Question

1. Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory.

What is the total amount to be budgeted for manufacturing overhead for the month?

Select one:

a. $11,484

b. $2,871

c. $11,880

d. $2,970

2. Haft Construction Company determines that 54,000 pounds of direct materials are needed for production in July. There are 3,200 pounds of direct materials on hand at July 1 and the desired ending inventory is 2,800 pounds. If the cost per unit of direct materials is $3, what is the budgeted total cost of direct materials purchases?

Select one:

a. $165,600

b. $160,800

c. $163,200

d. $158,400

3. Dolce Co. estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.

Cash collections for the third quarter are budgeted at

Select one:

a. $6,156,000

b. $4,428,000

c. $3,051,000

d. $5,319,000

4. The cash budget reflects

Select one:

a. expected cash receipts and cash disbursements from all sources

b. all the items that appear on a budgeted income statement

c. all the items that appear on a budgeted balance sheet

d. all revenues and all expenses for a period

5. Burr, Inc.'s direct materials budget shows total cost of direct materials purchases for April $400,000, May $480,000 and June $560,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for June are

Select one:

a. $528,000

b. $512,000

c. $480,000

d. $416,000

Answer 1

1.

Manufacturing overhead for the month = Boxes produced * Direct labour hours per box * Cost per hour * Overhead rate applied

= 870 * 0.25 * 12 * 110%

= 2,871

2.

Direct material purchases (in units) = Direct materials needed for production + Desired ending inventory - Beginning inventory

= 54,000 + 2,800 - 3,200

= 53,600

Total cost of Direct materials purchases = 53,600 units * 3 per unit

= 160,800

3.

First quarter sales = 180,000*25 = 4,500,000

Second quarter sales = (180,000+18,000)*25 = 4,950,000

Third quarter sales = (180,000+18,000+18,000)*25 = 5,400,000

Cash collections = Cash sales for the quarter + 70% of credit sales for the quarter + 30% of credit sales of the last quarter

= (5,400,000*40%) + (5,400,000*60%*70%) + (4,950,000*60%*30%)

= 2,160,000 + 2,268,000 + 891,000

= 5,319,000

4.

Cash budget shows the cash receipts and the cash disbursements for a period of time.

The answer is A.

5.

Budgeted cash payamnts for June = 60% of june purchases + 40% of May purchases

= (560,000*60%) + (480,000*40%)

= 336,000 + 192,000

= 528,000