1. Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

Sales are budgeted at $308,000 for November, $328,000 for December, and $228,000 for January.

Collections are expected to be 65% in the month of sale and 35% in the month following the sale.

The cost of goods sold is 80% of sales.

The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

Other monthly expenses to be paid in cash are $22,900.

Monthly depreciation is $30,000.

Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	35,500
Accounts receivable		86,000
Merchandise inventory		172,480
Property, plant and equipment, net of $624,000 accumulated depreciation		923,000
Total assets	$	1,216,980
Liabilities and Stockholders' Equity
Accounts payable	$	257,000
Common stock		758,000
Retained earnings		201,980
Total liabilities and stockholders' equity	$	1,216,980

The difference between cash receipts and cash disbursements for December would be:

2. Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,900 direct labor-hours will be required in August. The variable overhead rate is $1.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,520 per month, which includes depreciation of $8,830. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

3. Bustillo Inc. is working on its cash budget for March. The budgeted beginning cash balance is $42,000. Budgeted cash receipts total $123,000 and budgeted cash disbursements total $117,000. The desired ending cash balance is $65,500. To attain its desired ending cash balance for March, the company needs to borrow:

4. Which of the following statements is NOT correct concerning the Cash Budget?

a The Cash Budget builds on earlier budgets and schedules as well as additional data.

b The Cash Budget should be prepared before the Budgeted Balance Sheet.

c The Cash Budget should be prepared before the Budgeted Income Statement.

d It is not necessary to prepare any other budgets before preparing the Cash Budget.

5, In the merchandise purchases budget, the required purchases (in units) for a period can be determined by subtracting the beginning merchandise inventory (in units) from the budgeted sales (in units) and desired ending merchandise inventory (in units). true or false