accounting chapter 8
Shown below is the sales forecast for Cooper Inc
Accounting
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accounting chapter 8
Shown below is the sales forecast for Cooper Inc. for the first four months of the coming
year.
On average, 50% of credit sales are paid for in the month of the sale, 30% in the month following sale,
and the remainder are paid two months after the month of the sale. Assuming there are no bad debts, the
expected cash inflow in March is:
A. $138,000
B. $122,000
C. $119,000
D. $108,000
Budgeted sales in Allen Company over the next four months are given
below:
Twenty-five percent of the company's sales are for cash and 75% are on account. Collections for sales
on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of
sale, 30% are collected in the month following sale, and 15% are collected in the second month following
sale. The remainder are uncollectible. Given these data, cash collections for December should be:
A. $138,000
B. $133,500
C. $120,000
D. $103,500
The following data have been taken from the budget reports of Brandon company, a merchandising
company.
Forty percent of purchases are paid for in cash at the time of purchase, and 30% are paid for in each of
the next two months. Purchases for the previous November and December were $150,000 per month.
Employee wages are 10% of sales for the month in which the sales occur. Selling and administrative
expenses are 20% of the following month's sales. (July sales are budgeted to be $220,000.) Interest
payments of $20,000 are paid quarterly in January and April. Brandon's cash disbursements for the month
of April would be:
A. $140,000
B. $254,000
C. $200,000
D. $248,000
Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 units in May and 70,000
units in June. The company desires that the inventory on hand at the end of each month be equal to 40%
of the next month's expected unit sales. Due to excessive production during March, on March 31 there
were 25,000 units of Product W in the ending inventory. Given this information, Walsh Company's
production of Product W for the month of April should be:
A. 60,000 units
B. 65,000 units
C. 75,000 units
D. 66,000 units
Berol Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in
sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the
next month's estimated sales. There are 150,000 finished units in inventory on June 30.
Berol Company's production requirement in units of finished product for the three-month period ending
September 30 is:
A. 712,025 units
B. 630,500 units
C. 664,000 units
D. 665,720 units
The Willsey Merchandise Company has budgeted $40,000 in sales for the month of December. The
company's cost of goods sold is 30% of sales. If the company has budgeted to purchase $18,000 in
merchandise during December, then the budgeted change in inventory levels over the month of December
is:
A. $6,000 increase
B. $10,000 decrease
C. $22,000 decrease
D. $15,000 increase
Prestwich Company has budgeted production for next year as
follows:
Two pounds of material A are required for each unit produced. The company has a policy of maintaining
a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production
needs for material A. A total of 30,000 pounds of material A are on hand to start the year. Budgeted
purchases of material A for the second quarter would be:
A. 82,500 pounds
B. 165,000 pounds
C. 200,000 pounds
D. 205,000 pounds
Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output
requires 0.77 direct labor-hours. The direct labor rate is $11.20 per direct labor-hour. The production
budget calls for producing 7,100 units in October and 6,900 units in November. The company guarantees
its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that
means that the company is committed to paying its direct labor work force for at least 5,480 hours in total
each month even if there is not enough work to keep them busy. What would be the total combined direct
labor cost for the two months?
A. $122,752.00
B. $120,736.00
C. $120,881.60
D. $122,606.40
Hagos Corporation is working on its direct labor budget for the next two months. Each unit of output
requires 0.84 direct labor-hours. The direct labor rate is $9.40 per direct labor-hour. The production
budget calls for producing 2,100 units in June and 1,900 units in July. If the direct labor work force is
fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct
labor cost for the two months?
A. $15,792.00
B. $15,002.40
C. $16,581.60
D. $31,584.00
Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor
budget indicates that 8,100 direct labor-hours will be required in May. The variable overhead rate is $1.40
per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,440 per month,
which includes depreciation of $8,910. All other fixed manufacturing overhead costs represent current
cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead
budget should be:
A. $102,870
B. $11,340
C. $91,530
D. $111,780
