ch.9

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Question 1: Score 0/4

Your response Correct response

Exercise 9-1 Schedule of Expected Cash Collections [LO2]

Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below:

April May June Total

Budgeted sales (all on account) $ 300,000 $ 500,000 $ 200,000 $ 1,000,000

From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000.

Requirement 1:

Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

February sales $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) March sales 1 (0%) 1 (0%) 1 (0%) 1 (0%) April sales 1 (0%) 1 (0%) 1 (0%) 1 (0%) May sales 1 (0%) 1 (0%) 1 (0%) 1 (0%) June sales 1 (0%) 1 (0%) 1 (0%) 1 (0%) Total cash collections $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

Exercise 9-1 Schedule of Expected Cash Collections [LO2]

Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below:

Budgeted sales (all on account) $ 300,000 $ 500,000 $ 200,000 $ 1,000,000

From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000.

Requirement 1:

Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

February sales $ 23,000 $ 0 $ 0 $ 23,000

March sales 182,000 26,000 0 208,000

April sales 60,000 210,000 30,000 300,000

May sales 0 100,000 350,000 450,000

June sales 0 0 40,000 40,000

Total cash collections $ 265,000 $ 336,000 $ 420,000 $ 1,021,000

Total grade: 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 + 0.0×1/24 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

February sales: $230,000 × 10% $ 23,000 $ 23,000 March Sales: $260,000 × 70%, 10% 182,000 $ 26,000 208,000 April sales: $300,000 × 20%, 70%, 10% 60,000 210,000 $ 30,000 300,000 May sales: $500,000 × 20%, 70% 100,000 350,000 450,000 June sales: $200,000 × 20% 40,000 40,000

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Total cash collections $ 265,000 $ 336,000 $ 420,000 $ 1,021,000

Observe that even though sales peak in May, cash collections peak in June. This occurs because the bulk of the company's customers pay in the month following sale. The lag in collections that this creates is even more pronounced in some companies. Indeed, it is not unusual for a company to have the least cash available in the months when sales are greatest.

Requirement 2:

Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date. (Omit the "$" sign in your response.)

Accounts receivable $ 1 (0%)

Requirement 2:

Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date. (Omit the "$" sign in your response.)

Accounts receivable $ 210,000

Total grade: 0.0×1/1 = 0% Feedback:

Accounts receivable at June 30:

From May sales: $500,000 × 10% $ 50,000 From June sales: $200,000 × (70% + 10%) 160,000 Total accounts receivable at June 30 $ 210,000

Exercise 9-2 Production Budget [LO3]

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

Sales in Units April 50,000 May 75,000 June 90,000 July 80,000

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units.

Required:

Show the number of units to be produced each month and for the quarter in total.

Required

Production

Exercise 9-2 Production Budget [LO3]

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

Sales in Units April 50,000 May 75,000 June 90,000 July 80,000

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units.

Required:

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April 1 (0%) May 1 (0%) June 1 (0%) Quarter 1 (0%) _ProductionRequired April 52,500 May 76,500 June 89,000 Quarter 218,000 Total grade: 0.0×1/4 + 0.0×1/4 + 0.0×1/4 + 0.0×1/4 = 0% + 0% + 0% + 0% Feedback:

April May June Quarter

Budgeted sales in units 50,000 75,000 90,000 215,000 Add desired ending inventory* 7,500 9,000 8,000 8,000

Total needs 57,500 84,000 98,000 223,000

Less beginning inventory 5,000 7,500 9,000 5,000 Required production 52,500 76,500 89,000 218,000

*10% of the following month's sales in units.

Exercise 9-3 Direct Materials Budget [LO4]

Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is 150 roubles per kilogram. (Siberia is located in Russia, whose currency is the rouble.) Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

Year 2 Year 3

First Second Third Fourth First

Budgeted production, in bottles 60,000 90,000 150,000 100,000 70,000

Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. Required:

Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases in roubles for each quarter and for the year in total. (Input all amounts as positive values.)

Year 2

First Second Third

Production needs—grams 1 (0%) 1 (0%) 1 (0%)

Less (0%) : desired ending inventory—grams 1 (0%) 1 (0%) 1 (0%)

Total needs—grams 1 (0%) 1 (0%) 1 (0%)

Add (0%) : beginning inventory—grams 1 (0%) 1 (0%) 1 (0%)

Exercise 9-3 Direct Materials Budget [LO4]

Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is 150 roubles per kilogram. (Siberia is located in Russia, whose currency is the rouble.) Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

Year 2 Year 3

Budgeted production, in bottles 60,000 90,000 150,000 100,000 70,000

Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. Required:

Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases in roubles for each quarter and for the year in total. (Input all amounts as positive values.)

