POST ACC211 Unit 5 Quiz C7 Profit Planning

| June 7, 2016

Question
Question 1

Budgeted sales in Allen Company 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:

$138,000

$133,500

$120,000

$103,500

Question 2

Berol Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month’s estimated sales. There are 150,000 finished units in inventory on June 30.

Berol Company’s production requirement in units of finished product for the three-month period ending September 30 is:

712,025 units

630,500 units

664,000 units

665,720 units

Question 3

Hagos Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.84 direct labor-hours. The direct labor rate is $9.40 per direct labor-hour. The production budget calls for producing 2,100 units in June and 1,900 units in July. 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?

$15,792.00

$15,002.40

$16,581.60

$31,584.00

Question 4

The manufacturing overhead budget at Cutchin Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,800 direct labor-hours will be required in September. The variable overhead rate is $7.00 per direct labor-hour. The company’s budgeted fixed manufacturing overhead is $43,120 per month, which includes depreciation of $3,640. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

$59,080

$62,720

$19,600

$39,480

Question 5

The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,100 direct labor-hours will be required in August. The variable overhead rate is $8.60 per direct labor-hour. The company’s budgeted fixed manufacturing overhead is $132,770 per month, which includes depreciation of $24,850. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be:

$8.60

$27.30

$23.80

$18.70

Question 6

The selling and administrative expense budget of Breckinridge Corporation is based on budgeted unit sales, which are 5,500 units for June. The variable selling and administrative expense is $1.00 per unit. The budgeted fixed selling and administrative expense is $101,200 per month, which includes depreciation of $6,050 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 June selling and administrative expense budget should be:

$100,650

$106,700

$5,500

$95,150

Question 7

Deschambault Inc. is working on its cash budget for December. The budgeted beginning cash balance is $14,000. Budgeted cash receipts total $127,000 and budgeted cash disbursements total $126,000. The desired ending cash balance is $40,000. To attain its desired ending cash balance for December, the company needs to borrow:

$25,000

$0

$55,000

$40,000

Question 8

The Kafusi Company has the following budgeted sales:

The regular pattern of collection of credit sales is 30% in the month of sale, 60% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts.

The budgeted cash receipts for July would be:

$400,000

$430,000

$435,000

$390,000

Question 9

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.5 hours of direct labor at the rate of $15.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.

The budgeted direct labor cost per unit of Product WZ would be:

$37.50

$6.00

$15.00

$17.50

Question 10

Young Enterprises 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 10% of the next month’s sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months.

The desired ending inventory for August is:

540 units

680 units

720 units

380 units

Question 11

Young Enterprises 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 10% of the next month’s sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months.

The total number of units to be produced in July is:

7,740 units

7,200 units

7,020 units

7,280 units

Response Feedback:

Production Budget

Question 12

Davol Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $6.80 per direct labor-hour; the budgeted fixed manufacturing overhead is $72,000 per month, of which $20,000 is factory depreciation.

If the budgeted direct labor time for October is 5,000 hours, then the total budgeted manufacturing overhead for October is:

$52,000

$106,000

$54,000

$86,000

Question 13

Salge Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $8.10 per direct labor-hour. The company’s budgeted fixed manufacturing overhead is $74,730 per month, which includes depreciation of $20,670. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 5,300 direct labor-hours will be required in September.

The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for September should be:

$18.30

$14.10

$8.10

$22.20

Question 14

Deshaies Corporation is preparing its cash budget for November. The budgeted beginning cash balance is $10,000. Budgeted cash receipts total $100,000 and budgeted cash disbursements total $104,000. The desired ending cash balance is $30,000.

The excess (deficiency) of cash available over disbursements for November is:

$110,000

$6,000

($4,000)

$14,000

Question 15

Deshaies Corporation is preparing its cash budget for November. The budgeted beginning cash balance is $10,000. Budgeted cash receipts total $100,000 and budgeted cash disbursements total $104,000. The desired ending cash balance is $30,000.

To attain its desired ending cash balance for November, the company should borrow:

$36,000

$30,000

$24,000

$0

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