Question 1

Zhang Industries sells a product for $700 per unit.Unit sales for May were 400,and each month's unit sales are expected to grow by 3%.Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales.Compute the budgeted selling expense for the manager for the month ended June 30.

Accepted Answer

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Question 2

Ratchet Manufacturing anticipates total sales for August,September,and October of $200,000,$210,000,and $220,500 respectively.Cash sales are normally 25% of total sales and the remaining sales are on credit.All credit sales are collected in the first month after the sale.Compute the amount of cash received for September.

Accepted Answer

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Question 3

Memphis Company anticipates total sales for April,May,and June of $800,000,$900,000,and $950,000 respectively.Cash sales are normally 25% of total sales.Of the credit sales,30% are collected in the same month as the sale,65% are collected during the first month after the sale,and the remaining 5% are not collected.
-Compute the amount of cash received from total sales during the month of June.

Accepted Answer

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Question 4

Zhang Industries sells a product for $700.Unit sales for May were 400 and each month's sales are expected to grow by 3%.Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars.Assume 30% of Zhang's sales are for cash.The remaining 70% are credit sales; these customers pay in the month following the sale.Compute the budgeted cash receipts for June.

Accepted Answer

The budgeted cash receipts for June include 30% of June's sales and 70% of May's sales. June's sales are 400 units * 1.03 * $700 = $288,400. Cash receipts from June's sales are 30% of $288,400 = $86,520. Cash receipts from May's credit sales are 70% of 400 units * $700 = $196,000. Total cash receipts for June are $86,520 + $196,000 = $282,520.

Question 5

Zhang Industries is preparing a cash budget for June.The company has $25,000 cash at the beginning of June and anticipates $95,000 in cash receipts and $111,290 in cash payments during June.The company has no loans outstanding on June 1.Compute the amount the company must borrow,if any,to maintain a $20,000 cash balance.

Accepted Answer

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Question 6

Use the following information to determine the ending cash balance to be reported on the month ended June 30 cash budget. -Beginning cash balance on June 1,$73,000.
-Cash receipts from sales,$413,000.
-Budgeted cash payments for purchases,$268,000.
-Budgeted cash payments for salaries,$35,000.
-Other budgeted cash expenses,$57,000.
-Cash repayment of bank loan,$32,000.
-Budgeted depreciation expense,$34,000.

Accepted Answer

The ending cash balance is calculated as follows:Beginning cash balance: $73,000Add: Cash receipts from sales: $413,000Less: Budgeted cash payments for purchases: $268,000Less: Budgeted cash payments for salaries: $35,000Less: Other budgeted cash expenses: $57,000Less: Cash repayment of bank loan: $32,000Add: Budgeted depreciation expense: $34,000Ending cash balance: $94,000

Question 7

Webster Corporation is preparing a master budget for the first quarter.The company budgets production of 2,680 units in January,2,600 units in February and 2,740 units in March.Each unit requires 0.6 hours of direct labor.The direct labor rate is $12 per hour.Compute the budgeted direct labor cost for the first quarter budget.

Accepted Answer

The total units produced in the first quarter are 2,680 + 2,600 + 2,740 = 8,020 units. Each unit requires 0.6 hours of direct labor, so total labor hours are 8,020 * 0.6 = 4,812 hours. At $12 per hour, the total direct labor cost is 4,812 * $12 = $57,744.

Question 8

Zhang Industries budgets production of 300 units in June and 310 units in July.Each finished unit requires 4 pounds (lbs.)of raw material K,which costs $5 per pound.Each month's ending inventory of raw materials should be 30% of the following month's budgeted production.The June 1 raw materials inventory has 360 pounds of raw material K.Compute the budgeted purchases for raw material K in pounds for June.

