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# Wynn, Inc. manufactures beanies. The budgeted units to be produced and sold are below: Expected Production Expected Sales August 3,500 2,900 September 2,800 3,900 It takes 18 yards of yarn to produce a beanie. The company’s policy is to maintain yarn at the end of each month equal to 5% of next month’s production needs and to maintain a finished goods inventory at the end of each month equal to 20% of next month’s anticipated production needs. The cost of yarn is \$0.20 a yard. At August 1, 3,150 yards of yarn were on hand. Instructions Compute the budgeted cost of purchases. BE 160 The budget components for Birk Company for the quarter ended June 30 appear below. Birk sells trash cans for \$12 each. Budgeted production for the next three months is: April 26,000 units May 46,000 units June 29,000 units Birk desires to have trash cans on hand at the end of each month equal to 20 percent of the following month’s budgeted sales in units. On March 31, Birk had 4,000 completed units on hand. Five pounds of plastic are required for each trash can. At the end of each month, Birk desires to have 10 percent of the following month’s production material needs on hand. At March 31, Birk had 13,000 pounds of plastic on hand. The materials used in production costs \$0.60 per pound. Each trash can produced requires 0.10 hours of direct labor. Instructions Compute the cost of the plastic inventory at the end of May. BE 161 Smoke, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three months is as follows: April May June Budgeted production 21,000 22,000 24,000 The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month’s budgeted production needs. The cost of plastic is \$2.20 per pound. Instructions Prepare a direct materials purchases budget for the month of May. BE 162 The budget components for Park Company for the quarter ended June 30 appear below. Park sells trash cans for \$12 each. Budgeted sales and production for the next three months are: Sales Production April 20,000 units 26,000 units May 50,000 units 46,000 units June 30,000 units 29,000 units Park desires to have trash cans on hand at the end of each month equal to 20 percent of the following month’s budgeted sales in units. On March 31, Park had 4,000 completed units on hand. Five pounds of plastic are required for each trash can. At the end of each month, Park desires to have 10 percent of the following month’s production material needs on hand. At March 31, Park had 13,000 pounds of plastic on hand. The materials used in production cost \$0.60 per pound. Each trash can produced requires 0.10 hours of direct labor. Instructions Determine how much the materials purchases budget will be for the month ending April 30. BE 163 Jent Company reported the following information for 2013: October November December Budgeted sales \$320,000 \$340,000 \$360,000 Budgeted purchases \$120,000 \$128,000 \$144,000 · All sales are on credit. · Customer amounts on account are collected 40% in the month of sale and 60% in the following month. Instructions Compute the amount of cash Jent will receive during November. BE 164 Plack Company budgeted the following information for 2013: May June July Budgeted purchases \$104,000 \$110,000 \$102,000 · Cost of goods sold is 40% of sales. Accounts payable is used only for inventory acquisitions. · Plack purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month. · Selling and administrative expenses are budgeted at \$30,000 for May and are expected to increase 5% per month. They are paid during the month of acquisition. In addition, budgeted depreciation is \$10,000 per month. · Income taxes are \$38,400 for July and are paid in the month incurred. Instructions Compute the amount of budgeted cash disbursements for July. BE 165 Sable, Inc. has budgeted direct materials purchases of \$400,000 in March and \$500,000 in April. Past experience indicates that the company pays for 60% of its purchases in the month of purchase and the remaining 40% in the next month. Other costs are all paid during the month incurred. During April, the following items were budgeted: Wages expense \$120,000 Purchase of office equipment 200,000 Selling and administrative expenses 126,000 Depreciation expense 18,000 Instructions Compute the amount of budgeted cash disbursements for April. BE 166 Chain Inc. provided the following information: April May June Projected merchandise purchases \$92,000 \$80,000 \$66,000 · Chain pays 40% of merchandise purchases in the month purchased and 60% in the following month. · General operating expenses are budgeted to be \$31,000 per month of which depreciation is \$3,000 of this amount. Chain pays operating expenses in the month incurred. · Chain makes loan payments of \$4,000 per month of which \$450 is interest and the remainder is principal. Instructions Calculate budgeted cash disbursements for May. BE 167 Beal, Inc. provided the following information: March April May Projected merchandise purchases \$65,000 \$75,000 \$80,000 · Beal pays 40% of merchandise purchases in the month purchased and 60% in the following month. · General operating expenses are budgeted to be \$20,000 per month of which depreciation is \$2,000 of this amount. Beal pays operating expenses in the month incurred. Instructions Calculate Beal’s budgeted cash disbursements for May. BE 168 The beginning cash balance is \$15,000. Sales are forecasted at \$800,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at \$475,000. Accounts Receivable from previous accounting periods totaling \$9,000 will be collected in the current year. The company is required to make a \$15,000 loan payment and an annual interest payment on the last day of every year. The loan balance as of the beginning of the year is \$90,000, and the annual interest rate is 10%. Instructions Compute the excess of cash receipts over cash disbursements. EXERCISES Ex. 169 Delta Manufacturing has budgeted the following unit sales: 2012 Units April 25,000 May 40,000 June 60,000 July 45,000 Of the units budgeted, 40% are sold by the Coastal Division at an average price of \$15 per unit and the remainder are sold by the Central Division at an average price of \$12 per unit. Instructions Prepare separate sales budgets for each division and for the company in total for the second quarter of 2013. Ex. 170 Pitt Corp. makes and sells a single product, widgets. Two pounds of sand are needed to make one widget. Budgeted production of widgets for the next few months follows: September 25,000 units October 31,000 units The company wants to maintain monthly ending inventories of sand equal to 20% of the following month’s production needs. On August 31, 10,000 pounds of sand were on hand. Instructions How much sand should be purchased in September? Ex. 171 Butler Manufacturing manufactures two products, (1) Regular and (2) Deluxe. The budgeted units to be produced are as follows: Units of Product 2013 Regular Deluxe Total July 10,000 15,000 25,000 August 6,000 10,000 16,000 September 9,000 14,000 23,000 October 8,000 12,000 20,000 It takes 2 pounds of direct materials to produce the Regular product and 5 pounds of direct materials to produce the Deluxe product. It is the company’s policy to maintain an inventory ofdirect materials on hand at the end of each month equal to 30% of the next month’s production needs for the Regular product and 20% of the next month’s production needs for the Deluxe product. Direct materials inventory on hand at June 30 were 6,000 pounds for the Regular product and 15,000 pounds for the Deluxe product. The cost per pound of materials is \$5 Regular and \$8 Deluxe. Instructions Prepare separate direct materials budgets for each product for the third quarter of 2013.

