Professional Documents
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July
6000
$300,000
August
7000
$350,000
Cash Receipts
Cash collected in
0.6 x June Sales
= 165,000
0.3 x July Sales
0.6 x July Sales
= 90,000
= 180,000
0.3 x Aug Sales
= 105,000
Sales in September
Total Receipts:
$255,000
$285,000
September
5000
$250,000
60%
=
=
60% x
$150,000
Sales (September)
250,000
Beginning
=
Inventory
(Units)
or alternatively (by rearranging)
Units to be
Unit
Produced
=
Sales
Units to be
produced
Beginning
Inventory
(Units)
Ending
Inventory
(Units)
Ending
Inventory
(Units)
1
July
6,000 (given)
Given
=1,500
25% of 7,000
=1,750
6,250
August
7,000 (given)
Ending Inventory (July)
=1,750
25% of 5,000
=1,250
6,500
September
5,000 (given)
Ending Inventory (August)
=1,250
25% of 4,000
=1,000
4,750
2. The Covey Company is preparing its Manufacturing Overhead Budget for the fourth quarter of
the year. The budgeted variable factory overhead rate is $4.00 per direct labor hour; the budgeted
fixed factory overhead is $64,000 per month, of which $18,000 is factory depreciation.
a)If the budgeted direct labor time for October is 8,000 hours, then the total budgeted factory
overhead for October is:
(a) $64,000
Budgeted Factory O/H= 4(DLHs) + 64,000
(b) $76,000
= 32,000 + 64,000
(c) $78,000
(d) $96,000
b)If the budgeted cash disbursements for factory overhead for November are $90,000, then the
budgeted direct labor hours for November must be:
(a)
(b)
(c)
(d)
2,000 hours
6,500 hours
11,000 hours
22,500 hours
c) If the budgeted direct labor time for December is 4,000 direct labor hours, then the total
budgeted factory overhead per direct labor hour is:
(a)
(b)
(c)
(d)
$15.50
$16.00
$20.00
$24.50
$313,000
$320,000
$350,000
$383,000
$175,000
$210,000
$215,000
$250,000
January
February
Accounts Receivable
400,000 160,000 (40% x 400,000)
350,000 200,000 (50% x 400,000)
140,000 (40% x 350,000)
January
January
February
250,000
$2.85
$3.00
$5.35
$5.85
Total S&A
Units sold
2.85(30,000) + 90,000
30,000
b)If the company has budgeted to sell 26,000 Bobbs in November, then the total budgeted
variable selling and administrative expenses for November will be:
Total variable S&A = 2.85 x 26,000
(a) $37,700
= 74,100
(b) $62,400
(c) $74,100
(d) $90,000
c)If the company has budgeted to sell 28,000 Bobbs in September, then the total budgeted fixed
selling and administrative expenses for September is:
Total Fixed S&A
(a) $65,000
= 10,000+40,000+25,000+15,000
(b) $75,000
= 90,000
(c) $79,800
(d) $90,000
d) If the budgeted cash disbursements for selling and administrative expenses for October total
$160,500, then how many Bobbs does the company plan to sell in October?
(a)
(b)
(c)
(d)
25,000 units
30,000 units
46,042 units
56,316 units
S&A
= 2.85(Units sold) + 75,000
160,500
= 2.85(Units sold) + 75,000
(Note: depreciation is not a cash flow!)