CH. 8 acct

The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 8,000 direct labor-hours will be required in February. The variable overhead rate is $9.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $114,400 per month, which includes depreciation of $18,180. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for February should be:

$23.90 per direct labor-hour

Tracie Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.2 yards of cloth. Selected data from Tracie's master budget for next quarter are shown below: JulyAugustSeptemberBudgeted sales (in units)8,00010,00012,000Budgeted production (in units)9,00011,50014,000 Each unit requires 0.9 hours of direct labor, and the average hourly cost of Tracie's direct labor is $19. What is the cost of Tracie Corporation's direct labor in September?

$239,400

Sedita Incorporated is working on its cash budget for July. The budgeted beginning cash balance is $27,000. Budgeted cash receipts total $199,000 and budgeted cash disbursements total $198,000. The desired ending cash balance is $47,000. The excess (deficiency) of cash available over disbursements for July will be:

$28,000

Smith Corporation makes and sells a single product called a Pod. Each Pod requires 1.4 direct labor-hours at $9.60 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. Smith Corporation is preparing a Direct Labor Budget for the second quarter of the year. In June the company has budgeted to produce 22,000 Pods. Budgeted direct labor costs incurred in June would be:

$295,680

Bux Corporation produces and sells one product. In November it expects to sell 10,600 units of this product. The company's variable selling and administrative expense is $3.70 per unit sold and its fixed selling and administrative expense is $50,000 per month. The estimated selling and administrative expense for November is closest to:

$89,220

The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable manufacturing overhead is $4 per direct labor-hour; the budgeted fixed manufacturing overhead is $84,000 per month, of which $15,900 is factory depreciation. If the budgeted direct labor time for November is 7,900 hours, then the total budgeted manufacturing overhead for November is:

$99,700 Budgeted variable manufacturing expense = $4*7,900 = $31,600 Fixed manufacturing expenses exclude depreciation = $84,000-15,900 =$$68,100

Lusk Corporation produces and sells 14,900 units of Product X each month. The selling price of Product X is $31 per unit, and variable expenses are $25 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $73,000 of the $113,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product should be:

($49,400)

Fabri Corporation is considering eliminating a department that has an annual contribution margin of $37,000 and $74,000 in annual fixed costs. Of the fixed costs, $18,500 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be:

18,500

Parwin Corporation plans to sell 34,000 units during August. If the company has 13,500 units on hand at the start of the month, and plans to have 14,500 units on hand at the end of the month, how many units must be produced during the month?

35000 units Parwin corporation plans to sell 34000 units company had 13500 units in hand company planning to have 14500 units at the end of the month. number of units to be produced per month=34000+14500-13500=35000units

Reaser Corporation makes one product. AprilMayJuneJulyBudgeted unit sales8,4008,70012,60013,100 Each unit of finished goods requires 4 pounds of raw materials. The ending finished goods inventory equals 10% of the following month's sales. The ending raw materials inventory equals 40% of the following month's raw materials production needs. If 50,600 pounds of raw materials are required for production in June, then the budgeted raw material purchases for May is closest to:

42,056 pounds

Seventy percent of Pitkin Corporation's sales are collected in the month of sale, 20% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data for the company: JanuaryFebruaryMarchAprilBudgeted sales$200,000$300,000$350,000$250,000 Total budgeted cash collections in April would be:

=(0.7*250,000)+(0.2*350,000)+(0.1*300,000) =$275000.

Which of the following statements is true?

A benefit from budgeting is that it forces managers to think about and plan for the future.

Which of the following statements is true? Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period. The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory.

Both statements are true.

Which of the following statements is true?

Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period. The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory.

The following are Silver Corporation's unit costs of making and selling an item at a volume of 8,000 units per month (which represents the company's capacity): Manufacturing: Direct materials$ 4Direct labor$ 5Variable overhead$ 2Fixed overhead$ 8Selling and administrative: Variable$ 1Fixed$ 6 Present sales amount to 7,000 units per month. An order has been received from a customer in a foreign market for 1,000 units. The order would not affect regular sales. Total fixed costs, both manufacturing and selling and administrative, would not be affected by this order. The variable selling and administrative costs would have to be incurred for this special order as well as all other sales. Assume that direct labor is a variable cost. Assume the company has 50 units left over from last year which have small defects and which will have to be sold at a reduced price for scrap. The sale of these defective units will have no effect on the company's other sales. Which of the following costs is relevant in this decision?

Correct Answer ---$1 Variable selling And Administrative Cost Explanation Defective item has been produced after incurring Variable cost. The cost that has already been incurred is considered Sunk cost. Variable Selling and Administrative cost is a future cost. In other words Variable selling and Administrative cost is relevant cost as it is incurred at the time of sale of goods. Silver Corporation can sell Defective goods if the sale price is more than variable selling and administrative costs.

Seventy percent of Pitkin Corporation's sales are collected in the month of sale, 20% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data for the company: JanuaryFebruaryMarchAprilBudgeted sales$200,000$300,000$350,000$250,000 Total budgeted cash collections in April would be:

February sales ($300,000 × 10%)$ 30,000March sales ($350,000 × 20%)$ 70,000April sales ($250,000 × 70%)$ 175,000Total cash collections$ 275,000

Jeanclaude Corporation produces and sells one product. The budgeted selling price per unit is $105. Budgeted unit sales for July, August, September, and October are 7,400, 7,500, 13,800, and 15,300 units, respectively. All sales are on credit. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. The budgeted accounts receivable balance at the end of August is closest to:

From August sales = 105*7500*60% = $ 472,500 (Answer)

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?

It is calculated based on the sales budget and the desired ending inventory.

Which of the following statements is NOT correct concerning the Manufacturing Overhead Budget?

The Manufacturing Overhead Budget shows only the variable portion of manufacturing overhead.

Which of the following statements is true?

The direct labor budget begins with the required production in units from the production budget. The direct labor budget shows the direct labor-hours required to satisfy the production budget.

When preparing a direct materials budget, the required purchases of raw materials in units equals:

raw materials needed to meet the production schedule + desired ending inventory of raw materials - beginning inventory of raw materials.

When preparing a direct materials budget, the required purchases of raw materials in units equals:

raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials.

Accepting a special order will improve overall net operating income if the revenue from the special order exceeds:

the incremental costs associated with the order.

The usual starting point for a master budget is:

the sales forecast or sales budget.