Question

Q12:

Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $236,000, $310,000, and $403,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale.

The cash collections in November are

a.$458,490

b.$382,075

c.$211,575

d.$100,750

Q13:

Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale.

The cash collections in November are

a.$389,750

b.$410,000

c.$490,000

d.$317,750

Q14:

Production estimates for July are as follows:

Estimated inventory (units), July 1	8,500
Desired inventory (units), July 31	10,500
Expected sales volume (units), July	76,000

For each unit produced, the direct materials requirements are as follows:

Direct material A ($5 per lb.)	3 lbs.
Direct material B ($18 per lb.)	1/2 lb.

The total direct materials purchases of materials A and B (assuming no beginning or ending material inventory) required for July production is

a.$1,170,000 for A; $702,000 for B

b.$1,125,000 for A; $675,000 for B

c.$1,080,000 for A; $648,000 for B

d.$1,080,000 for A; $1,296,000 for B

Answer 1

Question 12

Answer: b.$382,075

.

Schedule of cash receipts during November
	Amount	Amount
Cash collections from November sales:
Cash sales                           [November sales x 25% = $403,000 x 25%]	$100,750
Credit sales                         [November Credit sales x 70% = ($403,000 x 75%) x 70%]	$211,575
Total collections from November sales		$312,325
Cash collections from October sales       [October Credit sales x 30% = ($310,000 x 75%) x 30%]		$69,750
Total cash collections in November		$382,075

.

.

Question 13

Answer: a.$389,750

.

Schedule of cash receipts during November
	Amount	Amount
Cash collections from November sales:
Cash sales                           [November sales x 25% = $410,000 x 25%]	$102,500
Credit sales                         [November Credit sales x 70% = ($410,000 x 75%) x 70%]	$215,250
Total collections from November sales		$317,750
Cash collections from October sales       [October Credit sales x 30% = ($320,000 x 75%) x 30%]		$72,000
Total cash collections in November		$389,750

.

.

Question 14

Answer: a.$1,170,000 for A; $702,000 for B

.

	Direct material A	Direct material B
Estimated production during July (Units)     [Refer working note]    (a)	78,000	78,000
Quantity required per unit (lbs.)                                                        (b)	3	1/2
Total quanity required        (lbs.)                                                      (c = a x b)	234,000	39,000
Price per lb.                                                                                       (d)	$5	$18
Total direct materials purchases                                                       (c x d)	$1,170,000	$702,000

.

Working note - Calculation of estimated production during July
Expected sales volume (units), July	76,000
Add: Desired inventory (units), July 31	10,500
Total required units	86,500
Less: Estimated inventory (units), July 1	8,500
Estimated production during July	78,000