Accepted Answer

1) Budgeted Production for June = 300 units
Raw material K required for each unit = 4 lbs
Total Raw material K required for June = 4 x 300 = 1200 lbs

2) June's ending inventory of raw materials should be 30% of July's budgeted production.
Budgeted Production for July = 310 units
Raw Material K required for each unit = 4 lbs
Total Raw Material K required for July = 4 x 310 = 1240 lbs
June's ending inventory of raw material = 30% of 1240 = 372 lbs

3) June 1 raw materials inventory = 360 lbs
Total raw material K required for June = 1200 lbs
Required Raw material K purchases for June = Total Raw Material K required for June - June 1 raw materials inventory + June's ending inventory of raw material
= 1200 - 360 + 372
= 1212 lbs

Therefore the budgeted purchases for raw material K in pounds for June is 1,212 lbs.

Question 9

Webster Corporation's budgeted sales for February are $325,000.Webster pays sales representatives a commission of 6% of sales dollars.The company pays a sales manager a monthly salary of $4,400 and expects advertising expense of $2,000 per month.Compute the total budgeted selling expenses for February.

Accepted Answer

The total budgeted selling expenses for February include the sales representatives' commission (6% of $325,000 = $19,500), the sales manager's salary ($4,400), and the advertising expense ($2,000). Adding these together gives $19,500 + $4,400 + $2,000 = $25,900.

Question 10

Memphis Company anticipates total sales for April,May,and June of $800,000,$900,000,and $950,000 respectively.Cash sales are normally 25% of total sales.Of the credit sales,30% are collected in the same month as the sale,65% are collected during the first month after the sale,and the remaining 5% are collected in the second month.Compute the amount of accounts receivable reported on the company's budgeted balance sheet for June 30.

Accepted Answer

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Question 11

Zhang Industries budgets production of 300 units in June and 310 units in July.Each unit requires 1.5 hours of direct labor.The direct labor rate is $14 per hour.The indirect labor rate is $21 per hour.Compute the budgeted direct labor cost for July.

Accepted Answer

For July, the budgeted direct labor cost is calculated as follows: 310 units * 1.5 hours/unit * $14/hour = $6,510.

Question 12

Glaston Company manufactures a single product using a JIT inventory system.The production budget indicates that the number of units expected to be produced are 193,000 in October,201,500 in November,and 198,000 in December.Glaston assigns variable overhead at a rate of $0.75 per unit of production.Fixed overhead equals $150,000 per month.Compute the total budgeted overhead for October.

Accepted Answer

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Question 13

Ratchet Manufacturing's August sales budget calls for sales of 8,000 units.Each month's unit sales are expected to grow by 5%.The product selling price is $25 per unit.The expected total sales dollars for September's sales budget are:

Accepted Answer

First, we need to calculate the expected unit sales for September:

August unit sales = 8,000 units 
September unit sales = August unit sales x (1 + growth rate) = 8,000 x 1.05 = 8,400 units

Next, we can calculate the expected total sales dollars for September:

September sales dollars = September unit sales x selling price per unit = 8,400 x $25 = $210,000

Therefore, the answer is choice C, $210,000.

Question 14

Ratchet Manufacturing anticipates total sales for August,September,and October of $200,000,$210,000,and $220,500 respectively.Cash sales are normally 25% of total sales and the remaining sales are on credit.All credit sales are collected in the first month after the sale.Compute the amount of accounts receivable to be reported on the company's budgeted balance sheet for August.

Accepted Answer

The answer of Ratchet Manufacturing anticipates total sales for August,September,and...

Question 15

Memphis Company anticipates total sales for April,May,and June of $800,000,$900,000,and $950,000 respectively.Cash sales are normally 25% of total sales.Of the credit sales,30% are collected in the same month as the sale,65% are collected during the first month after the sale,and the remaining 5% are not collected.
-Compute the amount of cash received from credit sales during the month of June.

Accepted Answer

For June, the total sales are $950,000. Since cash sales are 25% of total sales, credit sales are 75% of total sales. Therefore, credit sales for June = 75% of $950,000 = $712,500. The cash collected from credit sales during June includes 30% of June's credit sales, plus 65% of May's credit sales. May's total sales are $900,000, so May's credit sales = 75% of $900,000 = $675,000. Therefore, cash received from credit sales in June = (30% of $712,500) + (65% of $675,000) = $213,750 + $438,750 = $652,500.