Year 2

First Second Third

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Raw materials to be purchased—grams 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Cost of raw materials to be purchased 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Add : desired ending inventory—grams 54,000 90,000 60,000 42,000 42,000

Total needs—grams 234,000 360,000 510,000 342,000 1,242,000

Less : beginning inventory—grams 36,000 54,000 90,000 60,000 36,000

Raw materials to be purchased—grams 198,000 306,000 420,000 282,000 1,206,000

Cost of raw materials to be purchased 29,700 45,900 63,000 42,300 180,900

Total grade: 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 + 0.0×1/32 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Year 2 Year 3

Required production in bottles 60,000 90,000 150,000 100,000 ₀ 70,00

Number of grams per bottle × 3 × 3 × 3 × 3 × 3

Total production needs—grams 180,000 270,000 450,000 300,000 210,00 0

Exercise 9-4 Direct Labor Budget [LO5]

The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Units to be produced 8,000 6,500 7,000 7,500

Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour. Requirement 1:

Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Omit the "$" sign in your response.)

Total direct

labor cost 1st Quarter $ 1 (0%) 2nd Quarter $ 1 (0%) 3rd Quarter $ 1 (0%)

Exercise 9-4 Direct Labor Budget [LO5]

The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour. Requirement 1:

Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Omit the "$" sign in your response.)

Total direct labor cost 1st Quarter $ 33,600 2nd Quarter $ 27,300

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4th Quarter $ 1 (0%) Year $ 1 (0%) 3rd Quarter $ 29,400 4th Quarter $ 31,500 Year $ 121,800 Total grade: 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 = 0% + 0% + 0% + 0% + 0% Feedback:

Assuming that the direct labor workforce is adjusted each quarter, the direct labor budget is:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Units to be produced 8,000 6,500 7,000 7,500 29,000 Direct labor time per unit (hours) × 0.35 × 0.35 × 0.35 × 0.35 × 0.35 Total direct labor hours needed 2,800 2,275 2,450 2,625 10,150 Direct labor cost per hour × $12.00 × $12.00 × $12.00 × $12.00 × $12.00 Total direct labor cost $ 33,600 $ 27,300 $ 29,400 $ 31,500 $ 121,800

Requirement 2:

Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company's direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. (Omit the "$" sign in your response.)

Total direct labor cost 1st Quarter $ 1 (0%) 2nd Quarter $ 1 (0%) 3rd Quarter $ 1 (0%) 4th Quarter $ 1 (0%) Year $ 1 (0%) Requirement 2:

Compute the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company's direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. (Omit the "$" sign in your response.)

Total direct labor cost 1st Quarter $ 34,800 2nd Quarter $ 31,200 3rd Quarter $ 31,200 4th Quarter $ 31,650 Year $ 128,850 Total grade: 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 = 0% + 0% + 0% + 0% + 0% Feedback:

Assuming that the direct labor workforce is not adjusted each quarter and that overtime wages are paid, the direct labor budget is: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Units to be produced 8,000 6,500 7,000 7,500

Direct labor time per unit (hours) × 0.35 × 0.35 × 0.35 × 0.35 Total direct labor hours needed 2,800 2,275 2,450 2,625

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Regular hours paid 2,600 2,600 2,600 2,600

Overtime hours paid 200 0 0 25

Wages for regular hours (@ $12.00 per hour) $ 31,200 $ 31,200 $ 31,200 $ 31,200 $ 124,800 Overtime wages (@ 1.5 hours × $12.00 per hour) 3,600 0 0 450 4,050 Total direct labor cost $ 34,800 $ 31,200 $ 31,200 $ 31,650 $ 128,850

Exercise 9-5 Manufacturing Overhead Budget [LO6]

The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:

Budgeted direct labor-hours 8,000 8,200 8,500 7,800

The company's variable manufacturing overhead rate is $3.25 per direct labor-hour and the company's fixed manufacturing overhead is $48,000 per quarter. The only non cash item included in fixed manufacturing overhead is depreciation, which is $16,000 per quarter.

