BE 23.6 Identify the budgets in Column B from which dollar amounts are transferred directly in constructing the budgets listed in Column A. Column A Column B 1. Budgeted income statement a. Direct materials budget 2. Budgeted balance sheet b. Cost of goods sold budget 3. Cash flow budget c. Production budget 4. Cost of goods sold budget d. Payables budget 5. Production budget e. Sales budget f. Budgeted income statement E 23.1 The following information is from the manufacturing budget and the budgeted financial statements of Fabor Fabrication: Direct materials inventory, Jan. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 73,000 Direct materials inventory, Dec. 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,000 Direct materials budgeted for use during the year . . . . . . . . . . . . . . . . . . . . . . . . . 264,000 Accounts payable to suppliers of materials, Jan. 1 . . . . . . . . . . . . . . . . . . . . . . . . 46,000 Accounts payable to suppliers of materials, Dec. 31 . . . . . . . . . . . . . . . . . . . . . . . 77,000 Compute the budgeted amounts for: a. Purchases of direct materials during the year. b. Cash payments during the year to suppliers of materials. E 23.8 Sales on account for the first two months of the current year are budgeted as follows: January $800,000 February $880,000 All sales are made on terms of 2/10, n/30 (2% discount if paid in 10 days, full amount by 30 days); collections on accounts receivable are typically made as follows: Collections within the month of sale: Within discount period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70% After discount period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Collections within the month following sale: Within discount period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 After discount period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Returns, allowances, and uncollectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% Compute the estimated cash collections on accounts receivable for the month of February. E 23.9 On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the companys sales are made on account. The following information has been provided by Spicers management: Month Credit Sales Jan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000 (actual) Feb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 (actual) Mar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 (estimated) Apr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700,000 (estimated) May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000 (estimated) The companys collection activity on credit sales historically has been as follows: Collections in the month of the sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50% Collections one month after the sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Collections two months after the sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Uncollectible accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Spicers total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter. Compute Spicers budgeted cash balance at the ends of March, April, and May. E 24.2 At Franklis Incorporated, during the month of January, the direct labor rate variance was $2,800 unfavorable, and the direct labor efficiency variance was $4,900 favorable. Actual direct labor costs during January were $90,000. What was the standard direct labor applied to production at Franklis during the month of January? E 24.4 Jesse is the office manager of a large firm called Law & Legal Services, Inc. At Law & Legal Services, overhead is allocated to client accounts using hours billed. Jesse found the following information related to overhead for the previous month: Spending variance 5 $15,000 unfavorable Volume variance 5 $8,000 favorable Actual overhead 5 $60,000 Actual hours billed 5 4,500 hours Are the normal or expected hours for billing each month higher or lower than the actual hours billed last month? Were the actual expenditures of office supplies, equipment, indirect labor, and so on, higher or lower than expected? E 24.6. A popular product of Loring Glassworks is a hand-decorated vase. The companys standard cost system calls for 0.75 hours of direct labor per vase, at a standard wage rate of $8.25. During September, Loring produced 4,000 vases at an actual direct labor cost of $24,464 for 2,780 direct labor hours. What is the actual wage rate per hour? Compute the labor rate and efficiency variances for the month. Was paying workers the actual wage rather than the standard wage an efficient strategy for Loring