hour. What will Alonzo's direct labor costs be for the year? (Round each quarter's production to the nearest whole number when determining your answer.) $409,500.00 $420,264.00 $307,378.50 $441,246.00
Total labor cost would be total labor hours used for production multiplied by the labor rate per hour. First quarter expected production is 5,000 units. Second quarter expected production is 5,250 units (5,000 x 1.05) Third quarter expected production is 5,513 units (5,250 x 1.05) Fourth quarter expected production is 5,789 units (5,513 x 1.05) Total labor hours = (5,000 + 5,250 + 5,513 + 5,789 ) units x 1.5 hour per unit = 32,328 hours Total labor cost = 32,328 hours x $13 per hour = $420,264.
Jericho's Mediterranean Restaurant is preparing its budgeted balance sheet. The cash receipts budget indicates that net sales in the fourth quarter of 2022 were $36,000. Jericho expects 25% of these sales to be cash. Of the credit sales, it expects 80% to be collected in the quarter of the sale and 20% to be collected in the following quarter. Calculate the amount of accounts receivable that Jericho would report on the budgeted balance sheet at December 31, 2022. $1,800 $5,400 $9,000 $7,200
Total sales were $36,000 with 75%, or $27,000, as credit sales.$27,000 x 20% = $5,400
The Brenneman Company's direct materials budget shows total cost of direct materials purchases for January $125,000, February $150,000, and March $175,000. Cash payments are made 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are $160,000 $165,000 $150,000 $130,000
($150,000 x 40%) + ($175,000 x 60%) = $165,000.
Home Health manufactures medical supplies. For the month of April, it projects the following selling and administrative expenses: Sales commissions: 8% of sales Shipping expense: $12,800 Advertising and marketing costs payable next month: $4,200 Electric and water utilities: $1,900 Equipment depreciation: $18,700 Bad debt expense: $3,000. Sales for the month of April equal $694,000. What is the total of cash costs that will be reported on the cash budget? $597,880 $70,220 $623,780 $96,120
($694,000 x 8%) + $12,800 + $1,900 = $70,220 total cash costs on the cash budget
Waverly Shoes expects to have sales of $42,000 in August and $40,000 in September. Their cost of goods sold is usually 70% of their sales. If they plan to purchase $29,232 in August, what percent of their next month's inventory do they plan to keep in stock? 10% 14% 12% 8%
70% ($42,000 + $40,000X - $42,000X) = $29,232 $29,400 + $28,000X - $29,400X = $29,232 -$1,400X = -$168X = 12%
S&S Cycle Shop is preparing its budgeted financial statements for 2022. The budgeted income statement shows a net loss of $9,862. Total assets on the budgeted balance sheet are $864,398. Current liabilities are $75,678. Beginning retained earnings is $577,533. S&S paid no dividends. Calculate the retained earnings balance at December 31, 2022. $567,671 $587,395 $601,855 $653,211
Retained earnings is the accumulated income after paying dividends to the shareholders. Beginning retained earnings - net loss - dividends payment = Ending retained earnings $577,533 - $9,862 - $0 = $567,671
Quality Foods has budgeted $1,500,000 in sales of ginger chicken for May. It wants to end every month with inventory equal to 10 days worth of the next month's sales (based on a 30 day month). April sales are projected at $1,400,000. The sales price is $5 per box. Inventory at the beginning of April is estimated at 93,400 boxes of ginger chicken. How many boxes of ginger chicken should Quality Foods manufacture in April? 280,000 boxes 293,400 boxes 300,000 boxes 286,600 boxes
Sales based on a 30 day month for April = $1,400,000 Ending inventory is 10 days worth of next month's sale = $1,500,000 / 30 days x 10 days = $500,000 Beginning inventory = 93,400 boxes Sales Price is $5 per box ($1,400,000/$5) + ($500,000/$5) - 93,400 boxes = 286,600 boxes
Widgets Inc. is thinking about replacing a piece of manufacturing equipment with a remaining useful life of three years. The book value of the equipment is $25,000, and the machine could be sold in its current condition for $7,000. The new machine would cost $83,000 and would have no salvage value at the end of its three-year useful life. With the new machine, Widgets' variable manufacturing costs would drop from $189,500 to $169,900 per year. If Widgets opts to buy the new machine, its total variable manufacturing costs over the next three years will be $58,800 lower than with the current machine. it will be recording a loss of $25,000 on the current machine. it will see a $58,800 increase in income over the next three years. it will see a $24,200 decrease in income over the next three years.
With the old machine, Widgets' variable costs over the next three years would be $189,500 x 3 = $568,500, while with the new machine, they would be $169,900 x 3 = $509,700. This is a savings of $58,800 over three years. Selling the old machine would produce a loss of $25,000 - $7,000 = $18,000. We do not know how much income would change with the purchase of the new machine. $189,500-$169,900=19.6 19.6*3=58.8
RW Engineering has a machine with four years remaining useful life. The machine incurs $62,000 fixed and $43,000 in variable costs yearly. RW is considering a replacement that costs $102,000 and has a four-year useful life. It will incur $49,000 fixed and $28,000 variable costs each year. If the old machine has no sale or scrap value, what should RW do? Why? RW should purchase the new machine because it will realize a $10,000 increase in net income if it purchases the new machine. RW should retain the old machine because it will sustain a $105,000 decrease in net income if it purchases the new machine. RW should retain the old machine because the company will sustain a $3,000 decrease in net income if it purchases the new machine. RW should purchase the new machine because it will realize an $84,000 increase in net income if it purchases the new machine.
[4 years x $62,000] + [4 years x $43,000] = $420,000 $102,000+ [4 years x $49,000] + [4 years x $28,000]) = $410,000 $10,000 increase in net income ($420,000 - $410,000 = $10,000)
