Managerial Accounting Chapter 7

The WRT Corporation makes collections on sales according to the following schedule: 40% in month of sale 57% in month following sale 3% in second month following sale The following sales have been are expected: Expected Sales April $210,000 May $140,000 June $130,000 Budgeted cash collections in June should be budgeted to be? a. 130,630 b. 138,100 c. 130,000 d. 131,800

$138,100

Morrish Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,200 direct labor-hours will be required in January. The variable overhead rate is $1.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,380 per month, which includes depreciation of $8,970. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be? a. 113,340 b. 12,960 c. 91,410 d. 104,370

104,370

Budgeted sales in Acer Corporation over the next four months are given below: September October November December Budgeted sales $140,000 $150,000 $170,000 $130,000 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. $103,875 b. $98,125 c. $136,375 d. $119,500

136, 375

Arakaki Inc. is working on its cash budget for January. The budgeted beginning cash balance is $15,000. Budgeted cash receipts total $178,000 and budgeted cash disbursements total $177,000. The desired ending cash balance is $43,000. The excess (deficiency) of cash available over disbursements for January will be? a. 1,000 b. 193,300 c. 14,000 d. 16,000

16,000

Trumbull Corporation budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Experience indicates that none of the sales on account will be collected in the month of the sale, 60% will be collected the month after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September would be: a. $169,800 b. $147,960 c. $197,880 d. $194,760

169,800

Parsons Corporation plans to sell 18,000 units during August. If the company has 5,500 units on hand at the start of the month, and plans to have 6,000 units on hand at the end of the month, how many units must be produced during the month? a. 24,000 b. 18,500 c. 19,500 d. 17,500

18,500

Vandel Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 6,600 units are planned to be sold in April. The variable selling and administrative expense is $9.70 per unit. The budgeted fixed selling and administrative expense is $127,380 per month, which includes depreciation of $8,580 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be: a. $191,400 b. $118,800 c. $64,020 d. $182,820

182,820

Starg Corporation, a retailer, plans to sell 25,000 units of Product X during the month of August. If the company has 9,000 units on hand at the start of the month, and plans to have 7,000 units on hand at the end of the month, how many units of Product X must be purchased from the supplier during the month? a. 32,000 b. 23,000 c. 27,000 d. 25,000

23,000

Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales at Fab (in units) for the next three months are as follows: October November December Budgeted unit sales 28,000 25,000 31,000 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. 23,200 mugs b. 26,800 mugs c. 25,900 mugs d. 34,300 mugs

26,800

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. The excess (deficiency) of cash available over disbursements for July is? a. $23,000 b. $2,000 c. $166,000 d. $27,000

27,000

On November 1, Barnes Corporation has 8,000 units of Product A on hand. During the month, the company plans to sell 30,000 units of Product A, and plans to have 6,500 units on hand at end of the month. How many units of Product A must be produced during the month? a. 28,500 b. 31,500 c. 30,000 d. 36,500

28,500

Sioux Corporation is estimating the following sales for the first four months of next year: January $260,000 February $230,000 March $270,000 April $320,000 Sales are normally collected 60% in the month of sale, 35% in the month following the sale, and the remaining 5% being uncollectible. Based on this information, how much cash should Sioux expect to collect during the month of April? a. $286,500 b. $320,000 c. $192,000 d. $94,500

286,500

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. The excess (deficiency) of cash available over disbursements for April will be? a. $32,000 b. $190,000 c. $48,000 d. ($8,000)

32,000

Triste Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.6 yards of cloth. Selected data from Triste's master budget for next quarter are shown below: July August September Budgeted sales (in units) 7,000 9,000 10,000 Budgeted production (in units) 8,000 10,500 14,000 Each unit requires 1.6 hours of direct labor, and the average hourly cost of Triste's direct labor is $15. What is the cost of Triste Corporation's direct labor in September? a. $336,000 b. $240,000 c. $150,000 d. $210,000

336,000

The following information relates to Marter Manufacturing Corporation for next quarter: January February March Expected sales (in units) 450,000 360,000 380,000 Desired ending finished goods inventory (in units) 36,000 38,000 41,000 How many units should the company plan on producing for the month of February? a. 360,000 units b. 362,000 units c. 358,000 units d. 398,000 units

362,000

Seventy percent of Parlee Corporation's sales are collected in the month of sale, 25% in the month following sale, and 5% in the second month following sale. The following are budgeted sales data for the company: January February March April Total sales $600,000 $700,000 $500,000 $300,000 Total budgeted cash collections in April would be? a. $35,000 b. $125,000 c. $210,000 d. $370,000

370,000

Vandel Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 2,800 units are planned to be sold in April. The variable selling and administrative expense is $3.30 per unit. The budgeted fixed selling and administrative expense is $35,780 per month, which includes depreciation of $4,300 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be? a. 45,020 b. 40,720 c. 31,480 d. 9,240

40,720

Arakaki Inc. is working on its cash budget for January. The budgeted beginning cash balance is $41,000. Budgeted cash receipts total $114,000 and budgeted cash disbursements total $113,000. The desired ending cash balance is $60,000. The excess (deficiency) of cash available over disbursements for January will be: a. $42,000 b. $155,000 c. $40,000 d. $1,000

42,000

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. The April cash disbursements for manufacturing overhead on the manufacturing overhead budget should be? a. $59,070 b. $46,200 c. $27,060 d. $19,140

46,200

For July, White Corporation has budgeted production of 6,000 units. Each unit requires 0.10 direct labor-hours at a cost of $8.50 per direct labor-hour. How much will White Corporation budget for labor in July? a. $51,000 b. $5,160 c. $600 d. $5,100

5,100

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: January February March April Total sales $400,000 $600,000 $500,000 $700,000 Cash receipts in April are expected to be? a. $420,000 b. $545,000 c. $605,000 d. $185,000

605,000

Milano Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.50 direct labor-hours. The direct labor rate is $9.80 per direct labor-hour. The production budget calls for producing 6,400 units in October and 6,300 units in November. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months? a. $30,870 b. $31,360 c. $62,230 d. $31,115

62,230

Mutskic Corporation produces and sells Product BetaC. To guard against stockouts, the company requires that 30% of the next month's sales be on hand at the end of each month. Budgeted sales of Product BetaC over the next four months are: June July August September Budgeted sales in units 60,000 70,000 80,000 90,000 Budgeted production for August would be? a. 83,000 units b. 107,000 units c. 77,000 units d. 80,000 units

83,000

The selling and administrative expense budget of Ruffing Corporation is based on budgeted unit sales, which are 4,800 units for February. The variable selling and administrative expense is $8.10 per unit. The budgeted fixed selling and administrative expense is $71,520 per month, which includes depreciation of $16,800 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the February selling and administrative expense budget should be? a. $38,880 b. $54,720 c. $110,400 d. $93,600

93,600

A benefit of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack. True or False

false

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 or false

false

The direct labor budget shows the direct labor-hours required to produce the desired ending inventory. True or False

false

The direct materials budget is typically prepared before the production budget. True or False

false

The first budget a company prepares in a master budget is the production budget. True or False

false

The sales budget is usually prepared before the production budget. true or false

true