Extra C $14$ Questions

$$

$1.$ A manufacturing company, Rayburn Limited, makes a single product, the Trophy. The sales forecast for February is $5,900$ units. Each unit of Trophy uses $5$ kilos of Mersey and $3$ kilos of Gatt.

$$

The anticipated stocks at the beginning of February are:

$$

The required stock levels at the end of February are:

$$

Required:

$$Produce the following budget figures for the month of February:

a$).$ Production of Trophies $($in units$)$

b$).$ Materials usage of Mersey and Gatt $($in kilos$)$

c$).$ Materials purchases of Mersey and Gatt $($in kilos$)$

$$

Solution:

a$).$ Budgeted Sales Units $+$ Desired Ending Finished Goods $($FG$)$ less Beginning FGs $=$ required Production Units $5900+18001400=6300$

$$

b$).$ Materials Usage $6300*5=31500|6300*3=18900|31500+18300=50400$

$$

c$).$ DM required for Production $+$ Desired Ending DM less Beginning DM $=$ Required DM

$$

$$

$$

$2.$ Tata Brothers wish to approach the bankers for temporary overdraft facility for the period from

October $2010$ to December $2010.$ During the period of this period of these three months, the firm

will be manufacturing mostly for stock.

Required:$$ prepare a cash budget for the above period.

Month $$ Sales $($$$.)$ Purchases $($$$)$ Wages $($$$)$

August$360,000249,60024,000$

September $384,000288,00028,000$

October $216,000486,00022,000$

November$348,000492,00020,000$

December $252,000536,00030,000$

$$

$($a$)50\%$ of credit sales are realized in the month following the sales and remaining $50\%$ in the

second following.$$

$($b$)$ Creditors are paid in the month following the month of purchase

$($c$)$ Estimated cash as on $10/1/2010$ is $$50,000.$

$$

$$

$3.$ Shown below is the sales forecast for Clovercast Inc. for the first four months of the coming year.

$$

$$

Jan

Feb

Mar

Apr

Cash sales...............

$ $15,000$

$ $24,000$

$ $18,000$

$ $14,000$

Credit sales.............

$ $100,000$

$$120,000$

$ $90,000$

$ $70,000$

$$

On average, $50\%$ of credit sales are paid for in the month of the sale, $30\%$ in the month following sale, and the remainder is paid two months after the month of the sale.

Assuming there are no bad debts, the expected cash inflow in March is:

$$

A$)$ $$138,000$

B$)$ $$122,000$

C$)$ $$119,000$

D$)$ $$108,000$

$$

$$

$4.$ Paradise Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels $($in units$)$ are planned for the next year.

$$

$$

Beginning

Inventory

Ending

Inventory

Raw materials$*$

$40,000$

$50,000$

Finished goods

$80,000$

$50,000$

$$

$*$Three pounds of raw materials are needed to produce each unit of finished product.

If Paradise Company plans to sell $480,000$ units during the year, the number of units it would have to manufacture during the year would be:

A$)440,000$ units

B$)480,000$ units

C$)510,000$ units

D$)450,000$ units

$$

$$

$$

$$

$5.$ Berol Company plans to sell $200,000$ units of finished product in July and anticipates a growth rate in sales of $5\%$ per month. The desired monthly ending inventory in units of finished product is $80\%$ of the next month$$s estimated sales. There are $150,000$ finished units in inventory on June $30.$

$$

Berol Company$$s production requirement in units of finished product for the three$-$month period ending September $30$ is:

$$

a$.712,025$ units

b$.630,500$ units

c$.664,000$ units

d$.665,720$ units