Hamway Products, Inc. makes and sells a single product called a Wob. It takes two yards of material A to make one Wob. Budgeted production of Wobs for the next four months is as follows:

Hamway Products, Inc. makes and sells a single product called a Wob. It takes two yards of material A to make one Wob. Budgeted production of Wobs for the next four months is as follows:

 

The company wants to maintain monthly ending inventories of material A equal to 10% of the following month’s production needs. On March 31 this target had not been met since only 1,500 yards of material A were on hand. The cost of material A is $.90 per yard.

66. The total cost of material A to be purchased in April is:

A) $22,680

B) $24,750

C) $26,750

D) $26,780

Level: Medium    LO:  4    Ans:  A

67. The desired ending inventory of material A for the month of June is

A) 2,480 yards

B) 1,120 yards

C) 1,870 yards

D) 2,240 yards

Level: Easy    LO:  4    Ans:  D

Use the following information to answer 68-70

The Gerald Company makes and sells a single product called a Clop. Each Clop requires the use of 1.1 hours of direct labor time. The planned cost of direct labor time is $8.20 per hour. The direct labor workforce is fully adjusted each month to the required workload. The company wishes to prepare a Direct Labor Budget for the first quarter of the year.

68. If the company has budgeted to produce 20,000 Clops in January, then the budgeted direct labor cost for January is:

A) $164,000

B) $180,400

C) $172,200

D) $195,600

Level: Easy    LO:  5    Ans:  B

69. If the budgeted direct labor cost for February is $162,360, then the budgeted production of Clops for February is:

A) 23,200 units

B) 21,000 units

C) 19,800 units

D) 18,000 units

Level: Easy    LO:  5    Ans:  D

70. The budgeted direct labor cost per Clop is:

A) $7.45

B) $8.20

C) $9.02

D) $9.76

Level: Easy    LO:  5    Ans:  C

Use the following information to answer 71-72

Acmal Manufacturing Company is estimating the following raw material purchases for the last four months of the year:

 

At Acmal, 25% of raw materials purchases are normally paid for in the month of purchase. The remaining 75% is paid for in the month following the purchase.

71. How much cash should Acmal expect to pay out for raw material purchases during the month of November?

A) $202,500

B) $832,500

C) $862,500

D) $877,500

Level: Medium    LO:  4    Ans:  D

72. In Acmal’s budgeted balance sheet at December 31, at what amount will accounts payable be shown? (Assume that accounts payable is only used for raw material purchases.)

A) $585,000

B) $607,500

C) $780,000

D) $802,500

Level: Medium    LO:  4    Ans:  A

Use the following information to answer 73-74

Cashan Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 1.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows:

 

The company wants to maintain monthly ending inventories of Jurislon equal to 30% of the following month’s production needs. On July 31, this requirement was not met since only 10,400 kilograms of Jurislon were on hand. The cost of Jurislon is $4.00 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months.

73. The desired ending inventory of Jurislon for the month of September is:

A) $29,640

B) $29,520

C) $44,460

D) $44,280

Level: Medium    LO:  4    Ans:  D

74. The total cost of Jurislon to be purchased in August is:

A) $149,860

B) $252,400

C) $191,460

D) $147,000

Level: Medium    LO:  4    Ans:  A

Use the following information to answer 75-78

The Panza Company makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available:

 

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

75. If the company has budgeted to sell 18,000 Debs in January, then the total budgeted variable selling and administrative expenses for January will be:

A) $13,500

B) $23,400

C) $37,900

D) $40,500

Level: Easy    LO:  7    Ans:  D

76. If the company has budgeted to sell 16,000 Debs in February, then the total budgeted fixed selling and administrative expenses for February is:

A) $36,000

B) $77,000

C) $62,000

D) $98,000

E) none of these

Level: Easy    LO:  7    Ans:  B

77. If the company has budgeted to sell 20,000 Debs in March, then the total budgeted selling and administrative expenses per unit sold for March is:

A) $2.25

B) $5.35

C) $5.80

D) $6.10

Level: Easy    LO:  7    Ans:  D

78. If the budgeted cash disbursements for selling and administrative expenses for April total $116,000, then how many Debs does the company plan to sell in April?

