Carter Lumber sells lumber and
general building supplies to building contractors in a medium-sized town in
Montana. Data regarding the store’s operations follow:
Sales are budgeted at $380,000
for November, $390,000 for December, and $400,000 for January.
Collections are expected to be
70% in the month of sale, 27% in the month following the sale, and 3%
uncollectible.
The cost of goods sold is 65%
of sales.
The company purchases 80% of
its merchandise in the month prior to the month of sale and 20% in the month of
sale. Payment for merchandise is made in the month following the purchase.
Other monthly expenses to be
paid in cash are $22,000.
Monthly depreciation is
$20,000.
Ignore taxes.
107. The net income for
December would be:
A) $114,500
B) $94,500
C) $101,400
D) $82,800
Level: Hard LO: 9 Ans:
D
108. The cash balance at the
end of December would be:
A) $182,400
B) $114,400
C) $13,000
D) $195,400
Level: Hard LO: 10 Ans:
D
109. The accounts receivable
balance, net of uncollectible accounts, at the end of December would be:
A) $105,300
B) $88,700
C) $117,000
D) $207,900
Level: Hard LO: 10 Ans:
A
110. Accounts payable at the
end of December would be:
A) $253,500
B) $50,700
C) $208,000
D) $258,700
Level: Hard LO: 10 Ans:
D
111. Retained earnings at the
end of December would be:
A) $259,600
B) $342,400
C) $422,000
D) $445,100
Level: Hard LO: 10 Ans:
C
Use the following information
to answer 112-113
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.
112. 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
Level: Easy LO: 6 Ans:
B
113. The company recomputes
its predetermined overhead rate every month. The predetermined overhead rate
for April should be:
A) $14.00
B) $5.80
C) $17.90
D) $12.10
Level: Easy LO: 6 Ans:
C
Use the following information
to answer 114-115
The manufacturing overhead
budget at Cardera Corporation is based on budgeted direct labor-hours. The
direct labor budget indicates that 2,300 direct labor-hours will be required in
January. The variable overhead rate is $1.00 per direct labor-hour. The
company’s budgeted fixed manufacturing overhead is $28,060 per month, which
includes depreciation of $4,600. All other fixed manufacturing overhead costs
represent current cash flows.
114. The company recomputes
its predetermined overhead rate every month. The predetermined overhead rate
for January should be:
A) $1.00
B) $12.20
C) $11.20
D) $13.20
Level: Easy LO: 6 Ans:
D
115. The January cash
disbursements for manufacturing overhead on the manufacturing overhead budget
should be:
A) $30,360
B) $2,300
C) $23,460
D) $25,760
Level: Easy LO: 6 Ans:
D
Use the following information
to answer 116-117
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 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. This open line of credit will not
have to be used until July, if at all.
116. The excess (deficiency)
of cash available over disbursements for July is:
A) $23,000
B) $2,000
C) $166,000
D) $27,000
Level: Easy LO: 8 Ans:
D
117. To attain its desired
ending cash balance for July, the company should borrow:
A) $30,000
B) $0
C) $3,000
D) $57,000
Level: Easy LO: 8 Ans:
C
Use the following information
to answer 118-119
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 company has an open line of
credit, with interest not due until the month following the month in which
funds are borrowed. Prior to April, this open line of credit will not have been
used.
118. The excess (deficiency)
of cash available over disbursements for April will be:
A) $32,000
B) $190,000
C) $48,000
D) ($8,000)
Level: Easy LO: 8 Ans:
A
119. To attain its desired
ending cash balance for April, the company needs to borrow:
A) $18,000
B) $0
C) $50,000
D) $82,000
Level: Easy LO: 8 Ans:
A
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