Requirement 1:

Compute the company's manufacturing overhead budget for the upcoming fiscal year. (Omit the "$" sign in your response.) Cash disbursements for manufacturing overhead 1st Quarter $ 1 (0%) 2nd Quarter $ 1 (0%) 3rd Quarter $ 1 (0%) 4th Quarter $ 1 (0%) Year $ 1 (0%)

Exercise 9-5 Manufacturing Overhead Budget [LO6]

The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:

Budgeted direct labor-hours 8,000 8,200 8,500 7,800

The company's variable manufacturing overhead rate is $3.25 per direct labor-hour and the company's fixed manufacturing overhead is $48,000 per quarter. The only non cash item included in fixed manufacturing overhead is depreciation, which is $16,000 per quarter.

Requirement 1:

Compute the company's manufacturing overhead budget for the upcoming fiscal year. (Omit the "$" sign in your response.) Cash disbursements for manufacturing overhead 1st Quarter $ 58,000 2nd Quarter $ 58,650 3rd Quarter $ 59,625 4th Quarter $ 57,350 Year $ 233,625 Total grade: 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 = 0% + 0% + 0% + 0% + 0% Feedback: Yuvwell Corporation Manufacturing Overhead Budget

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year

Budgeted direct labor-hours 8,000 8,200 8,500 7,800 32,500

Variable overhead rate $ × 3.25 $ × 3.25 $ × 3.25 $ × 3.25 $ × 3.25

Variable manufacturing overhead $ 26,000 $ 26,650 $ 27,625 $ 25,350 $ 105,625

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Fixed manufacturing overhead 48,000 48,000 48,000 48,000 192,000

Total manufacturing overhead 74,000 74,650 75,625 73,350 297,625

Less depreciation 16,000 16,000 16,000 16,000 64,000

Cash disbursements for manufacturing overhead $ 58,000 $ 58,650 $ 59,625 $ 57,350 $ 233,625

Requirement 2:

Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Manufacturing overhead rate for the year $ 1 (0%)

Requirement 2:

Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Manufacturing overhead rate for the year $ 9.16

Total grade: 0.0×1/1 = 0% Feedback:

Total budgeted manufacturing overhead for the year (a) $ 297,625 Total budgeted direct labor-hours for the year (b) 32,500

Manufacturing overhead rate for the year (a) ÷ (b) $ 9.16

Exercise 9-6 Selling and Administrative Expense Budget [LO7]

The budgeted unit sales of Weller Company for the upcoming fiscal year are provided below:

Budgeted unit sales 15,000 16,000 14,000 13,000

The company's variable selling and administrative expense per unit is $2.50. Fixed selling and administrative expenses include advertising expenses of $8,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $20,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, property taxes of $8,000 will be paid in the second quarter.

Required:

Prepare the company's selling and administrative expense budget for the upcoming fiscal year. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Weller Company

Selling and Administrative Expense Budget

Exercise 9-6 Selling and Administrative Expense Budget [LO7]

The budgeted unit sales of Weller Company for the upcoming fiscal year are provided below:

The company's variable selling and administrative expense per unit is $2.50. Fixed selling and administrative expenses include advertising expenses of $8,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $20,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, property taxes of $8,000 will be paid in the second quarter.

Required:

Prepare the company's selling and administrative expense budget for the upcoming fiscal year. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Weller Company

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1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Variable expense $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

Fixed selling and administrative expenses:

Advertising 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Executive salaries 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Insurance 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Property taxes 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Depreciation 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Total fixed selling and administrative

expenses 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Total selling and administrative expenses 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Less depreciation 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Cash disbursements for selling and

administrative expenses $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Variable expense $ 37,500 $ 40,000 $ 35,000 $ 32,500 $ 145,000

Fixed selling and administrative expenses:

