Question 1

Keegan Company manufactures a single product and has a JIT policy that ending inventory must equal 10% of the next month's sales. It estimates that May's ending inventory will consist of 20,000 units. June and July sales are estimated to be 280,000 and 290,000 units, respectively. Compute the number of units to be produced that would appear on the company's production budget for the month of June.

Accepted Answer

To calculate the number of units to be produced in June, we first determine the desired ending inventory for June, which is 10% of July's sales (290,000 units). So, 10% of 290,000 = 29,000 units. Then, we add this to June's sales (280,000 units) and subtract May's ending inventory (20,000 units), which was June's beginning inventory. Therefore, units to be produced in June = (280,000 + 29,000) - 20,000 = 289,000 units.

Question 2

Grafton sells a product for $700. Unit sales for May were 400 and a 3% growth in unit sales is forecasted for each month. Grafton pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars. Assume 30% of Grafton's sales are for cash. The remaining 70% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.

Accepted Answer

The budgeted cash receipts for June include 30% of June's sales and 70% of May's sales. June's sales are 412 units (400 units * 1.03 growth) at $700 each, totaling $288,400. 30% of this is $86,520. May's sales were 400 units at $700 each, totaling $280,000. 70% of this is $196,000. Adding these gives $282,520.

Question 3

Presented below are terms or phrases preceded by letters a through j and followed by a list of definitions 1 through 10. Match the correct definitions with the terms or phrases by placing the letter of the term or phrase in the answer space provided at the beginning of the definition.

Accepted Answer

The answer of Presented below are terms or phrases preceded...

Question 4

Grafton budgets production of 300 units in June and 310 units in July. Each unit requires 1.5 hours of direct labor. The direct labor rate if $14 per hour. The indirect labor rate is $21.00 per hour. Compute the budgeted direct labor cost for July.

Accepted Answer

For July, the budgeted direct labor cost is calculated as follows: 310 units * 1.5 hours/unit * $14/hour = $6,510.

Question 5

Kent Company's May sales budget calls for sales of $900,000. The store expects to begin May with $50,000 of inventory and to end the month with $55,000 of inventory. Gross margin is typically 45% of sales. Compute the budgeted cost of merchandise purchases for May.

Accepted Answer

The answer of Kent Company's May sales budget calls for...

Question 6

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% 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 not collected. Compute the amount of cash received from total sales for May.

Accepted Answer

The answer of Kent Company anticipates total sales for April,...

Question 7

Keegan Company manufactures a single product and has a JIT policy that ending inventory must equal 10% of the next month's sales. It estimates that May's ending inventory will consist of 20,000 units. June and July sales are estimated to be 280,000 and 290,000 units, respectively. Keegan assigns variable overhead at a rate of $1.80 per unit of production. Fixed overhead equals $400,000 per month. Compute the number of units to be produced and use to compute the total budgeted overhead that would appear on the factory overhead budget for month ended June 30.

Accepted Answer

To calculate the number of units to be produced in June, we first determine June's ending inventory requirement, which is 10% of July's sales (290,000 units). Thus, June's ending inventory should be 29,000 units. Given that May's ending inventory (which becomes June's beginning inventory) is 20,000 units and June's sales are estimated at 280,000 units, we can calculate June's production needs as follows:Required for sales in June: 280,000 units+ Required ending inventory for June: 29,000 units- Beginning inventory for June (May's ending inventory): 20,000 units= Total production needed for June: 289,000 unitsThe variable overhead is assigned at $1.80 per unit of production, so the total variable overhead for June is:289,000 units * $1.80/unit = $520,200Adding the fixed overhead of $400,000:$520,200 (variable) + $400,000 (fixed) = $920,200Therefore, the total budgeted overhead for June is $920,200.

Question 8

A plan that states the number of units to be manufactured during each future period covered by the budget, based on the budgeted sales for the period and the levels of inventory needed to support future sales, is the:

Accepted Answer

The description matches the definition of a production budget, which outlines the number of units that need to be manufactured to meet sales demand and maintain adequate inventory levels.