Question 16

Webster Corporation's monthly projected general and administrative expenses include $5,000 administrative salaries,$2,400 of other cash administrative expenses,$1,350 of depreciation expense on the administrative equipment,and 0.5% monthly interest on an outstanding bank loan of $10,000.Compute the total budgeted general and administrative expenses budget per month.

Accepted Answer

$5,000 + $2,400 + $1,350 = $8,750

Plus, 0.5% of $10,000 = $50

Therefore, the total budgeted general and administrative expenses budget per month is:

$8,750 + $50 = $8,800

The closest answer choice is C, which is $8,750.

Question 17

Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 5% of the next month's sales.It estimates that May's ending inventory will consist of 14,000 units.June and July sales are estimated to be 280,000 and 290,000 units,respectively.Compute the number of units to be produced in June.

Accepted Answer

To compute the number of units to be produced in June, we need to consider the sales for June, the desired ending inventory for June, and the beginning inventory for June. The ending inventory for June should be 5% of July's sales, which is 5% of 290,000 = 14,500 units. The beginning inventory for June is the ending inventory for May, which is 14,000 units. Therefore, the units to be produced in June = June sales + June ending inventory - June beginning inventory = 280,000 + 14,500 - 14,000 = 280,500 units.

Question 18

Zhang Industries sells a product for $700.Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%.Compute the total budgeted sales dollars for the month ended June 30.

Accepted Answer

First, we need to find the expected unit sales for June using the 3% increase from May:
400 x 1.03 = 412

Then, we can find the total budgeted sales for June by multiplying the expected unit sales by the selling price:
412 x 700 = $288,400

Therefore, the answer is D.

Question 19

Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 5% of the next month's sales.It estimates that May's ending inventory will consist of 14,000 units.June and July sales are estimated to be 280,000 and 290,000 units,respectively.Trago assigns variable overhead at a rate of $1.80 per unit of production.Fixed overhead equals $400,000 per month.Compute the total budgeted overhead for June.

Accepted Answer

We can calculate the required ending inventory for June as 5% of the sales, which is:
280,000 x 5% = 14,000 units
Therefore, the ending inventory for May will also be 14,000 units as given. 
Total units required for June production = June sales + required ending inventory - May ending inventory
= 280,000 + 14,000 - 14,000 = 280,000 units
Variable overhead at a rate of $1.80 per unit of production = $1.80 x 280,000 = $504,000
Total budgeted overhead for June = Fixed overhead + Variable overhead = $400,000 + $504,000 = $904,900
Hence, the best answer choice is B.

Question 20

Zhang Industries budgets production of 300 units in June and 310 units in July.Each finished unit requires 4 pounds of raw material K,which costs $5 per pound.Each month's ending inventory of raw materials should be 30% of the following month's budgeted production.The June 1 raw materials inventory has 360 pounds of raw material K.Compute the budgeted cost of purchases for raw material K for June.

Accepted Answer

To determine the budgeted cost of purchases for raw material K for June, we need to calculate the amount of raw material K needed for production, as well as the desired ending inventory for July.

- Production needs: 4 pounds per unit x 300 units = 1,200 pounds
- Desired ending inventory for July: 30% of 310 units x 4 pounds per unit = 372 pounds

Therefore, the total amount of raw material K needed for June and July is:

1,200 + 372 - 360 (beginning inventory) = 1,212 pounds

The budgeted cost of purchases is then:

1,212 pounds x $5 per pound = $6,060

So the correct answer is D.

Quiz 20: Master Budgets and Performance Planning

Zhang Industries budgets production of 300 units in June and 310 units in July.Each unit requires 1.5 hours of direct labor.The direct labor rate is $14 per hour.The indirect labor rate is $21 per hour.Compute the budgeted direct labor cost for July.

Ratchet Manufacturing's August sales budget calls for sales of 8,000 units.Each month's unit sales are expected to grow by 5%.The product selling price is $25 per unit.The expected total sales dollars for September's sales budget are:

Zhang Industries sells a product for $700.Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%.Compute the total budgeted sales dollars for the month ended June 30.