Advertising 8,000 8,000 8,000 8,000 32,000

Executive salaries 35,000 35,000 35,000 35,000 140,000

Insurance 5,000 0 5,000 0 10,000

Property taxes 0 8,000 0 0 8,000

Depreciation 20,000 20,000 20,000 20,000 80,000

Total fixed selling and administrative

expenses 68,000 71,000 68,000 63,000 270,000

Total selling and administrative expenses 105,500 111,000 103,000 95,500 415,000

Less depreciation 20,000 20,000 20,000 20,000 80,000

Cash disbursements for selling and

administrative expenses $ 85,500 $ 91,000 $ 83,000 $ 75,500 $ 335,000 Total grade: 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% Feedback: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Budgeted unit sales 15,000 16,000 14,000 13,000 58,000 Variable selling and administrative expense

per unit $ × 2.50 $ × 2.50 $ × 2.50 $ × 2.50 $ × 2.50

Variable expense $ 37,500 $ 40,000 $ 35,000 $ 32,500 $ 145,000

Exercise 9-7 Cash Budget [LO8]

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total cash receipts $ 180,000 $ 330,000 $ 210,000 $ 230,000 Total cash disbursements $ 260,000 $ 230,000 $ 220,000 $ 240,000

The company's beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may

Exercise 9-7 Cash Budget [LO8]

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total cash receipts $ 180,000 $ 330,000 $ 210,000 $ 230,000 Total cash disbursements $ 260,000 $ 230,000 $ 220,000 $ 240,000

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borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded. Required:

Prepare the company's cash budget for the upcoming fiscal year. (Show deficiencies, repayments, interest, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Garden Depot Cash Budget

Cash balance, beginning $ 1 (0%) $ 1 (0%) $ 1 (0%) $

Total cash receipts 1 (0%) 1 (0%) 1 (0%)

Total cash available 1 (0%) 1 (0%) 1 (0%)

Less total cash disbursements 1 (0%) 1 (0%) 1 (0%) Excess (deficiency) of cash available over disbursements 1 (0%) 1 (0%) 1 (0%)

Financing:

Borrowings (at beginnings of quarters) 1 (0%) 1 (0%) 1 (0%) Repayments (at ends of quarters) 1 (0%) 1 (0%) 1 (0%)

Interest 1 (0%) 1 (0%) 1 (0%)

Total financing 1 (0%) 1 (0%) 1 (0%)

Cash balance, ending $ 1 (0%) $ 1 (0%) $ 1 (0%) $

balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.

Required:

Prepare the company's cash budget for the upcoming fiscal year. (Show deficiencies, repayments, interest, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Garden Depot Cash Budget

Cash balance, beginning $ 20,000 $ 10,000 $ 35,800 $ 25,800

Total cash receipts 180,000 330,000 210,000 230,000

Total cash available 200,000 340,000 245,800 255,800

Less total cash disbursements 260,000 230,000 220,000 240,000

Excess (deficiency) of cash available over disbursements -60,000 110,000 25,800 15,800

Financing:

Borrowings (at beginnings of quarters) 70,000 0 0 0

Repayments (at ends of quarters) 0 -70,000 0 0

Interest 0 -4,200 0 0

Total financing 70,000 -74,200 0 0

Cash balance, ending $ 10,000 $ 35,800 $ 25,800 $ 15,800

Total grade: 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 + 0.0×1/50 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Borrowings (at beginnings of quarters):

Since the deficiency of cash available over disbursements is $60,000, the company must borrow $70,000 to maintain the desired ending cash balance of $10,000.

Interest:

$70,000 × 3% × 2 = $4,200.

Question 8: Score 0.28/4

Exercise 9-8 Budgeted Income Statement [LO9]

Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:

Exercise 9-8 Budgeted Income Statement [LO9]

Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:

(10)

Budgeted unit sales 460

Selling price per unit $ 1,950

Cost per unit $ 1,575

Variable selling and administrative expenses (per unit) $ 75 Fixed selling and administrative expenses (per year) $ 105,000

Interest expense for the year $ 14,000

Required:

Use the absorption costing income statement method, prepare the company's budgeted income statement. (Input all amounts as positive values. Omit the "$" sign in your response.)

Gig Harbor Boating Budgeted Income Statement

Interest expense (0%) $ 1 (0%)

Selling and administrative expenses (0%) 1 (0%)

Gross profit (7%) 1 (0%)

Notes payable (0%) 1 (0%)

Net operating loss (0%) 1 (0%)

Notes payable (0%) 1 (0%)

Net loss (0%) $ 1 (0%)

Budgeted unit sales 460

Selling price per unit $ 1,950

Cost per unit $ 1,575

Variable selling and administrative expenses (per unit) $ 75 Fixed selling and administrative expenses (per year) $ 105,000

Interest expense for the year $ 14,000

Required:

Use the absorption costing income statement method, prepare the company's budgeted income statement. (Input all amounts as positive values. Omit the "$" sign in your response.)

