1. a distributor of organic beverages, needs a cash budget for September.The following information is available:

a.The cash balance at the beginning of September is $9,000.

b.Actual sales for July and August and expected sales for September are as follows:

JulyAugust September

Cash Sales$ 6,500$ 5,250$ 7,400

Sales on Account 20,00030,000 40,000

Total Sales$26,500$35,250$47,400

Sales on account are collected over a three month period as follows: 10% are collected in the month of sale, 70% collected in the month following the sale, and 18% collected in the second month following the sale.The remaining 2% is uncollectible.

c.Purchase of inventory will total $25,000 for September. Twenty percent of a month?s inventory purchases are paid ofr during the month of the purchase.The accounts payable remaining from August?s inventory purchases total $16,000, all of which will be paid in September.

d.Selling and administrative expenses are budgeted at $13,000 for September.Of this amount $4,000 is for depreciation.

e.Equipment costing $18,000 will be purchased for cash during September, and dividends totaling $3,000 will be paid during the month.

f.The company maintains a minimum cash balance of $5,000.An open line of credit is available from the company?s bank to bolster the cash balance as needed.

2. Prepare a schedule of cash collections for September. (5 points)

3. Prepare a schedule of expected cash disbursements for inventory purchases during September. (5 points)

4. Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September.Assume that any interest will not be paid until the following month. (5 points)

Use the following data to answer questions 9 & 10

5. High Prairie Industries produces three products, A, B, & C.The selling price, variable costs, and contribution margin for one unit of each product follow:

Product

XYZ

Selling price$120$180$160

Variable costs:

Direct materials 54 28 80

Direct labor 24 64 32

Variable manufacturing overhead6168

Total variable costs84108 120

Contribution margin $36$72$40

Contribution margin ratio30%40%25%

Due to a strike in the plant of one of its competitors, demand for the company?s products far exceeds its capacity to produce.Management is trying to determine which product(s) to concentrate on next week in filling its backlog of orders.The direct labor rate is $16 per hour, and only 3,000 hours of labor time are available each week.

6. Which orders would you recommend that the company work on next week ? the order for Product X, Product Y, or Product Z?Show computations.(6 points)

7.By paying overtime wages, more than 3,000 hours of direct labor time can be made available next week.Up to how much should the company be willing to pay per hour in overtime wages as long as there is unfilled demand for the three products?Explain. (4 points)

8. Donelan Products makes high-pressure lines for a variety of heavy road-improvement equipment. Donelan Products sells the lines to companies that manufacture and sell the equipment. The company?s market research department has discovered a market for high-pressure lines used in automated manufacturing equipment, which Donelan Products currently does not produce. The market research department has indicated that lines would likely sell for $50 per foot.

Assume Donelan Products desires an operating profit of 20 percent of sales. What is the highest acceptable manufacturing cost per foot for which Donelan Products would produce the lines? (5 points)

9. Charity Quilt Company produces and sells custom quilts.The company has a standard cost system to help control costs and has established the following labor standards for completing quilt tops.(5 points)

Standard labor-hours per unit of output:5.4 hours

Standard labor rate: $10.20 per hour

The following data pertain to quilt top operations for the last month.

Actual hours worked: 1,000 hours

Actual labor cost: $10,600

Actual output: 200 units

Compute the following variances

Direct labor rate and efficiency variances.

Prepare a brief explanation of the possible causes of each variance.

10. Foley Foods produces frozen meals targeted at the college student market.The production takes place in four stages:Preparation, in which the food is cleaned and cut; Cooking;Freezing; and Packaging.The company has a bottleneck in the Preparation stage, as shown below.Each ?unit? refers to a container of 144 frozen meals.

Preparation

Cooking

Freezing

Packaging

Hourly Capacity

300 Units

312 Units

320 Units

340 Units

Actual Hourly Capacity

300 Units

300 Units

300 Units

300 Units

Each unit sells for $200 and has a variable cost of $120.

Option a. Foley can increase Preparation output by renting additional equipment that would cost $200 per hour and increase the hourly capacity in Preparation by 5 units.

Option b. Foley can pay its suppliers to perform some of the food preparation.This option would cost Foley $2 more per unit and would enable the company to increase its hourly output in Preparation by 10 units.

