Question

1.

Schedule of Cash Payments for a Service Company

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	$153,600
April	145,900
May	132,800

Depreciation, insurance, and property taxes represent $33,000 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. 73% 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	$	$	$

2.

Direct Materials Purchases Budget

Lorenzo’s Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for September:

	Units
	12" Pizza		16" Pizza
Budgeted production volume	12,700		23,500

Three direct materials are used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows:

		12" Pizza		16" Pizza
Direct materials:
	Dough	0.80	lb. per unit	1.50	lb. per unit
	Tomato	0.50		0.70
	Cheese	0.70		1.30

In addition, Lorenzo’s has determined the following information about each material:

	Dough		Tomato		Cheese
Estimated inventory, September 1	620	lb.	190	lb.	340	lb.
Desired inventory, September 30	650	lb.	180	lb.	370	lb.
Price per pound	$1.20		$2.50		$3.10

Prepare September's direct materials purchases budget for Lorenzo’s Frozen Pizza Inc. When required, enter unit prices to the nearest cent.

Lorenzo’s Frozen Pizza Inc.
Direct Materials Purchases Budget
For the Month Ending September 30
	Dough	Tomato	Cheese	Total
Units required for production:
12" pizza
16" pizza
Total pounds required
Total units to be purchased
Unit price	x $	x $	x $
Total direct materials to be purchased	$	$	$	$

3.

Direct Labor Cost Budget

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	6,500 units	21,200 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	0.25 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	$20 per hour
Assembly Department	$12 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	$	$

Answer 1