accounting chapter 8 The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours

1. The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours.
   The direct labor budget indicates that 7,100 direct labor-hours will be required in August. The variable
   overhead rate is $8.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is
   $132,770 per month, which includes depreciation of $24,850. All other fixed manufacturing overhead
   costs represent current cash flows. The company recomputes its predetermined overhead rate every
   month. The predetermined overhead rate for August should be:
   A. $8.60
   B. $27.30
   C. $23.80
   D. $18.70

B. $27.30

2. Avitia Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor
   budget indicates that 3,700 direct labor-hours will be required in September. The variable overhead rate
   is $5.70 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $48,100 per
   month, which includes depreciation of $5,550. All other fixed manufacturing overhead costs represent
   current cash flows. The company recomputes its predetermined overhead rate every month. The
   predetermined overhead rate for September should be:
   A. $5.70
   B. $13.00
   C. $18.70
   D. $17.20

C. $18.70

3. The manufacturing overhead budget at Cutchin Corporation is based on budgeted direct labor-hours. The
   direct labor budget indicates that 2,800 direct labor-hours will be required in September. The variable
   overhead rate is $7.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead
   is $43,120 per month, which includes depreciation of $3,640. All other fixed manufacturing overhead
   costs represent current cash flows. The September cash disbursements for manufacturing overhead on the
   manufacturing overhead budget should be:
   A. $59,080
   B. $62,720
   C. $19,600
   D. $39,480

A. $59,080

4. The selling and administrative expense budget of Breckinridge Corporation is based on budgeted unit
   sales, which are 5,500 units for June. The variable selling and administrative expense is $1.00 per
   unit. The budgeted fixed selling and administrative expense is $101,200 per month, which includes
   depreciation of $6,050 per month. The remainder of the fixed selling and administrative expense
   represents current cash flows. The cash disbursements for selling and administrative expenses on the June
   selling and administrative expense budget should be:
   A. $100,650
   B. $106,700
   C. $5,500
   D. $95,150

A. $100,650

5. Lunderville Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales
   budget shows 3,200 units are planned to be sold in December. The variable selling and administrative
   expense is $3.10 per unit. The budgeted fixed selling and administrative expense is $60,800 per month,
   which includes depreciation of $6,720 per month. The remainder of the fixed selling and administrative
   expense represents current cash flows. The cash disbursements for selling and administrative expenses on
   the December selling and administrative expense budget should be:
   A. $70,720
   B. $54,080
   C. $64,000
   D. $9,920

C. $64,000

6. The Carlquist Company makes and sells a product called Product K. Each unit of Product K sells for $24
   dollars and has a unit variable cost of $18. The company has budgeted the following data for November:
   • Sales of $1,152,200, all in cash.
   • A cash balance on November 1 of $48,000.
   • Cash disbursements (other than interest) during November of $1,160,000.
   • A minimum cash balance on November 30 of $60,000.
   If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of $1,000
   and will bear interest at 2% per month. All borrowing will take place at the beginning of the month. The
   November interest will be paid in cash during November.
   The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain
   the desired November 30 cash balance is:
   A. $20,000
   B. $21,000
   C. $37,000
   D. $38,000

B. $21,000

7. Mosbey Inc. is working on its cash budget for June. The budgeted beginning cash balance is $16,000.
   Budgeted cash receipts total $188,000 and budgeted cash disbursements total $187,000. The desired
   ending cash balance is $40,000. The excess (deficiency) of cash available over disbursements for June
   will be:
   A. $15,000
   B. $1,000
   C. $17,000
   D. $204,000

C. $17,000

8. Avril Company makes collections on sales according to the following
   schedule:
   The following sales are expected:
   Cash collections in March should be budgeted to be:
   A. $110,000
   B. $110,800
   C. $105,000
   D. $113,000

D. $113,000

9. Deschambault Inc. is working on its cash budget for December. The budgeted beginning cash balance
   is $14,000. Budgeted cash receipts total $127,000 and budgeted cash disbursements total $126,000. The
   desired ending cash balance is $40,000. To attain its desired ending cash balance for December, the
   company needs to borrow:
   A. $25,000
   B. $0
   C. $55,000
   D. $40,000

A. $25,000

10. Diltex Farm Supply is located in a small town in the rural west: Expected cash collections in December are:
    A. $59,400
    B. $140,000
    C. $199,400
    D. $200,000

C. $199,400