Q1. Personal Budget

At the beginning of the school year, Katherine Malloy decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget

Cash balance, September 1 (from a summer job)	$8,140
Purchase season football tickets in September	110
Additional entertainment for each month	280
Pay fall semester tuition in September	4,400
Pay rent at the beginning of each month	390
Pay for food each month	220
Pay apartment deposit on September 2 (to be returned December 15)	600
Part-time job earnings each month (net of taxes)	1,010

Question Content Area

a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except an overall cash decrease which should be indicated with a minus sign.

	September	October	November	December
Estimated cash receipts from:
Part-time job	$fill in the blank 9dc96806dfdef98_1	$fill in the blank 9dc96806dfdef98_2	$fill in the blank 9dc96806dfdef98_3	$fill in the blank 9dc96806dfdef98_4
Deposit				fill in the blank 9dc96806dfdef98_5
Total cash receipts	$fill in the blank 9dc96806dfdef98_6	$fill in the blank 9dc96806dfdef98_7	$fill in the blank 9dc96806dfdef98_8	$fill in the blank 9dc96806dfdef98_9
Estimated cash payments for:
Season football tickets	$fill in the blank 9dc96806dfdef98_10
Additional entertainment	fill in the blank 9dc96806dfdef98_11	$fill in the blank 9dc96806dfdef98_12	$fill in the blank 9dc96806dfdef98_13	$fill in the blank 9dc96806dfdef98_14
Tuition	fill in the blank 9dc96806dfdef98_15
Rent	fill in the blank 9dc96806dfdef98_16	fill in the blank 9dc96806dfdef98_17	fill in the blank 9dc96806dfdef98_18	fill in the blank 9dc96806dfdef98_19
Food	fill in the blank 9dc96806dfdef98_20	fill in the blank 9dc96806dfdef98_21	fill in the blank 9dc96806dfdef98_22	fill in the blank 9dc96806dfdef98_23
Deposit	fill in the blank 9dc96806dfdef98_24
Total cash payments	$fill in the blank 9dc96806dfdef98_25	$fill in the blank 9dc96806dfdef98_26	$fill in the blank 9dc96806dfdef98_27	$fill in the blank 9dc96806dfdef98_28
Overall cash increase (decrease)	$fill in the blank 9dc96806dfdef98_29	$fill in the blank 9dc96806dfdef98_30	$fill in the blank 9dc96806dfdef98_31	$fill in the blank 9dc96806dfdef98_32
Cash balance at beginning of month	fill in the blank 9dc96806dfdef98_33	fill in the blank 9dc96806dfdef98_34	fill in the blank 9dc96806dfdef98_35	fill in the blank 9dc96806dfdef98_36
Cash balance at end of month	$fill in the blank 9dc96806dfdef98_37	$fill in the blank 9dc96806dfdef98_38	$fill in the blank 9dc96806dfdef98_39	$fill in the blank 9dc96806dfdef98_40

Question Content Area

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?

StaticFlexible

c. Malloy can see that her present plan

will providewill not provide

sufficient cash. If Malloy did not budget but went ahead with the original plan, she would be $fill in the blank e612fb08e057047_3

overshort

at the end of December, with no time left to adjust.

Q2. Flexible Budget for Assembly Department

Cabinaire Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department:

Direct labor per filing cabinet	30 minutes
Supervisor salaries	$138,000 per month
Depreciation	$16,000 per month
Direct labor rate	$24 per hour

Prepare a flexible budget for 8,000, 10,000, and 12,000 filing cabinets for the month of August in the Assembly Department, similar to Exhibit 5.

Units of production	8,000	10,000	12,000
Variable cost:
Direct labor	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Fixed cost:
Supervisor salaries	$fill in the blank 4	$fill in the blank 5	$fill in the blank 6
Depreciation	fill in the blank 7	fill in the blank 8	fill in the blank 9
Total fixed cost	$fill in the blank 10	$fill in the blank 11	$fill in the blank 12
Total department cost	$fill in the blank 13	$fill in the blank 14	$fill in the blank 15

Q3. Production Budget

FitHealth Inc. produces a small and large version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows:

	Bath Scale	Gym Scale
East Region unit sales	21,800		36,600
West Region unit sales	23,500		24,700
Total	45,300		61,300

The finished goods inventory estimated for October 1 for the Bath and Gym scale models is 1,600 and 2,300 units, respectively. The desired finished goods inventory for October 31 for the Bath and Gym scale models is 1,200 and 2,500 units, respectively.

Prepare a production budget for the Bath and Gym scales for the month ended October 31.

	Units Bath Scale	Units Gym Scale
Expected units to be sold	fill in the blank 1	fill in the blank 2
Less desired inventory, October 31Less estimated inventory, October 1Plus desired inventory, October 31Plus estimated inventory, October 1	- Select -	- Select -
Total units required	fill in the blank 6	fill in the blank 7
Less desired inventory, October 31Less estimated inventory, October 1Plus desired inventory, October 31Plus estimated inventory, October 1	- Select -	- Select -
Total units to be produced	fill in the blank 11	fill in the blank 12

Q4. Direct Materials Purchases Budget

Lorenzo's Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for September:

	Units
	12" Pizza	16" Pizza
Budgeted production volume	16,100		23,900

Three direct materials are used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows:

	12" Pizza	16" Pizza
Direct materials:
	Dough	0.80	lb. per unit	1.50	lb. per unit
	Tomato	0.50		0.70
	Cheese	0.70		1.30

In addition, Lorenzo's has determined the following information about each material:

	Dough	Tomato	Cheese
Estimated inventory, September 1	530	lb.	210	lb.	360	lb.
Desired inventory, September 30	560	lb.	200	lb.	390	lb.
Price per pound	$1.00		$2.10		$3.00

Prepare September's direct materials purchases budget for Lorenzo's Frozen Pizza Inc. When required, enter unit prices to the nearest cent.

