Question

In: Accounting

Master Budget Basics

  1. Q-1 llmakes Software budgeted August purchases of new software at $140,000.The store had software costing $6,000 on hand at the beginning of August, and to cover part of anticipated back-to-school sales in September they expect to have $15,000 of software on hand at the end of August.
    What was the budgeted cost of goods sold for August?

QUESTION 2

  1. The McKnight Company expects sales in 2015 of 420,000 units of serving trays. McKnight has beginning inventory for 2015 of 22,000 trays, and its target ending inventory is 15,000 trays. Compute the number of trays budgeted for production in 2015.

QUESTION 3

  1. The McKnight Company expects sales in 2015 of 56,000 units of serving trays. McKnight has beginning inventory for 2015 of 2,000 trays, and its target ending inventory is 4,500 trays. Compute the number of trays budgeted for production in 2015.

QUESTION 4

  1. Inglenook Co. produces wine. The company expects to produce 750,000 two-liter bottles of Chablis in 2015. Inglenook purchases empty glass bottles from an outside vendor. Its target ending inventory of such bottles is 20,000 ; its beginning inventor is 25,000 . For simplicity, ignore breakage. Compute the number of bottles to be purchased in 2015.

QUESTION 5

  1. The following information pertains to Hepburn Company.
    Month Sales Purchases
    January $40000 $22000
    February $36000 $20200
    March $39600 $22600
    • Cash is collected from customers 20percent in the month of the sale and 80in the month immediately following the sale.
    • 55percent of purchases are paid for in cash in the month of the purchase, and the balance is paid the following month.
    • Labor costs are 16percent of sales. Other operating costs are $35000per month, including $4000of depreciation. These costs are paid in the month incurred.
    • The cash balance on March 1st is $10000.
    • A minimum cash balance of $10000 is required at the end of the month.
    • Money can be borrowed in multiples of $500.

    How much cash will be paid in total during March? Do not use any dollar signs or commas in your answer.

QUESTION 6

  1. Inglenook Co. produces wine. The company expects to produce 880,000 two-liter bottles of Chablis in 2015. Inglenook purchases empty glass bottles from an outside vendor. Its target ending inventory of such bottles is 38,500 ; its beginning inventor is 42,000 . For simplicity, ignore breakage. Compute the number of bottles to be purchased in 2015.

1.4 points   

QUESTION 7

  1. The following information pertains to Hepburn Company.
    Month Sales Purchases
    January $38000 $15600
    February $38000 $15200
    March $45600 $16000
    • Cash is collected from customers 45percent in the month of the sale and 55in the month immediately following the sale.
    • 35percent of purchases are paid for in cash in the month of the purchase, and the balance is paid the following month.
    • Labor costs are 32percent of sales. Other operating costs are $29000per month, including $10000of depreciation. These costs are paid in the month incurred.
    • The cash balance on March 1st is $8000.
    • A minimum cash balance of $8000 is required at the end of the month.
    • Money can be borrowed in multiples of $1000.

    What is the expected cash balance at March 31st if Hepburn Company doesn t do any borrowing? 

 

Solutions

Expert Solution

Question-1      
  Budgeted Cost of Goods Sold    
       
  Inventories at the Beginning $6,000   
Add: Purchases during the Year $140,000   
  Cost of Goods available for sale $146,000   
Less: Inventories at the Ending $15,000   
  Budgeted Cost of Goods Sold $131,000   
       
  Question-2    
  Budgeted Production    
       
  Expected Sales (units) 420,000  
add: Ending Inventory required 15,000  
  Total required 435,000  
Less: Beginning Inventories 22,000  
  Budgeted Production 413,000  
       
  Question-3    
       
  Expected Sales (units) 56,000  
add: Ending Inventory required 4,500  
  Total required 60,500  
Less: Beginning Inventories 2,000  
  Budgeted Production 58,500  
       
       
  Question-4    
  No.of units to be purchased    
       
  Expected Production 750,000  
add: Ending Inventory required 20,000  
  Total required 770,000  
Less: Beginning Inventories 25,000  
  No.of units to be purchased 745,000  
       
  Question-5    
  Cash Paid in March    
      March
  Payments to suppliers    
  February month balance(20,200x45%)   9090
  March month purchase (22,600x55%)   12430
       
  Payments to suppliers(a)   21520
       
  Payments to labor (39,600x16%) (b)   6336
       
  Payment for operating expense (35,000-4,000) (c)   31000
       
  Total Cash payment in March (a+b+c)   58856
       
       
  Question-6    
  No.of units to be purchased    
       
  Expected Production 880,000  
add: Ending Inventory required 38,500  
  Total required 918,500  
Less: Beginning Inventories 42,000  
  No.of units to be purchased 876,500  
       
  Question-7    
  Expected Cash Balancein march 31    
  Begining Cash Balance (a)   8,000
Add: Receipt    
  Collection from Customers    
  February month balance(38,000x55%) 20900  
  March month (45,600x45%) 20520  
  Total collection from customer (b)   41420
Less: Payments    
  Payments to suppliers    
  February month balance(15,200x65%) 9880  
  March month purchase (16,000x35%) 5600  
  Payments to suppliers   15480
  Payments to labor (45,600x32%)    14592
  Payment for operating expense (29,000-10,000)   19000 
  Total Cash payment in March  (c)   49072 
       
  Expected Cash Balancein march 31 before borrowing (a+b-c)   348

Budgeted Cost of Goods Sold $131,000 

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  Q-1 llmakes Software budgeted August purchases of new software at $140,000.The store had software costing $6,000 on hand at the beginning of August, and to cover part of anticipated back-to-school sales in September they expect to have $15,000 of software on hand at the end of August.What was the budgeted cost of goods sold for August?
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