# Compute the required answer for each of the following independent situations. a. For next year, Penny Suits

## Question:

Compute the required answer for each of the following independent situations.

a. For next year, Penny Suits projects $8,000,000 of sales and total fixed manufacturing costs of$2,000,000. Variable manufacturing costs are estimated at 65 percent of sales. Assuming no change in inventory, what is the company’s projected cost of goods sold?

b. Tommy’s Company has projected the following information for October:

Sales .......................$800,000 Gross profit (based on sales) .............. 25% Increase in Merchandise Inventory in October .......$20,000

Decrease in Accounts Payable for October ......... $45,000 What are expected cash disbursements for inventory purchases for October? a. Buda Corp. is attempting to budget its overhead costs for March 2011. Overhead is a mixed cost with the following flexible budget formula: y =$250,000 + $17.50X, where X represents machine hours. Fixed overhead includes$95,000 of depreciation. If Buda Corp. expects to utilize 7,500 machine hours in March, what is the company’s budgeted March overhead cost? How much cash will the company pay for budgeted overhead in March?

b. Elizabeth Enterprises expects to begin 2011 with a cash balance of $15,000. Cash collections from sales and on account during the year are expected to be$470,500. The firm wants to maintain a minimum cash balance of $5,000. Budgeted cash disbursements for the year are as follows: Payoff of note payable ...................$52,500

Interest on note payable ................... 4,700

Purchase of computer system ................. 17,900

Payments for operating costs and inventory purchases .......193,500

Direct labor payments ....................110,000

Cash overhead payments ...................106,400

Cash selling and administrative payments ............ 94,800

The company can, if necessary, borrow in \$1,000 amounts. Prepare a cash budget for 2011.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Cash Budget
A cash budget is an estimation of the cash flows for a business over a specific period of time. These cash inflows and outflows include revenues collected, expenses paid, and loans receipts and payment.  Its primary purpose is to provide the...
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Related Book For

## Cost Accounting Foundations and Evolutions

ISBN: 978-1111626822

8th Edition

Authors: Michael R. Kinney, Cecily A. Raiborn

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