Question

Flagstaff Company has budgeted production units of 8,000 for July and 8,200 for August. The direct materials requirement per unit is 3 ounces (oz.). The company has determined that it wants to have safety stock of direct materials on hand at the end of each month to complete 25% of the units budgeted in the following month. There was 6,000 ounces of direct material in inventory at the start of July. The total cost of direct materials purchases for the July direct materials budget, assuming the materials cost $1.20 per ounce, is:

A) $28,800.

B) $28,980.

C) $21,600.

D) $28,620.

E) $36,180.

A sporting goods manufacturer budgets production of 55,000 pairs of ski boots in the first quarter and 46,000 pairs in the second quarter of the upcoming year. Each pair of boots require 2 kg of a key raw material. The company aims to end each quarter with ending raw materials inventory equal to 15% of the following quarter’s material needs. Beginning inventory for this material is 16,500 kg and the cost per kg is $8. What is the budgeted materials need in kg. in the first quarter?

A) 123,800 kg.

B) 107,300 kg.

C) 140,300 kg.

D) 110,000 kg.

E) 126,500 kg.

Based on a predicted level of production and sales of 16,000 units, a company anticipates total variable costs of $78,400, fixed costs of $27,200, and operating income of $34,080. Based on this information, the budgeted amount of variable costs for 13,000 units would be:

A) $165,192.

B) $27,200.

C) $61,280.

D) $63,700.

E) $78,400.

Memphis Company anticipates total sales for April, May, and June of $830,000, $930,000, and $980,000 respectively. Cash sales are normally 30% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are collected in the second month. Compute the amount of accounts receivable reported on the company’s budgeted balance sheet for June 30.

A) $480,200.

B) $543,900.

C) $512,750.

D) $851,950.

E) $922,950.

Ratchet Manufacturing anticipates total sales for August, September, and October of $210,000, $215,000, and $225,500 respectively. Cash sales are normally 20% of total sales and the remaining sales are on credit. All credit sales are collected in the first month after the sale. Compute the amount of cash received for September.

A) $211,000.

B) $168,000.

C) $85,000.

D) $172,000.

E) $340,000.

Answer 1

!)	Materials production Budget
					july		August
	Budgeted production				8,000		8,200
	ounces per unit required				3		3
	total ounces required				24,000		24600
	ending inventory (24600*25%)				6150
	total needs				30,150
	less:opening inventory				6,000
	materials required				24,150
	cost per unit				1.2
	total cost of materials				28980
	answer )	Option B	$28,980
2)	Budgeted production				55,000
	kgs required per unit				2
	total kgs required				110000
	Answer)	Option D	110,000 kgs
3)	Variable cost for 13,000 units
	78400/16000*13000
	63700
	Answer)	option D	$63,700
4)	Account receivable reported for June 30
	May	(930,000*70%*5%)=			32550
	June	(980,000*70%*70%)=			480200
	Account receivable reported for June 30				512750
	Answer )	Option C	$512,750
5)	Cash received for September
	September sales cash		(215000*20%)=		43000
	August sales (210,000*80%)=				168000
	Cash received for September				211000
	Answer)	Option A)	$211,000