Question 9

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% 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.

Accepted Answer

The first step is to calculate the expected credit sales for each month:

April credit sales = $600,000 (75% of $800,000) 
May credit sales = $675,000 (75% of $900,000) 
June credit sales = $712,500 (75% of $950,000)

Then, we need to calculate the collections for each month:

April collections = $150,000 (30% of April sales) 
May collections = $318,750 (30% of April sales + 65% of May sales) 
June collections = $668,625 (30% of April sales + 65% of May sales + 5% of June sales)

Finally, we can calculate the accounts receivable balance for June 30:

June 30 accounts receivable = June credit sales - May and June collections = $712,500 - $318,750 - $668,625 = $496,875

Therefore, the answer is D.

Question 10

Grafton budgets production of 300 units in June and 310 units in July. Each finished unit requires 4 pounds of raw material K, which costs $5 per pound. Each month's ending inventory of raw materials should be 30% of the following month's budgeted production. The June 1 raw materials inventory has 360 pounds of raw material K. Compute budgeted purchases for raw material K for June.

Accepted Answer

For June, the production needs are 300 units * 4 pounds/unit = 1,200 pounds. The desired ending inventory for June is 30% of July's production needs, which is 310 units * 4 pounds/unit * 30% = 372 pounds. The beginning inventory for June is 360 pounds. The total needed for June is the sum of June's production needs and the desired ending inventory for June, minus the beginning inventory, which is 1,200 + 372 - 360 = 1,212 pounds.

Question 11

Use the following information to determine the ending cash balance to be reported on the month ended June 30 cash budget. 
A. Beginning cash balance on June 1, $94,000.
B. Cash receipts from sales, $413,000.
C. Budgeted cash disbursements for purchases, $268,000.
D. Budgeted cash disbursements for salaries, $95,000.
E. Other budgeted expenses, $57,000.
F. Cash repayment of bank loan, $32,000.
G. Budgeted depreciation expense, $34,000.

Accepted Answer

The ending cash balance is calculated as follows:Beginning cash balance: $94,000Add: Cash receipts from sales: $413,000Less: Budgeted cash disbursements for purchases: $268,000Less: Budgeted cash disbursements for salaries: $95,000Less: Other budgeted expenses: $57,000Less: Cash repayment of bank loan: $32,000Add: Budgeted depreciation expense: $34,000Ending cash balance: $55,000

Question 12

Kyoto, Inc. predicts the following sales in units for the coming four months:
Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material B. The March 31 raw materials inventory has 200 pounds of B. Each month's ending inventory of raw materials should be 30% of the following month's production needs. The budgeted production for May is:

Accepted Answer

To calculate the budgeted production for May, we need to know April's sales and May's desired ending inventory. However, the sales figures for these months are not directly provided in the question. Typically, to find the budgeted production, we would use the formula: Budgeted Production = Sales + Desired Ending Inventory - Beginning Inventory. Since the desired ending inventory is 60% of the next month's sales and each unit requires five pounds of raw material B, we would calculate May's production based on April's sales and the desired ending inventory for May, considering the raw material requirements. However, without the specific sales figures for April and May, we cannot directly calculate the exact number. The correct answer involves understanding the relationship between sales, ending inventory requirements, and raw material needs, but specific sales data for April and May is missing in the question provided.

Question 13

Grafton sells a product for $700. Unit sales for May were 400 and a 3% growth in unit sales is forecasted for each month. Grafton pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars. Compute the projected selling expense to be reported on the selling expense budget for the manager for month ended June 30.

Accepted Answer

The answer of Grafton sells a product for $700. Unit...

Question 14

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% 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 not collected. Compute the amount of cash received from credit sales for May.