A) 17,333 units

B) 18,250 units

C) 24,000 units

D) 26,800 units

Level: Medium    LO:  7    Ans:  C

Use the following information to answer 79-81

Davey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable factory overhead rate is $3.00 per direct labor-hour; the budgeted fixed factory overhead is $66,000 per month, of which $10,000 is factory depreciation.

79. If the budgeted direct labor time for October is 6,000 hours, then the total budgeted factory overhead for October is:

A) $28,000

B) $56,000

C) $74,000

D) $84,000

Level: Easy    LO:  6    Ans:  D

80. If the budgeted direct labor time for November is 9,000 hours, then the total budgeted cash disbursements for November must be:

A) $56,000

B) $83,000

C) $37,000

D) $93,000

Level: Medium    LO:  6    Ans:  B

81. If the budgeted direct labor time for December is 4,000 hours, then the predetermined factory overhead per direct labor-hour for December would be:

A) $3.00

B) $19.50

C) $5.50

D) $17.00

Level: Medium    LO:  6    Ans:  B

Use the following information to answer 82-84

Poriss Corporation makes and sells a single product called a Yute. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the year. The following budget data are available:

 

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

82. If the company has budgeted to sell 19,000 Yutes in November, then the total budgeted variable selling and administrative expenses for November would be:

A) $546,000

B) $280,000

C) $266,000

D) $536,000

Level: Medium    LO:  7    Ans:  A

83. If the company has budgeted to sell 16,000 Yutes in December, then the budgeted total cash disbursements for selling and administrative expenses for December would be:

A) $280,000

B) $494,000

C) $224,000

D) $504,000

Level: Medium    LO:  7    Ans:  B

84. If the budgeted cash disbursements for selling and administrative expenses for October total $459,200, then how many Yutes does the company plan to sell in October?

A) 13,300 units

B) 12,500 units

C) 13,000 units

D) 12,800 units

Level: Hard    LO:  7    Ans:  D

Use the following information to answer 85-87

Sipan Retail Company was recently created with a beginning cash balance of $12,000. The owner expects the following for the first month of operations:

 

The display cases above were purchased at the beginning of the month and are being depreciated at a rate of $200 per month. This amount is included in the selling and administrative expenses figure above. All other selling and administrative expenses are paid as incurred. Sipan wants to maintain a cash balance of $10,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000. All borrowings are made at month end.

85. In Sipan’s cash budget for this first month, how much money will Sipan need to borrow at month end?

A) $7,000

B) $16,000

C) $17,000

D) $28,000

Level: Hard    LO:  8    Ans:  B

86. In Sipan’s budgeted income statement for this first month, what will net income (loss) be for this first month?

A) $(1,000)

B) $(2,000)

C) $7,400

D) $9,500

Level: Medium    LO:  9    Ans:  C

87. In Sipan’s budgeted balance sheet at the end of this first month, at what amount will accounts receivable be shown?

A) $0

B) $9,600

C) $18,000

D) $26,000

Level: Medium    LO:  10    Ans:  C

Use the following information to answer 88-89

The Ellis Company has budgeted its activity for September according to the following information:

Sales are budgeted at $392,000 and all sales are for cash.

All purchases of merchandise inventory are for cash. Merchandise inventory was $150,000 on August 31 and the planned merchandise inventory on September 30 is $140,000. All merchandise is sold at 40% above cost.

The selling and administrative expenses are budgeted at $92,000 for the month. All of these expenses are paid for in cash except for depreciation of $12,000.

88. The budgeted net income for September is:

A) $20,000

B) $143,200

C) $112,000

D) $64,800

Level: Medium    LO:  9    Ans:  A

89. The budgeted cash disbursements for September are:

A) $140,000

B) $270,000

C) $350,000

D) $362,000

Level: Medium    LO:  8    Ans:  C

Use the following information to answer 90-93

Kelly Company is a retail sporting goods store. Facts regarding Kelly’s operations are as follows:

Sales are budgeted at $220,000 for November and $200,000 for December.