Foley can take either or both options as presented if viable.If both options are taken, the cost increases in Option b would apply to 310 units.What do you recommend?Show computations to support your answer. (5 points)

Use the following data to answer questions 6, 7, & 8 Calgon Products, a distributor of organic beverages, needs a cash budget for September. The following information is available: a. The cash balance at the beginning of September is $9,000. b. Actual sales for July and August and expected sales for September are as follows: July August September Cash Sales $ 6,500 $ 5,250 $ 7,400 Sales on Account 20,000 30,000 40,000 Total Sales $26,500 $35,250 $47,400 Sales on account are collected over a three month period as follows: 10% are collected in the month of sale, 70% collected in the month following the sale, and 18% collected in the second month following the sale. The remaining 2% is uncollectible. c. Purchase of inventory will total $25,000 for September. Twenty percent of a month's inventory purchases are paid ofr during the month of the purchase. The accounts payable remaining from August's inventory purchases total $16,000, all of which will be paid in September. d. Selling and administrative expenses are budgeted at $13,000 for September. Of this amount $4,000 is for depreciation. e. Equipment costing $18,000 will be purchased for cash during September, and dividends totaling $3,000 will be paid during the month. f. The company maintains a minimum cash balance of $5,000. An open line of credit is available from the company's bank to bolster the cash balance as needed. 6. Prepare a schedule of cash collections for September. (5 points) 7. Prepare a schedule of expected cash disbursements for inventory purchases during September. (5 points) 8. Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September. Assume that any interest will not be paid until the following month. (5 points) Use the following data to answer questions 9 & 10 High Prairie Industries produces three products, A, B, & C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product X Y Z $120 $180 $160 Direct materials 54 28 80 Direct labor 24 64 32 Selling price Variable costs: Variable manufacturing overhead 6 16 8 Total variable costs 84 108 120 Contribution margin $36 $72 $40 Contribution margin ratio 30% 40% 25% Due to a strike in the plant of one of its competitors, demand for the company's products far exceeds its capacity to produce. Management is trying to determine which product(s) to concentrate on next week in filling its backlog of orders. The direct labor rate is $16 per hour, and only 3,000 hours of labor time are available each week. 9. Which orders would you recommend that the company work on next week - the order for Product X, Product Y, or Product Z? Show computations. (6 points) 10. By paying overtime wages, more than 3,000 hours of direct labor time can be made available next week. Up to how much should the company be willing to pay per hour in overtime wages as long as there is unfilled demand for the three products? Explain. (4 points) 11. Donelan Products makes high-pressure lines for a variety of heavy road-improvement equipment. Donelan Products sells the lines to companies that manufacture and sell the equipment. The company's market research department has discovered a market for high-pressure lines used in automated manufacturing equipment, which Donelan Products currently does not produce. The market research department has indicated that lines would likely sell for $50 per foot. Assume Donelan Products desires an operating profit of 20 percent of sales. What is the highest acceptable manufacturing cost per foot for which Donelan Products would produce the lines? (5 points) 12. Charity Quilt Company produces and sells custom quilts. The company has a standard cost system to help control costs and has established the following labor standards for completing quilt tops. (5 points) Standard labor-hours per unit of output: 5.4 hours Standard labor rate: $10.20 per hour The following data pertain to quilt top operations for the last month. Actual hours worked: 1,000 hours Actual labor cost: $10,600 Actual output: 200 units Compute the following variances Direct labor rate and efficiency variances. Prepare a brief explanation of the possible causes of each variance. 13. Foley Foods produces frozen meals targeted at the college student market. The production takes place in four stages: Preparation, in which the food is cleaned and cut; Cooking;Freezing; and Packaging. The company has a bottleneck in the Preparation stage, as shown below. Each \"unit\" refers to a container of 144 frozen meals. Hourly Capacity Actual Hourly Capacity Preparatio n 300 Units 300 Units Cooking 312 Units 300 Units Freezing 320 Units 300 Units Packagin g 340 Units 300 Units Each unit sells for $200 and has a variable cost of $120. Option a. Foley can increase Preparation output by renting additional equipment that would cost $200 per hour and increase the hourly capacity in Preparation by 5 units. Option b. Foley can pay its suppliers to perform some of the food preparation. This option would cost Foley $2 more per unit and would enable the company to increase its hourly output in Preparation by 10 units. Foley can take either or both options as presented if viable. If both options are taken, the cost increases in Option b would apply to 310 units. What do you recommend? Show computations to support your answer. (5 points)