Gig Harbor Boating Budgeted Income Statement

Sales $ 897,000

Cost of goods sold 724,500

Gross profit 172,500

Selling and administrative expenses 139,500

Net operating income 33,000

Interest expense 14,000

Net income $ 19,000

Total grade: 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 1.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 + 0.0×1/14 = 0% + 0% + 0% + 0% + 7% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% Feedback:

Sales (460 units × $1,950 per unit) = $897,000

Cost of goods sold (460 units × $1,575 per unit) = $724,500

Selling and administrative expenses (460 units × $75 per unit) + $105,000 = $139,500.

Exercise 9-9 Budgeted Balance Sheet [LO10]

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

Ending Balances Cash ? Accounts receivable $ 8,100 Supplies inventory $ 3,200 Equipment $ 34,000 Accumulated depreciation $ 16,000 Accounts payable $ 1,800

Exercise 9-9 Budgeted Balance Sheet [LO10]

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

Ending Balances Cash ? Accounts receivable $ 8,100 Supplies inventory $ 3,200 Equipment $ 34,000 Accumulated depreciation $ 16,000

(11)

Common stock $ 5,000

Retained earnings ?

The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800.

Required:

Prepare the company's budgeted balance sheet. (Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

Mecca Copy Budgeted Balance Sheet Assets

Liabilities and Stockholders' Equity

Current assets: Current liabilities: Cash (5%) $ 1 (0%) Accounts payable (5%) Common stock (0%) 1 (0%) Stockholders' equity: Retained earnings (0%) 1 (0%) Supplies inventory (0%)

Total current assets

$ 1 (0%) Equipment (0%)

Plant and equipment:

Total stockholders' equity

Building (0%) 1 (0%)

Retained earnings (0%) 1 (0%)

Plant and equipment, net

1 (0%)

Total assets

$ 1 (0%) Total liabilities and stockholders' equity

Accounts payable $ 1,800

Common stock $ 5,000

Retained earnings ?

The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800.

Required:

Prepare the company's budgeted balance sheet. (Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

Mecca Copy Budgeted Balance Sheet Assets

Liabilities and Stockholders' Equity

Current assets: Current liabilities: Cash $ 12,200 Accounts payable Accounts receivable 8,100 Stockholders' equity: Supplies inventory 3,200 Common stock

Total current assets

$ 23,500 Retained earnings

Plant and equipment:

Total stockholders' equity

Equipment 34,000

Accumulated depreciation -16,000

Plant and equipment, net

18,000

Total assets $ 41,500 Total liabilities and stockholders' equity

Total grade: 1.0×1/21 + 0.0×1/21 + 1.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 + 0.0×1/21 = 5% + 0% + 5% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

Cash: Plug figure.

Retained earnings, beginning balance $ 28,000

Add net income 11,500

39,500

Deduct dividends 4,800

Retained earnings, ending balance $ 34,700

(12)

Exercise 9-10 Cash Budget Analysis [LO8]

A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts in the table. (Enter your answers in thousands of dollars. Show deficiencies, repayments, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Quarter

1 2 3 4 Year

Cash balance, beginning $ 6 $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

Add collections from customers 1 (0%) 1 (0%) 96 1 (0%) 323

Total cash available 71 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Less disbursements: Purchases of inventory 35 45 1 (0%) 35 1 (0%) Operating expenses 1 (0%) 30 30 1 (0%) 113 Equipment purchases 8 8 10 1 (0%) 36 Dividends 2 2 2 2 1 (0%) Total disbursements 1 (0%) 85 1 (0%) 1 (0%) 1 (0%)

Excess (deficiency) of cash available over disbursements -2 1 (0%) 11 1 (0%) 1 (0%)

Financing:

Borrowings 1 (0%) 15 1 (0%) 1 (0%) 1 (0%)

Repayments (including interest)* 1 (0%) 1 (0%) 1 (0%) -17 1 (0%)

Total financing 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Cash balance, ending $ 1 (0%) 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

*Interest will total $1,000 for the year.

