BE 159
Wynn, Inc.
manufactures beanies. The budgeted units to be produced and sold are below:
Expected
Production Expected Sales
August 3,500 2,900
September 2,800 3,900
It takes 18 yards
of yarn to produce a beanie. The company’s policy is to maintain yarn at the
end of each month equal to 5% of next month’s production needs and to maintain
a finished goods inventory at the end of each month equal to 20% of next
month’s anticipated production needs. The cost of yarn is $0.20 a yard. At
August 1, 3,150 yards of yarn were on hand.
Instructions
Compute the budgeted cost
of purchases.
BE 160
The budget
components for Birk Company for the quarter ended June 30 appear below. Birk
sells trash cans for $12 each. Budgeted production for the next three months
is:
April 26,000
units
May 46,000
units
June 29,000
units
Birk desires to have trash cans on
hand at the end of each month equal to 20 percent of the following month’s
budgeted sales in units. On March 31, Birk had 4,000 completed units on hand. Five
pounds of plastic are required for each trash can. At the end of each month, Birk
desires to have 10 percent of the following month’s production material needs
on hand. At March 31, Birk had 13,000 pounds of plastic on hand. The materials
used in production costs $0.60 per pound. Each trash can produced requires 0.10
hours of direct labor.
Instructions
Compute the cost of the plastic inventory at
the end of May.
BE 161
Smoke, Inc.
makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted
production of buckets in units for the next three months is as follows:
April May June
Budgeted production 21,000 22,000 24,000
The company
wants to maintain monthly ending inventories of plastic equal to 25% of the
following month’s budgeted production needs. The cost of plastic is $2.20 per
pound.
Instructions
Prepare a direct
materials purchases budget for the month of May.
BE 162
The budget
components for Park Company for the quarter ended June 30 appear below. Park
sells trash cans for $12 each. Budgeted sales and production for the next three
months are:
Sales Production
April 20,000
units 26,000 units
May 50,000
units 46,000 units
June 30,000
units 29,000 units
Park desires to have trash cans on hand at
the end of each month equal to 20 percent of the following month’s budgeted
sales in units. On March 31, Park had 4,000 completed units on hand. Five pounds
of plastic are required for each trash can. At the end of each month, Park
desires to have 10 percent of the following month’s production material needs
on hand. At March 31, Park had 13,000 pounds of plastic on hand. The materials
used in production cost $0.60 per pound. Each trash can produced requires 0.10 hours
of direct labor.
Instructions
Determine how much the materials purchases
budget will be for the month ending April 30.
BE 163
Jent Company
reported the following information for 2013:
October November December
Budgeted sales $320,000 $340,000 $360,000
Budgeted purchases $120,000 $128,000 $144,000
· All sales are on
credit.
· Customer amounts on
account are collected 40% in the month of sale and 60% in the following month.
Instructions
Compute the amount of cash Jent will receive during November.
BE 164
Plack Company budgeted the following
information for 2013:
May June July
Budgeted purchases $104,000 $110,000 $102,000
·
Cost
of goods sold is 40% of sales. Accounts payable is used only for inventory
acquisitions.
·
Plack purchases and pays for merchandise 60% in
the month of acquisition and 40% in the following month.
·
Selling and administrative expenses are budgeted at $30,000 for
May and are expected to increase 5% per month. They are paid during the month
of acquisition. In
addition, budgeted depreciation is $10,000 per month.
·
Income taxes are $38,400 for July and are paid in the month
incurred.
Instructions
Compute the amount of budgeted cash
disbursements for July.
BE 165
Sable, Inc. has budgeted direct materials purchases of $400,000 in
March and $500,000 in April. Past experience indicates that the company pays
for 60% of its purchases in the month of purchase and the remaining 40% in the
next month. Other costs are all paid during the month incurred. During April,
the following items were budgeted:
Wages expense $120,000
Purchase of office equipment 200,000
Selling and administrative expenses 126,000
Depreciation expense 18,000
Instructions
Compute the amount of budgeted cash disbursements for April.
BE 166
Chain Inc. provided the following
information:
April May June
Projected merchandise purchases $92,000 $80,000 $66,000
·
Chain pays 40% of merchandise
purchases in the month purchased and 60% in the following month.
·
General operating expenses are
budgeted to be $31,000 per month of which depreciation is $3,000 of this
amount. Chain pays operating expenses in the month incurred.
·
Chain makes loan payments of
$4,000 per month of which $450 is interest and the remainder is
principal.
Instructions
Calculate budgeted cash disbursements for
May.
BE 167
Beal, Inc. provided the following information:
March April May
Projected merchandise purchases $65,000 $75,000 $80,000
·
Beal pays 40% of merchandise
purchases in the month purchased and 60% in the following month.
·
General operating expenses are
budgeted to be $20,000 per month of which depreciation is $2,000 of this
amount. Beal pays operating expenses in the month incurred.
Instructions
Calculate Beal’s
budgeted cash disbursements for May.
BE 168
The beginning cash balance is $15,000. Sales are forecasted at $800,000
of which 80% will be on credit. 70% of credit sales are expected to be collected
in the year of sale. Cash expenditures for the year are forecasted at $475,000.
Accounts Receivable from previous accounting periods totaling $9,000 will be
collected in the current year. The company is required to make a $15,000 loan
payment and an annual interest payment on the last day of every year. The loan
balance as of the beginning of the year is $90,000, and the annual interest
rate is 10%.
Instructions
Compute the excess
of cash receipts over cash disbursements.
EXERCISES
Ex. 169
Delta
Manufacturing has budgeted the following unit sales:
2012 Units
April 25,000
May 40,000
June 60,000
July 45,000
Of the units budgeted, 40% are sold by the Coastal
Division at an average price of $15 per unit and the remainder are sold by the Central
Division at an average price of $12 per unit.
Instructions
Prepare separate sales budgets for each division
and for the company in total for the second quarter of 2013.
Ex. 170
Pitt Corp. makes
and sells a single product, widgets. Two pounds of sand are needed to make one
widget. Budgeted production of widgets for the next few months follows:
September 25,000 units
October 31,000 units
The
company wants to maintain monthly ending inventories of sand equal to 20% of the
following month’s production needs. On August 31, 10,000 pounds of sand were on
hand.
Instructions
How much sand should be purchased in September?
Ex. 171
Butler Manufacturing manufactures two products,
(1) Regular and (2) Deluxe. The budgeted units to be produced are as follows:
Units
of Product
2013 Regular Deluxe Total
July 10,000 15,000 25,000
August 6,000 10,000 16,000
September 9,000 14,000 23,000
October 8,000 12,000 20,000
It takes 2 pounds of direct materials to produce
the Regular product and 5 pounds of direct materials to produce the Deluxe
product. It is the company’s policy to maintain an inventory ofdirect materials on hand at the end of each month equal to 30% of
the next month’s production needs for the Regular product and 20% of the next
month’s production needs for the Deluxe product. Direct materials inventory on
hand at June 30 were 6,000 pounds for the Regular product and 15,000 pounds for
the Deluxe product. The cost per pound of materials is $5 Regular and $8 Deluxe.
Instructions
Prepare
separate direct materials budgets for each product for the third quarter of 2013.
