Question

3.

MatchPoint Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for March for the two rackets is as follows:

	Junior	Pro Striker
Production budget	8,100 units	20,500 units

Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

	Forming Department	Assembly Department
Junior	0.2 hour per unit	0.5 hour per unit
Pro Striker	0.35 hour per unit	0.6 hour per unit

The direct labor rate for each department is as follows:

Forming Department	$19 per hour
Assembly Department	$10 per hour

Prepare the direct labor cost budget for March.

MatchPoint Racket Company
Direct Labor Cost Budget
For the Month Ending March 31
	Forming Department	Assembly Department
Hours required for production:	?	?
Junior	?	?
Pro Striker	?	?
Total hours required	?	?
Hourly rate	x$ ?	x$ ?
Total direct labor cost	$ ?	$ ?

4.

Furry Friends Supplies Inc., a pet wholesale supplier, was organized on May 1. Projected sales for each of the first three months of operations are as follows:

May	$380,000
June	520,000
July	760,000

All sales are on account. 58 percent of sales are expected to be collected in the month of the sale, 30% in the month following the sale, and the remainder in the second month following the sale.

Prepare a schedule indicating cash collections from sales for May, June, and July.

Furry Friends Supplies Inc.
Schedule of Collections from Sales
For the Three Months Ending May 31
	May	June	July
May sales on account:
Collected in May	?
Collected in June		?
Collected in July			?
June sales on account:
Collected in June		?
Collected in July			?
July sales on account:
Collected in July			?
Total cash collected	$ ?	$ ?	$ ?

5.

SafeMark Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:

March	$83,200
April	79,000
May	71,900

Depreciation, insurance, and property taxes represent $18,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. 64% of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.

Prepare a schedule indicating cash payments for selling and administrative expenses for March, April, and May.

SafeMark Financial Inc.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31
	March	April	May
March expenses:
Paid in March	$ ?
Paid in April		$ ?
April expenses:
Paid in April		?
Paid in May			$ ?
May expenses:
Paid in May			?
Total cash payments	$ ?	$ ?	$ ?

Answer 1

(3)

Direct Labor Cost Budget	Forming Department	Assembly Department
Hours required for production:
Junior	1620	4050
Pro Striker	7175	12300
Total hours required	8795	16350
Hourly rate	$19	$10
Total direct labor cost	$      167,105	$      163,500

(4)

Schedule of Collections from Sales	May	June	July
May sales on account:
Collected in May ($380000 * 58%)	$220,400
Collected in June ($380000 * 30%)		$114,000
Collected in July ($380000 * 12%)			$45,600
June sales on account:
Collected in June ($520000 * 58%)		$301,600
Collected in July ($520000 * 30%)			$156,000
July sales on account:
Collected in July ($760000 * 58%)			$440,800
Total cash collected	$ 220,400	$ 415,600	$ 642,400

(5)

Schedule of Cash Payments for Selling and Administrative Expenses	March	April	May
March expenses:
Paid in March ($65200 * 64%)	$41,728
Paid in April ($65200 * 36%)		$23,472
April expenses:
Paid in April ($61000 * 64%)		$39,040
Paid in May ($61000 * 36%)			$21,960
May expenses:
Paid in May ($53900 * 64%)			$34,496
Total cash payments	$ 41,728	$ 62,512	$ 56,456

Explanations :-

Expenses other than Depreciation. Insurance & Property taxes	March	April	May
Total Expenses	$83,200	$79,000	$71,900
Less: Depreciation, Insurance & Property taxes	$18,000	$18,000	$18,000
	$65,200	$61,000	$53,900