Exercise 9-10 Cash Budget Analysis [LO8]

A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts in the table. (Enter your answers in thousands of dollars. Show deficiencies, repayments, and total financing preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Quarter

1 2 3 4 Year

Cash balance, beginning $ 6 $ 5 $ 5 $ 5 $ 6

Add collections from customers 65 70 96 92 323

Total cash available 71 75 101 97 329

Less disbursements: Purchases of inventory 35 45 48 35 163 Operating expenses 28 30 30 25 113 Equipment purchases 8 8 10 10 36 Dividends 2 2 2 2 8 Total disbursements 73 85 90 72 320

Excess (deficiency) of cash available over disbursements -2 -10 11 25 9

Financing:

Borrowings 7 15 0 0 22

Repayments (including interest)* 0 0 -6 -17 -23

Total financing 7 15 -6 -17 -1

Cash balance, ending $ 5 5 $ 5 $ 8 $ 8

*Interest will total $1,000 for the year.

Total grade: 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 + 0.0×1/42 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Exercise 9-11 Production and Direct Materials Budgets [LO3, LO4]

The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

The company expects to start the first quarter with 1,600 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished

Exercise 9-11 Production and Direct Materials Budgets [LO3, LO4]

The marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

The company expects to start the first quarter with 1,600 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished

(13)

goods inventory for the fourth quarter is 1,700 units.

In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3,120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14,820.

Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3,140 pounds. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.

Requirement 1:

Prepare the company's production budget for the upcoming fiscal year. (Input all amounts as positive values.)

Gaeber Industries Production Budget

Budgeted unit sales 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Add desired ending inventory 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Total units needed 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Less beginning inventory 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Required production 1 (0%) 1 (0%) 1 (0%) 1 (0%)

goods inventory for the fourth quarter is 1,700 units.

In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3,120 pounds and the beginning accounts payable for the first quarter is budgeted to be $14,820.

Each unit requires 2 pounds of raw material that costs $4.00 per pound. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3,140 pounds. Management plans to pay for 75% of raw material purchases in the quarter acquired and 25% in the following quarter.

Requirement 1:

Gaeber Industries Production Budget

Budgeted unit sales 8,000 7,000 6,000 7,000

Add desired ending inventory 1,400 1,200 1,400 1,700

Total units needed 9,400 8,200 7,400 8,700

Less beginning inventory 1,600 1,400 1,200 1,400

Required production 7,800 6,800 6,200 7,300

Total grade: 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Requirement 2:

(a) Prepare the company's direct materials budget. (Input all amounts as positive values. Omit the "$" sign in your response.)

Gaeber Industries Direct Materials Budget

Production needs 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Add desired ending inventory 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Total needs 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Less beginning inventory 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Raw materials to be purchased 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Cost of raw materials to be purchased $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

Requirement 2:

(a) Prepare the company's direct materials budget. (Input all amounts as positive values. Omit the "$" sign in your response.)

Gaeber Industries Direct Materials Budget

Production needs 15,600 13,600 12,400 14,600 56,200

Add desired ending inventory 2,720 2,480 2,920 3,140 3,140

Total needs 18,320 16,080 15,320 17,740 59,340

Less beginning inventory 3,120 2,720 2,480 2,920 3,120

Raw materials to be purchased 15,200 13,360 12,840 14,820 56,220

Cost of raw materials to be purchased $ 60,800 $ 53,440 $ 51,360 $ 59,280 $ 224,880

Total grade: 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% Feedback: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Required production 7,800 6,800 6,200 7,300 28,100

Raw materials per unit × 2 × 2 × 2 × 2 × 2

(14)

Production needs 15,600 13,600 12,400 14,600 56,200

(b) Prepare the schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Gaeber Industries

Schedule of Expected Cash Disbursements for Materials

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Accounts payable, beginning balance $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) 1st Quarter purchases 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) 2nd Quarter purchases 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

3rd_purchases ₁_(0%) ₁_(0%) ₁_(0%) ₁_(0%) ₁_(0%)

4th Quarter purchases 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Total cash disbursements for materials $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

(b) Prepare the schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Gaeber Industries

Schedule of Expected Cash Disbursements for Materials

Accounts payable, beginning balance $ 14,820 $ 0 $ 0 $ 0 $ 14,820

1st Quarter purchases 45,600 15,200 0 0 60,800

2nd Quarter purchases 0 40,080 13,360 0 53,440

3rd_purchases ₀ ₀ _38,520 _12,840 _51,360

4th Quarter purchases 0 0 0 44,460 44,460

Total cash disbursements for materials $ 60,420 $ 55,280 $ 51,880 $ 57,300 $ 224,880

Total grade: 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Exercise 9-14 Direct Labor and Manufacturing Overhead Budgets [LO5, LO6]

The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour.

