33. (Appendix 10A) Conner Company is a medium-sized toy distributor. Experience has shown that 30% of sales are collected within the month of sale, 60% is collected the month after the sale, and 10% is collected two months after the sale Inventory on hand at the end of a month is to be 70% of the next month's budgeted sales. Cost of goods sold is 50% of the selling price. Payment for purchases is made in the month after purchase. All other costs are paid in the month incurred. Budgeted amounts are as follows: Sales Costs: Wages Rent $10,000 $20,000 S30,000 $30,000 $50,000 $40,000 1,500 2,500 1,500 500 500 500 500 600 500 Total cash disbursements in August are expected to be: a) $24,000 b) $45,500 c) $21,500 d) $31,000 Answer: a Difficulty: Medium Learning Objective: Explain how a cash budget is developed. Bloomcode: Application 34. Horton Company produces and sells two products: round and square tables. In August 20x4, the budget projected the following for 20x5 Units Price Jan. 1.20x5 Dec 31 5,000 $500 2,000 units 2,500 units Square 6,000 400 1,000 units 1,500 The tables are manufactured using the following direct materials: Direct Materia Round 2 kgs. 1 kgs 3 kgs 2 kgs 34. Horton Company produces and sells two products: round and square tables. In August 20x4, the budget projected the following for 20x5: Budgeted Sales Expected Inventories Units Price Jan. 1.20x5 20x5 Round units Square units Dec. 31 2,000 units 2,500 ,000 units ,500 5,000 $500 ,000 400 The tables are manufactured using the following direct materials: Direct Materia Round Square 2 kgs 1 kgs 3 kgs 2 kgs. Budgeted data for 20x5 direct materials are: Purchase Direct Material Price Jan. 1.20x5 Dec. 31 20x5 $85 per kg. 55 per kg. 2,000 kgs. 2,500 kgs. 1,000 kgs. ,500 kgs. Budgeted data for 20x5 direct labour and overhead are: Direct labour: Round Square Overhead: $4 per direct labour hour 4 hours per unit at $6 per hour 6 hours per unit at $8 per hour Total budgeted production of tables in 20x5 is: a) 12,000 units b) 10,000 units c) 6,500 units d) 14,000 units Answer: a Difficulty: Medium Learning Objective: Describe a master budget and explain how it is prepared; explain how operating budgets are prepared. CPA: Management Accounting Bloomcode: Application 35. Horton Company produces and sells two products: round and square tables. In August 20x4, the budget projected the following for 20x5: Budgeted Sales Expected Inventories Units Price Jan. 1.20x5 Dec. 31 20x5 Round units 5,000 $500 2,000 units 2,500 33. (Appendix 10A) Conner Company is a medium-sized toy distributor. Experience has shown that 30% of sales are collected within the month of sale, 60% is collected the month after the sale, and 10% is collected two months after the sale Inventory on hand at the end of a month is to be 70% of the next month's budgeted sales. Cost of goods sold is 50% of the selling price. Payment for purchases is made in the month after purchase. All other costs are paid in the month incurred. Budgeted amounts are as follows: Sales Costs: Wages Rent $10,000 $20,000 S30,000 $30,000 $50,000 $40,000 1,500 2,500 1,500 500 500 500 500 600 500 Total cash disbursements in August are expected to be: a) $24,000 b) $45,500 c) $21,500 d) $31,000 Answer: a Difficulty: Medium Learning Objective: Explain how a cash budget is developed. Bloomcode: Application 34. Horton Company produces and sells two products: round and square tables. In August 20x4, the budget projected the following for 20x5 Units Price Jan. 1.20x5 Dec 31 5,000 $500 2,000 units 2,500 units Square 6,000 400 1,000 units 1,500 The tables are manufactured using the following direct materials: Direct Materia Round 2 kgs. 1 kgs 3 kgs 2 kgs 34. Horton Company produces and sells two products: round and square tables. In August 20x4, the budget projected the following for 20x5: Budgeted Sales Expected Inventories Units Price Jan. 1.20x5 20x5 Round units Square units Dec. 31 2,000 units 2,500 ,000 units ,500 5,000 $500 ,000 400 The tables are manufactured using the following direct materials: Direct Materia Round Square 2 kgs 1 kgs 3 kgs 2 kgs. Budgeted data for 20x5 direct materials are: Purchase Direct Material Price Jan. 1.20x5 Dec. 31 20x5 $85 per kg. 55 per kg. 2,000 kgs. 2,500 kgs. 1,000 kgs. ,500 kgs. Budgeted data for 20x5 direct labour and overhead are: Direct labour: Round Square Overhead: $4 per direct labour hour 4 hours per unit at $6 per hour 6 hours per unit at $8 per hour Total budgeted production of tables in 20x5 is: a) 12,000 units b) 10,000 units c) 6,500 units d) 14,000 units Answer: a Difficulty: Medium Learning Objective: Describe a master budget and explain how it is prepared; explain how operating budgets are prepared. CPA: Management Accounting Bloomcode: Application 35. Horton Company produces and sells two products: round and square tables. In August 20x4, the budget projected the following for 20x5: Budgeted Sales Expected Inventories Units Price Jan. 1.20x5 Dec. 31 20x5 Round units 5,000 $500 2,000 units 2,500