1. Michard Corporation makes one product and it provided the following informati
ID: 2336852 • Letter: 1
Question
1. Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.
Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.
The ending finished goods inventory equals 20% of the following month's sales.
The ending raw materials inventory equals 30% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound.
Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.
The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours.
The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000.
The budgeted required production for May is closest to:
2. Sparks Corporation has a cash balance of $18,000 on April 1. The company must maintain a minimum cash balance of $10,000. During April, expected cash receipts are $98,000. Cash disbursements during the month are expected to total $112,000. Ignoring interest payments, during April the company will need to borrow:
3. Fiwrt Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales Fiwrt (in units) for the next three months are as follows:
Fiwrt likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales. How many mugs should Fiwrt plan on producing during the month of November
4. Roberts Enterprises has budgeted sales in units for the next five months as follows:
Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on May 31 contained 450 units. The company needs to prepare a production budget for the second quarter of the year.
The beginning inventory in units for September is:
5. Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.
Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.
The ending finished goods inventory equals 20% of the following month's sales.
The ending raw materials inventory equals 30% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound.
Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.
The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours.
The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000.
If 54,480 pounds of raw materials are required for production in June, then the budgeted raw material purchases for May is closest to:
6. Pabon Corporation makes one product. Budgeted unit sales for August and September are 11,100 and 12,600 units, respectively. The ending finished goods inventory equals 40% of the following month's sales. The direct labor wage rate is $19.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. The estimated direct labor cost for August is closest to:
October November December Budgeted unit sales 30,000 36,000 34,000Explanation / Answer
(1) Budgeted required production for May is closest to:-
May Sales
10500
(+) May Ending Inventory (20% * 13800)
2760
(-) May Beginning Inventory (20% * 10500)
2100
11160
(2) During April the company will need to borrow:
Beginning Cash Balance
18000
(+) Expected Cash Receipt
98000
(-) Cash Disbursement
112000
(-) Minimum Cash Balance
10000
Need to Borrow
6000
(3)
November Sales
36000
(+) Ending FG Inventory (30% * 34000)
10200
(-) Beginning FG Inventory (36000 * 30%)
10800
35400
(4) Beginning Inventory in units for September is = September Sales * 10%
= 6700 * 10% = 670 units
(5) Finished goods required for production in May :-
May Sales
10500
(+) May Ending Inventory (20% * 13800)
2760
(-) May Beginning Inventory (20% * 10500)
2100
11160
Raw Material required for May = 11160 units * 4 pound = 44640 pound
Raw material purchases for May:-
Raw Material required for May
44640
(+) Ending Inventory (54480 * 30%)
16344
(-) Beginning Inventory (44640 * 30%)
13392
47592
(6) Pabon Corporation makes one product. Budgeted unit sales for August and September are 11,100 and 12,600 units, respectively. The ending finished goods inventory equals 40% of the following month's sales. The direct labor wage rate is $19.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. The estimated direct labor cost for August is closest to:
FG produced in August :-
Sales in August
11100
(+) Ending FG Inventory (40% * 12600)
5040
(-) Beginning FG Inventory (40% * 11100)
4440
11700
Estimated direct labor cost for August :-
11700 units * 2.5 hours * $19 = $555750
May Sales
10500
(+) May Ending Inventory (20% * 13800)
2760
(-) May Beginning Inventory (20% * 10500)
2100
11160
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