In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter. Requirement 1:

Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Omit the "$" sign in your response.)

Raredon Corporation Direct Labor Budget

1st quarter 2nd quarter 3rd quarter 4th quarter

Exercise 9-14 Direct Labor and Manufacturing Overhead Budgets [LO5, LO6]

The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour.

In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter. Requirement 1:

Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Omit the "$" sign in your response.)

(15)

Total direct labor-hours needed 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Total direct labor cost $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

Total direct labor-hours needed 8,400 9,800 9,100 7,700 35,000

Total direct labor cost $ 88,200 $ 102,900 $ 95,550 $ 80,850 $ 367,500

Total grade: 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 + 0.0×1/10 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% Feedback:

1st quarter 2nd quarter 3rd quarter 4th quarter Year Units to be produced 12,000 14,000 13,000 11,000 50,000 Direct labor time per unit (hours) ×0.70 ×0.70 ×0.70 ×0.70 ×0.70 Total direct labor-hours needed 8,400 9,800 9,100 7,700 35,000 Direct labor cost per hour $ 10.50 $ 10.50 $ 10.50 $ 10.50 $ 10.50 Total direct labor cost $ 88,200 $ 102,900 $ 95,550 $ 80,850 $ 367,500

Requirement 2:

Prepare the company's manufacturing overhead budget. (Omit the "$" sign in your response.)

Raredon Corporation Manufacturing Overhead Budget

1st quarter 2nd quarter 3rd quarter 4th quarter Year

Variable manufacturing overhead $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) Fixed manufacturing overhead 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Total manufacturing overhead 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%) Cash disbursements for

manufacturing overhead $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) Requirement 2:

Prepare the company's manufacturing overhead budget. (Omit the "$" sign in your response.)

1st quarter 2nd quarter 3rd quarter 4th quarter Year

Variable manufacturing overhead $ 12,600 $ 14,700 $ 13,650 $ 11,550 $ 52,500

Fixed manufacturing overhead 80,000 80,000 80,000 80,000 320,000

Total manufacturing overhead 92,600 94,700 93,650 91,550 372,500

Cash disbursements for

manufacturing overhead $ 70,600 $ 72,700 $ 71,650 $ 69,550 $ 284,500

Total grade: 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 + 0.0×1/20 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Feedback:

1st quarter 2nd quarter 3rd quarter 4th quarter Year Budgeted direct labor-hours 8,400 9,800 9,100 7,700 35,000 Variable overhead rate $ ×1.50 $ ×1.50 $ ×1.50 $ ×1.50 $ ×1.50 Variable manufacturing overhead $ 12,600 $ 14,700 $ 13,650 $ 11,550 $ 52,500 Fixed manufacturing overhead 80,600 80,000 80,000 80,000 320,000 Total manufacturing overhead 92,600 94,700 93,650 91,550 372,500 Less depreciation 22,000 22,000 22,000 22,000 88,000 Cash disbursements for $ 70,600 $ 72,700 $ 71,650 $ 69,550 $ 284,500

(16)

manufacturing overhead

Exercise 9-12 Sales and Production Budgets [LO2, LO3]

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):

The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200.

The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850 units.

Requirement 1:

(a) Calculate the company's total sales. (Omit the "$" sign in your response.)

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total sales $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

Exercise 9-12 Sales and Production Budgets [LO2, LO3]

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):

The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200.

The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850 units.

Requirement 1:

(a) Calculate the company's total sales. (Omit the "$" sign in your response.)

