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Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs €0.40 per pound and employees of the company are paid €12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory.

 

What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

  1. 38,280
  2. 37,680
  3. 38,880
  4. 40,200

 

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1. Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory.

What is the total amount to be budgeted for manufacturing overhead for the month?

Select one:

a. $11,484

b. $2,871

c. $11,880

d. $2,970

2. Haft Construction Company determines that 54,000 pounds of direct materials are needed for production in July. There are 3,200 pounds of direct materials on hand at July 1 and the desired ending inventory is 2,800 pounds. If the cost per unit of direct materials is $3, what is the budgeted total cost of direct materials purchases?

Select one:

a. $165,600

b. $160,800

c. $163,200

d. $158,400

3. Dolce Co. estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.

Cash collections for the third quarter are budgeted at

Select one:

a. $6,156,000

b. $4,428,000

c. $3,051,000

d. $5,319,000

4. The cash budget reflects

Select one:

a. expected cash receipts and cash disbursements from all sources

b. all the items that appear on a budgeted income statement

c. all the items that appear on a budgeted balance sheet

d. all revenues and all expenses for a period

5. Burr, Inc.'s direct materials budget shows total cost of direct materials purchases for April $400,000, May $480,000 and June $560,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for June are

Select one:

a. $528,000

b. $512,000

c. $480,000

d. $416,000

1. Sandler Company has 6,000 units in beginning finished goods. Thesales budget shows expected sales to be 24,000 units. If theproduction budget shows that 28,000 units are required forproduction, what was the desired ending finished goods?
A) 2,000.
B) 6,000.
C) 10,000.
D) 18,000.

2. The following credit sales are budgeted by PeckmanCompany:January $136,000
February 200,000
March 280,000
April 240,000

The company's past experience indicates that 70% of the accountsreceivable are collected in the month of sale, 20% in the monthfollowing the sale, and 8% in the second month following the sale.The anticipated cash inflow for the month of April is
A) $246,880.
B) $224,000.
C) $240,000.
D) $235,200.

3. Lester Production is planning to sell 600 boxes of ceramic tile,with production estimated at 580 boxes during May. Each box of tilerequires 44 pounds of clay mix and a quarter hour of direct labor.Clay mix costs $0.40 per pound and employees of the company arepaid $12.00 per hour. Manufacturing overhead is applied at a rateof 110% of direct labor costs. Lester has 2,600 pounds of clay mixin beginning inventory and wants to have 3,000 pounds in endinginventory.

What is the total amount to be budgeted in pounds for directmaterials to be purchased for the month?
A) 25,520
B) 25,120
C) 25,920
D) 26,800

4. The following information is taken from the production budgetfor the first quarter:Beginning inventory in units 1,200
Sales budgeted for the quarter 456,000
Capacity in units of production facility 472,000

How many finished goods units should be produced during the quarterif the company desires 3,200 units available to start the nextquarter?
A) 458,000
B) 454,000
C) 474,000
D) 459,200

Scholastic Brass Corporation manufactures brass musical instruments for use by high school students. The company uses a normal costing system, in which manufacturing overhead is applied on the basis of direct-labor hours. The company’s budget for the current year included the following predictions.

Budgeted total manufacturing overhead ..........................................................................................................$426,300

Budgeted total direct-labor hours (based on practical capacity) .....................................................................20,300

During March, the firm worked on the following two production jobs: Job number T81, consisting of 76 trombones Job number C40, consisting of 110 cornetsThe events of March are described as follows:

a. One thousand square feet of rolled brass sheet metal were purchased on account for $5,000.

b. Four hundred pounds of brass tubing were purchased on account for $4,000.

c. The following requisitions were submitted on March 5: Direct labor: Job number T81, 800 hours at $20 per hour Direct labor: Job number C40, 900 hours at $20 per hour Indirect labor: General factory cleanup, $4,000 Indirect labor: Factory supervisory salaries, $9,000 Requisition number 112: 250 square feet of brass sheet metal at $5 per square foot (for job number T81) Requisition number 113: 1,000 pounds of brass tubing, at $10 per pound (for job number C40) Requisition number 114: 10 gallons of valve lubricant, at $10 per gallonAll brass used in production is treated as direct material. Valve lubricant is an indirect material.

d. An analysis of labor time cards revealed the following labor usage for March.

Direct labor: Job number T81, 800 hours at $20 per hour

Direct labor: Job number C40, 900 hours at $20 per hour Indirect labor:

General factory cleanup, $4,000 Indirect labor:

Factory supervisory salaries, $9,000

e. Depreciation of the factory building and equipment during March amounted to $12,000.

f. Rent paid in cash for warehouse space used during March was $1,200.

g. Utility costs incurred during March amounted to $2,100. The invoices for these costs were received, but the bills were not paid in March.

h. March property taxes on the factory were paid in cash, $2,400.

i. The insurance cost covering factory operations for the month of March was $3,100. The insurance policy had been prepaid.

j. The costs of salaries and fringe benefits for sales and administrative personnel paid in cash during March amounted to $8,000.

k. Depreciation on administrative office equipment and space amounted to $4,000.

l. Other selling and administrative expenses paid in cash during March amounted to $1,000.

m. Job number T81 was completed on March 20.

n. Half of the trombones in job number T81 were sold on account during March for $700 each.

The March 1 balances in selected accounts are as follows:

Cash ...................................................................................................................................................................$?? 10,000

Accounts Receivable .........................................................................................................................................21,000

Prepaid Insurance .............................................................................................................................................5,000

Raw-Material Inventory .....................................................................................................................................149,000

Manufacturing Supplies Inventory ....................................................................................................................500

Work-in-Process Inventory ................................................................................................................................91,000

Finished-Goods Inventory .................................................................................................................................220,000

Accumulated Depreciation: Buildings and Equipment .....................................................................................102,000

Accounts Payable ..............................................................................................................................................13,000

Wages Payable ..................................................................................................................................................8,000

Required:

1. Calculate the company’s predetermined overhead rate for the year.

2. Prepare journal entries to record the events of March.

3. Set up T-accounts, and post the journal entries made in requirement (2).

4. Calculate the overapplied or underapplied overhead for March. Prepare a journal entry to close this balance into Cost of Goods Sold.

5. Prepare a schedule of cost of goods manufactured for March.

6. Prepare a schedule of cost of goods sold for March.

7. Prepare an income statement for March.

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