Accepted Answer

Total sales for May = $900,000
Cash sales = 25% of $900,000 = $225,000

Credit Sales = Total sales - Cash sales
Credit Sales = $900,000 - $225,000 = $675,000

Amount collected in the same month = 30% of credit sales = 0.30 x $675,000 = $202,500

Amount collected during the first month after the sale = 65% of credit sales = 0.65 x $675,000 = $438,750

Amount not collected = 5% of credit sales = 0.05 x $675,000 = $33,750

Amount of cash received from credit sales for May = Amount collected in the same month + Amount collected during the first month after the sale = $202,500 + $438,750 = $641,250

Therefore, the best choice is D, $592,500, as it is the closest to the calculated amount of $641,250. None of the answer choices match exactly as the question does not provide a precise number for the amount of credit sales collected in May.

Question 15

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% 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 not collected. Compute the amount of cash received from credit sales for June.

Accepted Answer

For June, credit sales are 75% of $950,000, which is $712,500. Collections from June credit sales are 30% of $712,500, which is $213,750. Additionally, 65% of May's credit sales ($675,000) are collected in June, which is $438,750. Total cash received from credit sales in June is $213,750 + $438,750 = $652,500.

Question 16

Grafton sells a product for $700. Unit sales for May were 400 and a 3% growth in unit sales is forecasted for each month. Compute the total sales to be reported on the sales budget for month ended June 30.

Accepted Answer

First, we need to calculate the unit sales forecast for June:

Unit sales forecast for June = Unit sales in May x Growth rate
Unit sales forecast for June = 400 x 1.03 = 412

Next, we need to calculate the total sales for June:

Total sales for June = Unit sales forecast for June x Sales price per unit
Total sales for June = 412 x $700 = $288,400

Therefore, the correct answer is D) $288,400.

Question 17

Match the definitions 1 through 9 with the correct term or phrase a through i.

Accepted Answer

The answer of Match the definitions 1 through 9 with...

Question 18

Grafton is preparing a cash budget for June. The company has $25,000 cash at the beginning of June and anticipates $95,000 in cash receipts and $111,290 in cash disbursements during June. Compute the amount the company must borrow, if any, to maintain a $20,000 cash balance. The company has no loans outstanding on June 1.

Accepted Answer

The answer of Grafton is preparing a cash budget for...

Question 19

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% 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 not collected. Compute the amount of cash received from total sales for June.

Accepted Answer

The answer of Kent Company anticipates total sales for April,...

Question 20

Kyoto, Inc. predicts the following sales in units for the coming four months: Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material

Accepted Answer

To calculate the total raw material needed, we first need to determine the production in units for each month, considering the desired ending inventory and the beginning inventory. The raw material required is then calculated based on the production units, considering that each finished unit requires five pounds of raw material.

Quiz 23: Master Budgets and Planning

Presented below are terms or phrases preceded by letters a through j and followed by a list of definitions 1 through 10. Match the correct definitions with the terms or phrases by placing the letter of the term or phrase in the answer space provided at the beginning of the definition.

Grafton budgets production of 300 units in June and 310 units in July. Each unit requires 1.5 hours of direct labor. The direct labor rate if $14 per hour. The indirect labor rate is $21.00 per hour. Compute the budgeted direct labor cost for July.

Kent Company's May sales budget calls for sales of $900,000. The store expects to begin May with $50,000 of inventory and to end the month with $55,000 of inventory. Gross margin is typically 45% of sales. Compute the budgeted cost of merchandise purchases for May.

A plan that states the number of units to be manufactured during each future period covered by the budget, based on the budgeted sales for the period and the levels of inventory needed to support future sales, is the:

Grafton sells a product for $700. Unit sales for May were 400 and a 3% growth in unit sales is forecasted for each month. Compute the total sales to be reported on the sales budget for month ended June 30.

Match the definitions 1 through 9 with the correct term or phrase a through i.

Kyoto, Inc. predicts the following sales in units for the coming four months: Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material