Total sales $ 198,000 $ 216,000 $ 252,000 $ 234,000 Total grade: 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 + 0.0×1/5 = 0% + 0% + 0% + 0% + 0% Feedback: Jessi Corporation Sales Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year

Budgeted unit sales 11,000 12,000 14,000 13,000 50,000

Selling price per unit × $18.00 × $18.00 × $18.00 × $18.00 × $18.00 Total sales $ 198,000 $ 216,000 $ 252,000 $ 234,000 $ 900,000

(17)

(b) Prepare the schedule of expected cash collections. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Jessi Corporation

Schedule of Expected Cash Collections

1st_Quarter ₂nd_Quarter ₃rd_Quarter ₄th_Quarter _Year Accounts receivable, beginning balance $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

1st Quarter sales 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

2nd Quarter sales 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

3rd Quarter sales 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

4th_{Quarter sales} ₁_(0%) ₁_(0%) ₁_(0%) ₁_(0%) ₁_(0%)

Total cash collections $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%) $ 1 (0%)

(b) Prepare the schedule of expected cash collections. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Jessi Corporation

Schedule of Expected Cash Collections

1st_Quarter ₂nd_Quarter ₃rd_Quarter ₄th_Quarter _Year

Accounts receivable, beginning balance $ 70,200 $ 0 $ 0 $ 0 $ 70,200

1st Quarter sales 128,700 59,400 0 0 188,100

2nd Quarter sales 0 140,400 64,800 0 205,200

3rd Quarter sales 0 0 163,800 75,600 239,400

4th_{Quarter sales} ₀ ₀ ₀ _152,100 _152,100

Total cash collections $ 198,900 $ 199,800 $ 228,600 $ 227,700 $ 855,000

Total grade: 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 + 0.0×1/30 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Requirement 2:

Jessi Corporation Production Budget

Budgeted unit sales 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Add desired ending inventory 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Total units needed 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Less beginning inventory 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Required production 1 (0%) 1 (0%) 1 (0%) 1 (0%) 1 (0%)

Requirement 2:

Jessi Corporation Production Budget

Budgeted unit sales 11,000 12,000 14,000 13,000 50,000

Add desired ending inventory 1,800 2,100 1,950 1,850 1,850

Total units needed 12,800 14,100 15,950 14,850 51,850

Less beginning inventory 1,650 1,800 2,100 1,950 1,650

Required production 11,150 12,300 13,850 12,900 50,200

Total grade: 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 + 0.0×1/25 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0%

Exercise 10-1 Prepare a Flexible Budget [LO1]

Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company's planning budget for May appears below:

Puget Sound Divers Planning Budget For the Month Ended May 31

Exercise 10-1 Prepare a Flexible Budget [LO1]

Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company's planning budget for May appears below:

Puget Sound Divers Planning Budget

(18)

Budgeted diving-hours (q) 100

Revenue ($365.00q) $ 36,500

Expenses:

Wages and salaries ($8,000 + $125.00q) 20,500

Supplies ($3.00q) 300

Equipment rental ($1,800 + $32.00q) 5,000

Insurance ($3,400) 3,400

Miscellaneous ($630 + $1.80q) 810

Total expense 30,010

Net operating income $ 6,490

Required:

During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity. (Input all amounts as positive values. Omit the "$" sign in your response.)

Puget Sound Divers Flexible Budget For the Month Ended May 31

Revenue $ 1 (0%)

Expenses:

Wages and salaries 1 (0%)

Supplies 1 (0%)

Equipment rental 1 (0%)

Insurance 1 (0%)

Miscellaneous 1 (0%)

Total expense 1 (0%)

Net operating income $ 1 (0%)

For the Month Ended May 31

Budgeted diving-hours (q) 100

Revenue ($365.00q) $ 36,500

Expenses:

Wages and salaries ($8,000 + $125.00q) 20,500

Supplies ($3.00q) 300

Equipment rental ($1,800 + $32.00q) 5,000

Insurance ($3,400) 3,400

Miscellaneous ($630 + $1.80q) 810

Total expense 30,010

Net operating income $ 6,490

Required:

During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity. (Input all amounts as positive values. Omit the "$" sign in your response.)

Puget Sound Divers Flexible Budget For the Month Ended May 31

Revenue $ 38,325

Expenses:

Wages and salaries 21,125

Supplies 315

Equipment rental 5,160

Insurance 3,400

Miscellaneous 819

Total expense 30,819

Net operating income $ 7,506

Total grade: 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 + 0.0×1/8 = 0% + 0% + 0% + 0% + 0% + 0% + 0% + 0% Feedback:

Revenue ($365.00 × 105) = $38,325

Wages and salaries ($8,000 + ($125.00 × 105)) = $21,125 Supplies ($3.00 × 105) = $315

Equipment rental ($1,800 + ($32.00 × 105)) = $5,160 Miscellaneous ($630 + ($1.80 × 105)) = $819