Question

1.

Miller and Sons' static budget for 9,500 units of production includes $40,300 for direct materials, $53,800 for direct labor, variable utilities of $6,800, and supervisor salaries of $15,000. A flexible budget for 14,000 units of production would show

Round your final answer to the nearest dollar. Do not round interim calculations.

a.direct materials of $59,389, direct labor of $79,284, utilities of $10,021, and supervisor salaries of $18,000

b.total variable costs of $115,900

c.direct materials of $59,389, direct labor of $79,284, utilities of $10,021, and supervisor salaries of $15,000

d.the same cost structure in total

2.

Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business—September, October, and November—are $231,000, $317,000, and $418,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale.

The cash collections expected in September from accounts receivable are estimated to be

a.$129,360

b.$277,200

c.$161,700

d.$231,000

4.

Motorcycle Manufacturers, Inc. projected sales of 55,300 machines for the year. The estimated January 1 inventory is 6,540 units, and the desired December 31 inventory is 7,490 units. What is the budgeted production (in units) for the year?

a.54,350

b.41,270

c.55,300

d.56,250

Answer 1

1	Given,
	Particulars	Static budget ($)	Flexible Budget at 14,000 units ($)	Flexible Budget at 14,000 units ($)
		(Given)	Computation	Answer
	Volume (units)	9,500 units	14,000 units	14,000 units
	-Direct Materials	$40,300	($40,300/9,500*14,000)	$59,389
	-Direct Labour	$53,800	($53,800/9,500*14,000)	$79,284
	-Variable utilities	$6,800	($6,800/9,500*14,000)	$10,021
	- Supervisor salaries (Fixed overheads)	$15,000	*Note 1	$15,000
	*Note 1: Supervisor salaries is fixed cost and hence does not change with volume.
	Therefore, the answer is "Option c"
2	Given,
	Nuthatch Corporation began its operations on September 1
	Budgeted sales:
	Month	Budgeted sales
	September	$231,000
	October	$317,000
	November	$418,000
	Cash sales as a percentage of budgeted sales = 30%
	Therefore, credit sales = 70% (100%-30%) of budgeted sales
	Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale.
	Cash collections expected in September from accounts receivable
	Budgeted sales =	$231,000 (Given)
	Credit sales =	(70% of Budgeted sales)
	Credit sales =	$231,000*70%
	Credit sales =	$161,700
	Cash collections expected in September from accounts receivable = 80% of credit sales = $161,700 * 80% = $129,360
	Therefore, the answer is "Option a"
4	Projected sales = 55,300 units
	Estimated January 1 inventory (opening inventory) = 6,540 units
	Desired December 31 inventory (closing inventory) '= 7,490 units
	Budgeted production (in units) for the year = Projected sales + Closing inventory - Opening inventory
	Budgeted production (in units) for the year = 55,300 + 7,490 - 6,540
	Budgeted production (in units) for the year = 56,250
	Therefore, the answer is "Option d"