Name: Chapter 8 1) Hoffman Inc. estimates future sales as follows: January February March April ACCT 285- Practice Set #5 (Chapter 8) 120,000 units $480,000 144,500 units $578,000 152,000 units $608,000 149,000 units $596,000 Hoffman Inc.'s past experience has shown that the ending inventory for each month should be equal to 30% of the next month's sales in units. The inventory on December 31st of the previous year contained 36,000 units. The company collects its sales 65% in the month of sale and 35% in the month after sale. The income statement for the first quarter (January-March) should report what amount for sales? a. $416,500 b. $2,053,400 c. $1,666,000 d. $1,453,200 2) Home Basics Inc.'s sales are collected 50% in the month of the sale, 40% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data: Total Sales June $400,0 00 July $410,0 00 August $480,0 00 What are budgeted cash collections in September? a. $440,500 b. $399,000 c. $415,000 d. $444,000 Septembe r W $415,00 0 October $370,0 00 3) Vertico Inc. has budgeted sales in units for the next four months as follows: Month January February March April Units 10,000 15,000 18,000 16,500 Past experience has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units. The company needs to prepare a
Hoffman Inci's past experience has shown that the ending inventory for each month should be equal to 30% of the next month's sales in units. The inventory on December 31st of the previous year contained 36,000 units. The company collects its sales 65% in the month of sale and 35% in the month after sale. The Income statement for the first quarter (January-March) should report what amount for sales? a. $416,500 b. $2,053,400 c. $1,666,000 d. $1,453,200 2) Home Basics Inc.'s sales are collected 50% in the month of the sale, 40% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data: What are budgeted cash collections in September? a. $440,500 b. $399,000 c. $415,000 d. $444,000 3) Vertico Inc. has budgeted sales in units for the next four months as follows: Past expenence has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units. The company needs to prepare a production budget for the next three months. The beginning inventory for March should be: a. 3,000 units b. 3,300 units c. 3,600 units d. 2,700 units 4) Campbell Company produces and selis footballs. To guard against out of stock situations, the company requires that 25% of the next month's sales be on hand at the end of each month. Budgeted sales of footballs over the next three months are: Budgeted sales in units July August September 300,000 200,000 240,000 Budgeted production for August would be: a. 240,000 units b. 255,000 units c. 265,000 units d. 315,000 units 5) Prestwich Company has budaeted oroduction fnr navt vas as follows: I wo pounas of material A are required for each unit of finished good produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs. A total of 30,000 pounds of material A are on hand to start the year. The cost of material A is $3 per pound. Prestwich pays for 60% of the purchases in the month of purchase and 40% in the following month. How many pounds of material A would Prestwich purchase in the 2nd quarter? (Answer: 165,000) a. 80,000 pounds b. 165,000 pounds c. 240,000 Pounds d. Pounds 6) Sloan Inc. incurs variable manufacturing overhead costs of $12 per unit and fixed manufacturing overhead cost of $650,000 per month. Of the fixed expense, $240,000 relates to depreciation each month. Sloan Inc. produced and sold 60,000 units in January and 48,000 units in February. 60% of each month's expense is paid for in the month incurred, and the other 40% is paid in the following month. What amount would Sloan Inc, include for manufacturing overhead expense on its February income statement? a. $1,226,000 b. $986,000 c. $1,043,600 d. $1,130,000 7) Morris Company incurs $1.80 per unit of variable selling and administrative expense and $102,950 per month in fixed selling and administrative expense. Of the fixed expense, $19.880 relates to depreciation each month. Morris produced and sold 7,000 units in February and 6,000 units in March. 80% of a month's expense is paid for in the month incurred, and the other 20% is paid in the following month. How much would be the March cash disbursements for selling and administrative expense? (Answer: 94,230) a. $93,870 b. $114,110 c. $95,670 d. $94,230 8) Letestu Company has a beginning cash balance on January 1,2021 of $10,000. Cash collected in January is $100,000 and sales revenue in Jaryary is $108,000. Expected disbursements for january for inventory purchases are $45.000 and for selling and administrative expenses are $62,000. Additionally, a dividend payment of $5,000 will be made in January. Letestu maintains a minimum cash balance of $5,000. How much cash will Letestu need to borrow in January in order to meet the minimum balance requirement? a. $0 b. $19,000 c. $7,000 d. $17,000 9) The Stokes Company has obtained the following sales forecast data: CashSalesApril$80,000May$70,000June$50,000July$60,000 The regular pattern of collection of credit sales is 25% in the month of sale and 75% in the month following the month of sale. There are no bad debts. The budgeted accounts receivable balance on June 30th is: a. $225,000 b. $70,000 c. $247,500 d. $210,000 10) Bridgette's Boutique has budgeted to make the following material purchases during the next four months: Bridgette pays for 60% of the purchases in the month of purchase and 40% in the following month. Accounts payable at the end of March would be: I a. $20,920 b. $39,400 c. $52,300 d. $30,800 11) Larry's Lumber sells lumber and general building supplies to building contractors. Larry's net income is budgeted to be $93,500 in December. A dividend of $50,000 was declared and paid in December. Statement of Financial Position The retained earnings at the end of December would be: a. $119,207 b. $162,707 c. ($48,593) d. $212,707
