Question 1

Bradford, Inc., expects to sell 9,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $12, and manufacturing overhead is $3 per vase. The following inventory levels apply to 2019:

What are the 2019 budgeted production costs for direct materials, direct manufacturing labor, and manufacturing overhead, respectively?

Accepted Answer

Budgeted cost for direct materials = $27,600 [9,200 units × $3].
Budgeted cost for direct manufacturing labor = $110,400 [9,200 units × $12].
Budgeted manufacturing overhead = $27,600 [9,200 × $3].

Question 2

Bradford, Inc., expects to sell 6,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $10, and manufacturing overhead is $3 per vase. The following inventory levels apply to 2019:

How many ceramic vases should be produced in 2019?

Accepted Answer

Number of vases to be produced = 6,000 units (Estimated sales) + 600 units (Budgeted ending inventory) - 400 units (Opening inventory) = 6,200 units.

Question 3

For next year, Roberts, Inc., has budgeted sales of 20,000 units, targeted ending finished goods inventory of 1,650 units, and beginning finished goods inventory of 750 units. All other inventories are zero. How many units should be produced next year?

Accepted Answer

Units to be produced next year = 20,000 units (estimated sales) + 1,650 units (budgeted ending inventory) - 750 units (opening inventory) = 20,900 units

Question 4

Bradford, Inc., expects to sell 11,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $11, and manufacturing overhead is $5 per vase. The following inventory levels apply to 2019:

On the 2019 budgeted income statement, what amount will be reported for sales?

Accepted Answer

Total sales = 11,000 units × $21 = $231,000.

Question 5

Which of the following information is required by a company's manager while preparing a manufacturing overhead costs budget?

Accepted Answer

Manufacturing overhead costs include expenses related to maintaining and operating the factory building and equipment. Therefore, the estimated expense for maintenance of factory building is required for preparing the manufacturing overhead costs budget. Estimated incentives to be paid to marketing personnel (A), estimated expense for office supplies (B), and rent expense for lease of office building (D) are not relevant to manufacturing overhead costs.

Question 6

First Class, Inc., expects to sell 28,000 pool cues for $14 each. Direct materials costs are $3, direct manufacturing labor is $5, and manufacturing overhead is $0.82 per pool cue. The following inventory levels apply to 2019:

How many pool cues need to be produced in 2019?

Accepted Answer

28,000 units (Budgeted sales) + 2,800 (Budgeted ending inventory) - 1,300 (Beginning inventory) = 29,500 cues

Question 7

Antique Brass Company has budgeted sales volume of 122,000 units and budgeted production of 114,000 units, while 24,000 units are in beginning finished goods inventory. How many units are targeted for ending finished goods inventory?

Accepted Answer

114,000 units (Budgeted production) + 24,000 units (Beginning finished goods inventory) - 122,000 units (Budgeted sales) = 16,000 units (Budgeted ending finished goods inventory)

Question 8

Bradford, Inc., expects to sell 8,000 ceramic vases for $21 each. Direct materials costs are $4, direct manufacturing labor is $10, and manufacturing overhead is $4 per vase. The following inventory levels apply to 2019:

On the 2019 budgeted income statement, what amount will be reported for cost of goods sold?

Accepted Answer

Cost of goods sold is $144,000 [8,000 × ($4 + $10 + $4)].

Question 9

First Class, Inc., expects to sell 26,000 pool cues for $14 each. Direct materials costs are $2, direct manufacturing labor is $4, and manufacturing overhead is $0.89 per pool cue. The following inventory levels apply to 2019:

On the 2019 budgeted income statement, what amount will be reported for cost of goods sold?

Accepted Answer

The cost per unit is $6.89 ($2 + $4 + $0.89). Therefore, the total cost of goods sold is $179,140 ($6.89 × 26,000).

Question 10

The following information pertains to the January operating budget for Murphy Corporation, a retailer:
Budgeted sales are $210,000 for January
Collections of sales are 40% in the month of sale and 60% the next month
Cost of goods sold averages 66% of sales
Merchandise purchases total $159,000 in January
Marketing costs are $3,600 each month
Distribution costs are $5,300 each month
Administrative costs are $10,100 each month
For January, the amount budgeted for the nonmanufacturing costs budget is ________.

