1) Assume that a company provided the following cost formulas for three of its expenses (where q refers to the number of hours worked):

Rent (fixed)		$3,000
Supplies (variable)		$4.70	q
Utilities (mixed)		$150 + $0.75	q

The company’s planned level of activity was 2,000 hours and its actual level of activity was 1,850 hours. How much supplies expense would be included in the flexible budget?

A) 8695

B) 9400

C) 10105

D) 8995

2) Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects cash sales of $40,000 and $44,000, respectively. It also expects credit sales of $60,000 and $70,000, respectively. The company expects to collect 60% of its credit sales in the month of the sale, 35% in the following month, and 5% is deemed uncollectible. What amount of cash collections would appear in the company’s cash budget for the second month?

A) 107000

B) 104000

C) 94500

D) 42000

3) Assume the sales budget for April and May is 32,000 units and 34,000 units, respectively. The production budget for the same two months is 29,000 units and 30,000 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the following months production needs. If the company pays $2.05 per pound of raw material, then what is the estimated cost of raw material purchases for April?

A) 245190

B) 239440

C) 242440

D) 238690

Answer rating: 100% (QA)

Answer 47 Calculation of Supplies expense to be included in flexible budget Supplies expense to be i... View the full answer