	Dough	Tomato	Cheese	Total
Units required for production:
12" pizza	fill in the blank 1	fill in the blank 2	fill in the blank 3
16" pizza	fill in the blank 4	fill in the blank 5	fill in the blank 6
Less desired inventory, September 1Less desired inventory, September 30Less estimated inventory, September 1Plus desired inventory, September 30Plus estimated inventory, September 1	- Select -	- Select -	- Select -
Total pounds required	fill in the blank 11	fill in the blank 12	fill in the blank 13
Less desired inventory, September 1Less desired inventory, September 30Less estimated inventory, September 1Plus desired inventory, September 30Plus estimated inventory, September 1	- Select -	- Select -	- Select -
Total pounds to be purchased	fill in the blank 18	fill in the blank 19	fill in the blank 20
Unit price (per pound)	x $fill in the blank 21	x $fill in the blank 22	x $fill in the blank 23
Total direct materials to be purchased	$fill in the blank 24	$fill in the blank 25	$fill in the blank 26	$fill in the blank 27

Q5. Direct Labor Cost Budget

Rip Court Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for March for the two rackets is as follows:

	Junior	Pro Striker
Production budget	7,500 units	21,300 units

Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

	Forming Department	Assembly Department
Junior	0.25 hour per unit	0.5 hour per unit
Pro Striker	0.35 hour per unit	0.75 hour per unit

The direct labor rate for each department is as follows:

Forming Department	$16 per hour
Assembly Department	$11 per hour

Prepare the direct labor cost budget for March.

	Forming Department	Assembly Department
Hours required for production:
Junior	fill in the blank 1	fill in the blank 2
Pro Striker	fill in the blank 3	fill in the blank 4
Total hours required	fill in the blank 5	fill in the blank 6
Hourly rate	x$fill in the blank 7	x$fill in the blank 8
Total direct labor cost	$fill in the blank 9	$fill in the blank 10

Q6. Factory Overhead Cost Budget

Toot Sweet Company budgeted the following costs for anticipated production for August:

Advertising expenses	$269,520
Manufacturing supplies	14,770
Power and light	44,060
Sales commissions	297,870
Factory insurance	25,660
Production supervisor wages	129,580
Production control wages	33,690
Executive officer salaries	274,700
Materials management wages	37,050
Factory depreciation	20,990

Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only fixed factory costs.

Variable factory overhead costs:
Advertising expensesFactory depreciationFactory insuranceManufacturing suppliesSales commissions	$- Select -
Advertising expensesExecutive officer salariesFactory depreciationPower and lightSales commissions	- Select -
Advertising expensesExecutive officer salariesFactory depreciationFactory insuranceProduction supervisor wages	- Select -
Advertising expensesFactory depreciationFactory insuranceProduction control wagesSales commissions	- Select -
Advertising expensesExecutive officer salariesFactory depreciationMaterials management wagesSales commissions	- Select -
Total variable factory overhead costs		$fill in the blank 11
Fixed factory overhead costs:
Advertising expensesFactory insuranceManufacturing suppliesProduction supervisor wagesSales commissions	$- Select -
Advertising expensesExecutive officer salariesFactory depreciationPower and lightProduction supervisor wages	- Select -
Total fixed factory overhead costs		fill in the blank 16
Total factory overhead costs		$fill in the blank 17

Q7. Cost of Goods Sold Budget

Wilmington Chemical Company uses oil to produce two types of plastic products, P1 and P2. Wilmington budgeted 24,100 barrels of oil for purchase in June for $63 per barrel. Direct labor budgeted in the chemical process was $167,000 for June. Factory overhead was budgeted $273,300 during June. The inventories on June 1 were estimated to be:

Oil	$11,700
P1	7,800
P2	6,700
Work in process	9,700

The desired inventories on June 30 were:

Oil	$12,900
P1	7,200
P2	6,300
Work in process	10,000

Use the preceding information to prepare a cost of goods sold budget for June.

Cost of direct materials available for useDirect laborFactory overheadFinished goods inventory, June 1Total work in process during period			$- Select -
Direct laborFactory overheadWork in process inventory, June 1Work in process inventory, June 30Total work in process during period		$- Select -
Direct materials:
Cost of direct materials available for useDirect laborDirect materials inventory, June 1Direct materials inventory, June 30Total work in process during period	$- Select -
Cost of goods soldDirect laborDirect materials purchasesFinished goods inventory, June 30Total work in process during period	- Select -
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal manufacturing costs	$- Select -
Less direct laborLess direct materials inventory, June 30Less factory overheadLess finished goods inventory, June 1Less total work in process during period	- Select -
Cost of direct materials placed in productionCost of goods soldFinished goods inventory, June 1Finished goods inventory, June 30Work in process inventory, June 30	$- Select -
Cost of goods soldDirect laborTotal work in process during periodWork in process inventory, June 1Work in process inventory, June 30	- Select -
Direct materials inventory, June 1Direct materials inventory, June 30Factory overheadTotal work in process during periodWork in process inventory, June 30	- Select -
Cost of direct materials available for useCost of finished goods available for saleCost of goods soldCost of goods manufacturedTotal manufacturing costs		- Select -
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal work in process during the period		$- Select -
Less direct laborLess direct materials inventory, June 30Less factory overheadLess finished goods inventory, June 1Less work in process inventory, June 30		- Select -
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal work in process during the period			- Select -
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal work in process during the period			$- Select -
Less direct laborLess direct materials inventory, June 30Less factory overheadLess finished goods inventory, June 30Less work in process inventory, June 30			- Select -
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal work in process during the period			$- Select -