1. Speedy Runner makes running shoes and they are anticipating the incurrence of
ID: 2564114 • Letter: 1
Question
1. Speedy Runner makes running shoes and they are anticipating the incurrence of the following manufacturing overhead costs during the upcoming year:
Cost Indirect materials $4,000
Indirect Labor $70,000
Utilities $42,000
Insurance $7,000
Taxes $8,000
Depreciation on equipment $20,000
What will Speedy Runner budget for cash disbursements related to manufacturing overhead?
A. $74,000
B. $131,000
C. $111,000
D. $151,000
2. Lough Company prepared the following purchases budget:
Month
Budgeted Purchases
June
$36,000
July
$49,000
August
$39,400
September
$50,000
October
$48,500
All purchases are paid for as follows: 5% two months after purchase, 35% in the following month, and 60% in the month of purchase.
What are the cash disbursements in October to account for the September purchases at Lough Company?
A.$50,000
B.$2,500
C.$17,500
D.$1,800
3. Distribution Corporation collects 35% of a month's sales in the month of sale, 45% in the month following sale, and 20% in the second month following sale. Budgeted sales for the upcoming four months are:
April budgeted sales
$120,000
May budgeted sales
$150,000
June budgeted sales
$230,000
July budgeted sales
$170,000
The amount of cash that will be collected in July is budgeted to be
A.$133,500
B.$190,000
C.$193,000
D.$59,500
Month
Budgeted Purchases
June
$36,000
July
$49,000
August
$39,400
September
$50,000
October
$48,500
Explanation / Answer
1. Answer: Option B. $131,000
Speedy Runner will budget for all the manufacturing overhead components in its cash disbursements except for depreciation which is a non-cash expense.
2. Answer: Option C. $17,500
Cash disbursements in October for September purchases = 35% x $50000 = $17500
3. Answer: Option C. $193,000
Indirect materials 4000 Indirect labor 70000 Utilities 42000 Insurance 7000 Taxes 8000 Total cash manufacturing overheads $ 131000Related Questions
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