Various budgets Compute the required answer for each of the following independen
ID: 2454432 • Letter: V
Question
Various budgets
Compute the required answer for each of the following independent situations.
a. For next year, Penny Suits projects $8,000,000 of sales and total fixed manufacturing costs of $2,000,000. Variable manufacturing costs are estimated at 65 percent of sales. Assuming no change in inventory, what is the company's projected cost of goods sold?
$ ____
What are expected cash disbursements for inventory purchases for October?
$ ____
c. Buda Corp. is attempting to budget its overhead costs for March 2014. Overhead is a mixed cost with the following flexible budget formula: y = $250,000 + $17.50X, where X represents machine hours. Fixed overhead includes $95,000 of depreciation. If Buda Corp. expects to utilize 7,500 machine hours in March, what is the company's budgeted March overhead cost?
$ ____
How much cash will the company pay for budgeted overhead in March?
$ ____
The company can, if necessary, borrow in $1,000 amounts. Prepare a cash budget for 2014.
Elizabeth Enterprises
Cash Budget
For the Year 2014
Beginning cash balance
Borrowings needed
Cash collections
Cash deficiency
Ending cash balance
Total cash available
Correct 4 of Item 2
Correct 5 of Item 2
Correct 6 of Item 2
Correct 7 of Item 2
Correct 8 of Item 2
Correct 9 of Item 2
Disbursements:
Payoff of note payable
$ 52500
Interest on note payable
4700
Purchase of computer system
17900
Operating costs and inventory purchases
193500
Direct labor wages
110000
Overhead costs
106400
Selling and administrative costs
94800
Correct 25 of Item 2
Correct 26 of Item 2
Correct 27 of Item 2
Correct 28 of Item 2
Correct 29 of Item 2
Beginning cash balance
Borrowings needed
Cash collections
Cash deficiency
Ending cash balance
Total cash available
Correct 30 of Item 2
$
Elizabeth Enterprises
Cash Budget
For the Year 2014
Beginning cash balance
Borrowings needed
Cash collections
Cash deficiency
Ending cash balance
Total cash available
Correct 4 of Item 2
$Correct 5 of Item 2
Correct 6 of Item 2
Correct 7 of Item 2
Correct 8 of Item 2
$Correct 9 of Item 2
Disbursements:
Payoff of note payable
$ 52500
Interest on note payable
4700
Purchase of computer system
17900
Operating costs and inventory purchases
193500
Direct labor wages
110000
Overhead costs
106400
Selling and administrative costs
94800
Correct 25 of Item 2
Correct 26 of Item 2
$Correct 27 of Item 2
Correct 28 of Item 2
Correct 29 of Item 2
Beginning cash balance
Borrowings needed
Cash collections
Cash deficiency
Ending cash balance
Total cash available
Correct 30 of Item 2
$
Explanation / Answer
A)
Sales= $800000
Variable Cost= $520000 (65% of 800000)
Fixed Manufacturing Cost= $200000
COGS= Sales- Variable Cost- Fixed manufacturing Overhead= 800000-520000-200000=$80000
b) Cash disbursements
Sales= $800000
Gross Profit= 25%=$200000
COGS= 800000-200000=$600000
To calculate cash payment= COGS+ Increase in inventory ( as we have paid for purchasing more inventory+Decrease in Accounts payable( as we have paid to uur creditors)
= 600000+20000+45000= $665000
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