Collections are expected to be 60% in the month of sale and 38% in the month following the sale. 2% of sales are expected to be uncollectible.

The cost of goods sold is 75% of sales.

A total of 80% of the merchandise is purchased in the month prior to the month of sale and 20% is purchased 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 $22,600.

Monthly depreciation is $18,000.

 

90. The budgeted cash collections for November are:

A) $208,000

B) $132,000

C) $203,600

D) $212,000

Source: CMA, adapted

Level: Medium    LO:  8    Ans:  A

91. The net income for November is:

A) $32,400

B) $28,000

C) $14,400

D) $10,000

Source: CMA, adapted

Level: Hard    LO:  9    Ans:  D

92. The projected balance in accounts payable on November 30 is:

A) $162,000

B) $204,000

C) $153,000

D) $160,000

Source: CMA, adapted

Level: Medium    LO:  10    Ans:  C

93. The projected balance in inventory on November 30 is:

A) $160,000

B) $120,000

C) $153,000

D) $150,000

Source: CMA, adapted

Level: Hard    LO:  10    Ans:  B

Use the following information to answer 94-102

Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s operations follow:

Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.

Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and 1% uncollectible.

The cost of goods sold is 65% 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.

Other monthly expenses to be paid in cash are $20,300.

Monthly depreciation is $20,000.

Ignore taxes.

 

94. Expected cash collections in December are:

A) $230,000

B) $184,000

C) $233,400

D) $49,400

Level: Hard    LO:  2    Ans:  C

95. The cost of December merchandise purchases would be:

A) $141,700

B) $169,000

C) $81,900

D) $149,500

Level: Hard    LO:  3    Ans:  A

96. December cash disbursements for merchandise purchases would be:

A) $141,700

B) $149,500

C) $157,300

D) $81,900

Level: Hard    LO:  3    Ans:  C

97. The excess (deficiency) of cash available over disbursements for December would be:

A) $55,800

B) $37,900

C) $93,700

D) $17,900

Level: Hard    LO:  8    Ans:  A

98. The net income for December would be:

A) $60,200

B) $37,900

C) $40,200

D) $55,800

Level: Hard    LO:  9    Ans:  B

99. The cash balance at the end of December would be:

A) $180,500

B) $153,500

C) $82,800

D) $27,000

Level: Hard    LO:  10    Ans:  A

100. The accounts receivable balance, net of uncollectible accounts, at the end of December would be:

A) $46,000

B) $93,100

C) $43,700

D) $81,300

Level: Hard    LO:  10    Ans:  C

101. Accounts payable at the end of December would be:

A) $81,900

B) $141,700

C) $59,800

D) $149,500

Level: Hard    LO:  10    Ans:  B

102. Retained earnings at the end of December would be:

A) $380,400

B) $418,300

C) $471,300

D) $466,400

Level: Hard    LO:  10    Ans:  D

Use the following information to answer 103-106

Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store’s operations follow:

Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.

Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible.

The cost of goods sold is 75% of sales.

The company purchases 70% of its merchandise in the month prior to the month of sale and 30% 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 $21,800.

Monthly depreciation is $19,000.

Ignore taxes.

103. Expected cash collections in December are:

A) $340,000

B) $328,100

C) $272,000

D) $56,100

Level: Hard    LO:  2    Ans:  B

104. The cost of December merchandise purchases would be:

A) $225,000

B) $178,500

C) $247,500

D) $255,000

Level: Hard    LO:  3    Ans:  D

105. December cash disbursements for merchandise purchases would be:

A) $178,500

B) $255,000

C) $225,000

D) $252,750

Level: Hard    LO:  3    Ans:  D

106. The excess (deficiency) of cash available over disbursements for December would be:

A) $34,000

B) $19,550

C) $87,550

D) $53,550

Level: Hard    LO:  8    Ans:  D