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Chapter 20: Master Budgets and Performance Planning

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Financial & Managerial Accounting
Pages: 882 - 935

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131 Questions for Chapter 20: Master Budgets and Performance Planning

  1. Blue Wave Co. predicts the following unit sales for the coming four months: September, 4,000 units; October, 5,000 units; November, 7,000 units; and December, 7,600 units. The company’s policy is to maintain finished goods inventory equal to 60% of the next month’s sales. At the end of August, the company had 2,400 finished units on hand. Prepare a production budget for each of the months of September, October, and November.

    Found on Page 918
  2. Found on Page 918
  3. X-Tel budgets sales of $60,000 for April, $100,000 for May, and $80,000 for June. In addition, sales are 40% cash and 60% on credit. All credit sales are collected in the month following the sale. The April 1 balance in accounts receivable is $15,000. Prepare a schedule of budgeted cash receipts for April, May, and June.

    Found on Page 913
  4. X-Tel budgets sales of $60,000 for April, $100,000 for May, and $80,000 for June. In addition, sales commissions are 10% of sales dollars and the company pays a sales manager a salary of $6,000 per month. Sales commissions and salaries are paid in the month incurred. Prepare a selling expense budget for April, May, and June.

    Found on Page 914
  5. Champ, Inc., predicts the following sales in units for the coming two months:

    Found on Page 914
  6. Miami Solar manufactures solar panels for industrial use. The company budgets production of 5,000 units (solar panels) in July and 5,300 units in August. Each unit requires 3 pounds of direct materials, which cost $6 per pound. The company’s policy is to maintain direct materials inventory equal to 30% of the next month’s direct materials requirement. As of June 30, the company has 4,500 pounds of direct materials in inventory, which complies with the policy.

    Found on Page 914
  7. Miami Solar budgets production of 5,000 solar panels in July. Each unit requires 4 hours of direct labor at a rate of $16 per hour. Prepare a direct labor budget for July.

    Found on Page 914
  8. Atlantic Surf manufactures surfboards. The company’s sales budget for the next three months is shown below. In addition, company policy is to maintain finished goods inventory equal (in units) to 40% of the next month’s unit sales. As of June 30, the company has 1,600 finished surfboards in inventory, which complies with the policy. Prepare a production budget for the months of July and August.

    Found on Page 914
  9. Forrest Company manufactures phone chargers and has a JIT policy that ending inventory must equal 10% of the next month’s sales. It estimates that October’s actual ending inventory will consist of 40,000 units. November and December sales are estimated to be 400,000 and 350,000 units, respectively. Compute the number of units to be produced for the month of November.

    Found on Page 915
  10. Music World reports the following sales forecast: August, $150,000; and September, $170,000. Cash sales are normally 40% of total sales and all credit sales are expected to be collected in the month following the date of sale. Prepare a schedule of cash receipts for September.

    Found on Page 915

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