Wynn, Inc. manufactures beanies. The budgeted units to be produced and sold are below:

Expected Production Expected Sales

August 3,500 2,900

September 2,800 3,900

It takes 18 yards of yarn to produce a beanie. The company’s policy is to maintain yarn at the end of each month equal to 5% of next month’s production needs and to maintain a finished goods inventory at the end of each month equal to 20% of next month’s anticipated production needs. The cost of yarn is \$0.20 a yard. At August 1, 3,150 yards of yarn were on hand.

Instructions

Compute the budgeted cost of purchases.

##### BE 160

The budget components for Birk Company for the quarter ended June 30 appear below. Birk sells trash cans for \$12 each. Budgeted production for the next three months is:

April 26,000 units

May 46,000 units

June 29,000 units

Birk desires to have trash cans on hand at the end of each month equal to 20 percent of the following month’s budgeted sales in units. On March 31, Birk had 4,000 completed units on hand. Five pounds of plastic are required for each trash can. At the end of each month, Birk desires to have 10 percent of the following month’s production material needs on hand. At March 31, Birk had 13,000 pounds of plastic on hand. The materials used in production costs \$0.60 per pound. Each trash can produced requires 0.10 hours of direct labor.

Instructions

Compute the cost of the plastic inventory at the end of May.

##### BE 161

Smoke, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three months is as follows:

April May June

Budgeted production 21,000 22,000 24,000

The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month’s budgeted production needs. The cost of plastic is \$2.20 per pound.

Instructions

Prepare a direct materials purchases budget for the month of May.

##### BE 162

The budget components for Park Company for the quarter ended June 30 appear below. Park sells trash cans for \$12 each. Budgeted sales and production for the next three months are:

Sales Production

April 20,000 units 26,000 units

May 50,000 units 46,000 units

June 30,000 units 29,000 units

Park desires to have trash cans on hand at the end of each month equal to 20 percent of the following month’s budgeted sales in units. On March 31, Park had 4,000 completed units on hand. Five pounds of plastic are required for each trash can. At the end of each month, Park desires to have 10 percent of the following month’s production material needs on hand. At March 31, Park had 13,000 pounds of plastic on hand. The materials used in production cost \$0.60 per pound. Each trash can produced requires 0.10 hours of direct labor.

Instructions

Determine how much the materials purchases budget will be for the month ending April 30.

##### BE 163

Jent Company reported the following information for 2013:

October November December

Budgeted sales \$320,000 \$340,000 \$360,000

Budgeted purchases \$120,000 \$128,000 \$144,000

· All sales are on credit.

· Customer amounts on account are collected 40% in the month of sale and 60% in the following month.

Instructions

Compute the amount of cash Jent will receive during November.

##### BE 164

Plack Company budgeted the following information for 2013:

May June July

Budgeted purchases \$104,000 \$110,000 \$102,000

· Cost of goods sold is 40% of sales. Accounts payable is used only for inventory acquisitions.

· Plack purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month.

· Selling and administrative expenses are budgeted at \$30,000 for May and are expected to increase 5% per month. They are paid during the month of acquisition. In addition, budgeted depreciation is \$10,000 per month.

· Income taxes are \$38,400 for July and are paid in the month incurred.

Instructions

Compute the amount of budgeted cash disbursements for July.

##### BE 165

Sable, Inc. has budgeted direct materials purchases of \$400,000 in March and \$500,000 in April. Past experience indicates that the company pays for 60% of its purchases in the month of purchase and the remaining 40% in the next month. Other costs are all paid during the month incurred. During April, the following items were budgeted:

Wages expense \$120,000

Purchase of office equipment 200,000

Depreciation expense 18,000

Instructions

Compute the amount of budgeted cash disbursements for April.

##### BE 166

Chain Inc. provided the following information:

April May June

Projected merchandise purchases \$92,000 \$80,000 \$66,000

· Chain pays 40% of merchandise purchases in the month purchased and 60% in the following month.

· General operating expenses are budgeted to be \$31,000 per month of which depreciation is \$3,000 of this amount. Chain pays operating expenses in the month incurred.

· Chain makes loan payments of \$4,000 per month of which \$450 is interest and the remainder is principal.

Instructions

Calculate budgeted cash disbursements for May.

##### BE 167

Beal, Inc. provided the following information:

March April May

Projected merchandise purchases \$65,000 \$75,000 \$80,000

· Beal pays 40% of merchandise purchases in the month purchased and 60% in the following month.

· General operating expenses are budgeted to be \$20,000 per month of which depreciation is \$2,000 of this amount. Beal pays operating expenses in the month incurred.

Instructions

Calculate Beal’s budgeted cash disbursements for May.

##### BE 168

The beginning cash balance is \$15,000. Sales are forecasted at \$800,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at \$475,000. Accounts Receivable from previous accounting periods totaling \$9,000 will be collected in the current year. The company is required to make a \$15,000 loan payment and an annual interest payment on the last day of every year. The loan balance as of the beginning of the year is \$90,000, and the annual interest rate is 10%.

Instructions

Compute the excess of cash receipts over cash disbursements.

## EXERCISES

##### Ex. 169

Delta Manufacturing has budgeted the following unit sales:

2012 Units

April 25,000

May 40,000

June 60,000

July 45,000

Of the units budgeted, 40% are sold by the Coastal Division at an average price of \$15 per unit and the remainder are sold by the Central Division at an average price of \$12 per unit.

Instructions

Prepare separate sales budgets for each division and for the company in total for the second quarter of 2013.

##### Ex. 170

Pitt Corp. makes and sells a single product, widgets. Two pounds of sand are needed to make one widget. Budgeted production of widgets for the next few months follows:

September 25,000 units

October 31,000 units

The company wants to maintain monthly ending inventories of sand equal to 20% of the following month’s production needs. On August 31, 10,000 pounds of sand were on hand.

Instructions

How much sand should be purchased in September?

##### Ex. 171

Butler Manufacturing manufactures two products, (1) Regular and (2) Deluxe. The budgeted units to be produced are as follows:

Units of Product

2013 Regular Deluxe Total

July 10,000 15,000 25,000

August 6,000 10,000 16,000

September 9,000 14,000 23,000

October 8,000 12,000 20,000

It takes 2 pounds of direct materials to produce the Regular product and 5 pounds of direct materials to produce the Deluxe product. It is the company’s policy to maintain an inventory ofdirect materials on hand at the end of each month equal to 30% of the next month’s production needs for the Regular product and 20% of the next month’s production needs for the Deluxe product. Direct materials inventory on hand at June 30 were 6,000 pounds for the Regular product and 15,000 pounds for the Deluxe product. The cost per pound of materials is \$5 Regular and \$8 Deluxe.

Instructions

Prepare separate direct materials budgets for each product for the third quarter of 2013.

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