Accepted Answer

$3,600 + $5,300 + $10,100 = $19,000

Question 11

The following information pertains to the January operating budget for Murphy Corporation, a retailer:
Budgeted sales are $208,000 for January
Collections of sales are 60% in the month of sale and 40% the next month
Cost of goods sold averages 64% of sales
Merchandise purchases total $154,000 in January
Marketing costs are $3,600 each month
Distribution costs are $5,000 each month
Administrative costs are $10,500 each month
For January, budgeted gross margin is ________.

Accepted Answer

$208,000 - (0.64 × $208,000) = $74,880

Question 12

First Class, Inc., expects to sell 29,000 pool cues for $13 each. Direct materials costs are $3, direct manufacturing labor is $5, and manufacturing overhead is $0.83 per pool cue. The following inventory levels apply to 2019:

What are the 2019 budgeted costs for direct materials, direct manufacturing labor, and manufacturing overhead, respectively?

Accepted Answer

Direct materials = 30,600 × $3 = $91,800; Direct manufacturing labor = 30,600 × $5 = $153,000; Manufacturing overhead = 30,600 × $0.83 = $25,398

Question 13

Which of the following is most likely to be a cost driver for the variable portion of marketing costs?

Accepted Answer

The number of units sold is the most likely cost driver for the variable portion of marketing costs, as the more units sold, the higher the marketing costs will be to promote and sell those units. The other options are not necessarily directly tied to marketing costs.

Question 14

First Class, Inc., expects to sell 22,000 pool cues for $12 each. Direct materials costs are $3, direct manufacturing labor is $4, and manufacturing overhead is $0.84 per pool cue. The following inventory levels apply to 2019:

On the 2019 budgeted income statement, what amount will be reported for sales?

Accepted Answer

22,000 units sold × $12 per pool cue = $264,000

Question 15

Which of the following best describes a bill of materials?

Accepted Answer

A bill of materials is a document that identifies how each product is manufactured, specifying materials and components and the quantities of materials in each finished good. It is an important part of the production process, as it helps manufacturers plan their inventory, production schedule, and purchasing needs.

Question 16

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:

What is the projected decline in operating income if the direct materials costs of T-Shirts increase to $3.50 per unit and direct labor costs of Sweatshirts increase to $14.00 per unit?

Accepted Answer

(67,000 × $1.50) + (20,000 × $5.80) = $216,500

Question 17

Mary's Baskets Company expects to manufacture and sell 30,000 baskets in 2019 for $5 each. There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 9,000 baskets. The company keeps no work-in-process inventory. What amount of sales revenue will be reported on the 2019 budgeted income statement?

Accepted Answer

Sales revenue = 30,000 baskets × $5 = $150,000

Question 18

Which of the following is required to arrive at the budgeted units to be produced in a year?

Accepted Answer

To arrive at the budgeted units to be produced in a year, it's essential to know the estimated finished goods inventory required at the end of the year. This helps in determining how many units need to be produced to meet both the sales demand and the desired inventory levels.

Question 19

Orange Corporation has budgeted sales of 23,000 units, targeted ending finished goods inventory of 9,000 units, and beginning finished goods inventory of 6,000 units. How many units should be produced next year?

Accepted Answer

Number of units to be produced next year = 23,000 units (estimated sales) + 9,000 units (budgeted ending inventory) - 6,000 units (opening inventory) = 26,000 units.

Question 20

To prepare the direct materials labor costs budget, which of the following budget must be prepared first?

Accepted Answer

The production budget must be prepared first as it provides the estimated quantity of finished goods that need to be produced during a specific period. The direct material purchase budget and the direct material usage budget depend on the production budget, as they are based on the estimated direct material requirements for the production of finished goods. Therefore, the direct materials labor costs budget cannot be prepared without first preparing the production budget. Budgeted manufacturing overhead is not directly related to the preparation of the direct materials labor costs budget.

Quiz 6: Master Budget and Responsibility Accounting

Bradford, Inc., expects to sell 6,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $10, and manufacturing overhead is $3 per vase. The following inventory levels apply to 2019: How many ceramic vases should be produced in 2019?