Caprice Corporation is a wholesaler of industrial goods. Data regarding the store’s operations follow: Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January. Collections are expected to be 80% in the month of sale, 16% in the month following the sale, and 4%

126. Caprice Corporation is a wholesaler of industrial goods. Data regarding the store’s operations follow:

Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January.

Collections are expected to be 80% in the month of sale, 16% in the month following the sale, and 4% uncollectible.

The cost of goods sold is 70% of sales.

The company purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for merchandise is made in the month following the purchase.

The November beginning balance in the accounts receivable account is $78,000.

The November beginning balance in the accounts payable account is $254,000.

Required:

(a.) Prepare a Schedule of Expected Cash Collections for November and December.

(b.) Prepare a Merchandise Purchases Budget for November and December.

Level: Medium    LO:  2,3

Ans:

 

127. Rehmer Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.61 direct labor-hours. The direct labor rate is $8.90 per direct labor-hour. The production budget calls for producing 2,600 units in July and 2,100 units in July.

Required:

Construct the direct labor budget for the next two months, assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month.

Level: Easy    LO:  5   

Ans: 

128. Kouba Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.23 direct labor-hours. The direct labor rate is $11.20 per direct labor-hour. The production budget calls for producing 4,000 units in April and 3,400 units in May. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 920 hours in total each month even if there is not enough work to keep them busy.

Required:

Construct the direct labor budget for the next two months.

Level: Medium    LO:  5   

Ans: 

 

129. Edgington Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $4.90 per direct labor-hour. The company’s budgeted fixed manufacturing overhead is $39,590 per month, which includes depreciation of $5,920. All other fixed manufacturing overhead costs represent current cash flows. The November direct labor budget indicates that 3,700 direct labor-hours will be required in that month.

Required:

(a.) Determine the cash disbursement for manufacturing overhead for November.

(b.) Determine the predetermined overhead rate for November.

Level: Easy    LO:  6   

Ans: 

 

130. The manufacturing overhead budget of Paparella Corporation is based on budgeted direct labor-hours. The November direct labor budget indicates that 6,000 direct labor-hours will be required in that month. The variable overhead rate is $2.00 per direct labor-hour. The company’s budgeted fixed manufacturing overhead is $79,200 per month, which includes depreciation of $21,000. All other fixed manufacturing overhead costs represent current cash flows.

Required:

(a.) Determine the cash disbursement for manufacturing overhead for November. Show your work!

(b.) Determine the predetermined overhead rate for November. Show your work!

Level: Easy    LO:  6   

Ans:  

131. Skeete Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $1.70 per unit. The budgeted fixed selling and administrative expense is $57,720 per month, which includes depreciation of $9,360. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 3,900 units are planned to be sold in November.

Required:

Prepare the selling and administrative expense budget for November.

Level: Easy    LO:  7   

Ans:  

132. The selling and administrative expense budget of Gullette Corporation is based on the number of units sold., which are budgeted to be 2,700 units in April. The variable selling and administrative expense is $1.90 per unit. The budgeted fixed selling and administrative expense is $35,640 per month, which includes depreciation of $7,290. The remainder of the fixed selling and administrative expense represents current cash flows.

Required:

Prepare the selling and administrative expense budget for April.

Level: Easy    LO:  7   

Ans: 

 

133. Parliman Corporation is preparing its cash budget for August. The budgeted beginning cash balance is $12,000. Budgeted cash receipts total $159,000 and budgeted cash disbursements total $162,000. The desired ending cash balance is $20,000. The company has an open line of credit that allows it to borrow up to $160,000 at any time, with interest not due until the following month. The company does not anticipate any requirement to use this open line of credit until August.

Required:

Prepare the company’s cash budget for August in good form.

Level: Easy    LO:  8   

Ans: 

 

134. Freet Inc. is preparing its cash budget for November. The budgeted beginning cash balance is $11,000. Budgeted cash receipts total $126,000 and budgeted cash disbursements total $130,000. The desired ending cash balance is $20,000. The company has an open line of credit that allows it to borrow up to $170,000 at any time, with interest not due until the following month. The company does not anticipate any requirement to use this open line of credit until November.

Required:

Prepare the company’s cash budget for November in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.

Level: Easy    LO:  8   

Ans: