Q1. NanoTech is developing cash and other budget information for May, June and July. On April 30, the company had cash of $10,000 accounts receivable of $75,000, and accounts payable of $100,000. The budget is to be based on the following assumptions.
Each month's sales are billed on the last day of the month.
The billing is collected as follows: 70% within the discount period, 15% by the end of the month, 10 % by the end of second month. The rest is uncollectable.
Customer are allowed 2% discount if payment is made within 10 days after billing date. Receivables are recorded in the accounts at their gross amounts. (Not net of discounts)
The cost of each unit of inventory is $3.
Of all purchases of merchandise and selling, general, and administrative expenses 60% is paid in the month purchased and the remainder in the following month.
The number of units in each months ending inventory equals 110% of next month's units sales.
Selling, general, and administrative expenses, of which $5,000 is depreciation, equal 20% of current month's sales. Actual sales for March and April and projected sales for May through August are as follows:
|
|
Dollars
|
Units
|
|
March
|
$110,000
|
10,000
|
|
April
|
$110,000
|
11,000
|
|
May
|
$120,000
|
12,000
|
|
June
|
$130,000
|
13,000
|
|
July
|
$140,000
|
14,000
|
|
August
|
$150,000
|
15,000
|
Using the preceding information, compute the following amounts:
a) Budgeted purchases in dollars for May
b) Budgeted Cash Collections for May
c) Budgeted Cash Disbursements for June
Q2. QB LLC manufactures a line of repair tools. The firm produces 3 types of products X,Y,Z. The preliminary budget for next year is as follows:
|
Product
|
X
|
Y
|
Z
|
|
Unit Sales
|
50,000
|
50,000
|
100,000
|
|
Unit Selling Price
|
$100
|
$110
|
$120
|
|
Variable Manufacturing cost per unit
|
$53
|
$69
|
$77
|
|
Variable Selling Cost per unit
|
$7
|
$6
|
$13
|
|
Machine Hours per unit
|
1
|
0.5
|
2
|
Committed Manufacturing overhead is budgeted at $3,500,000 and company's committed selling and administrative expense are forecasted to be $1,500,000.
a) Estimate QB LLC's budgeted income for next year.
b) Assuming that the sales mix remains as budgeted, determine how many units of each product Kalifo must sell to break even.
c) Assuming that machine hours are limited to 80,000 hrs, determine, the number of units of each product that QB LLC should make during the coming year.
Q3. Cont Corp uses a joint process that costs $50,000 for inputs and processing batch. Processing one batch results in the following joint outputs:
|
Product
|
Quantity
|
Sales Price at Split Off
|
Further Processing Cost
|
Sales Price after further processing
|
|
X
|
40,000 lbs
|
$1/lb
|
NA
|
NA
|
|
Y
|
20,000 lbs
|
$2/lb
|
$2/lb
|
$3/lb
|
a) Should Product Y be sold at split off or processed further?
b) Assuming that Product Y is not processed further, allocate joint costs using net realizable value.