# 1. McCabe Manufacturing Co.’s static budget at 8,000 units of production includes \$40,000 for direct labor and \$4,000 for electric power. Total fixed costs are \$23,000. At 9,000

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1. McCabe Manufacturing Co.’s static budget at 8,000 units of production includes \$40,000 for direct labor and \$4,000 for electric power. Total fixed costs are \$23,000. At 9,000 units of production, a flexible budget would show: variable costs of \$49,500 and \$25,875 of fixed costs variable costs of \$44,000 and \$23,000 of fixed costs variable costs of \$49,500 and \$23,000 of fixed costs variable and fixed costs totaling \$75,375 2 points Question 2 1. For January, sales revenue is \$600,000; sales commissions are 5% of sales; the sales manager’s salary is \$96,000; advertising expenses are \$80,000; shipping expenses total 2% of sales; and miscellaneous selling expenses are \$2,100 plus 1/2 of 1% of sales. Total selling expenses for the month of January are: \$157,100 \$223,100 \$183,750 \$182,100 2 points Question 3 1. Machine Manufacturers, Inc. projected sales of 66,000 machines for 2008. The estimated January 1, 2008, inventory is 6,500 units, and the desired December 31, 2008, inventory is 7,000 units. What is the budgeted production (in units) for 2008? 65,500 66,000 66,500 65,000 2 points Question 4 1. Mancini Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 108,000 units, and desired ending inventory is 90,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A .50 lb. per unit @ \$ .60 per pound Material B 1.00 lb. per unit @ \$1.70 per pound Material C 1.20 lb. per unit @ \$1.00 per pound The dollar amount of direct material A used in production during the year is: \$186,600 \$181,200 \$240,000 \$210,600 2 points Question 5 1. The Martin Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January – 200,000 units; February – 180,000 units; March – 210,000 units; and April – 230,000 units. The Martin Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. What would be the budgeted inventory for March 31st? 46,000 36,000 Cannot be determined from the data given 42,000 2 points Question 6 1. OneSystem treasurer has accumulated the following budget information for the first two months of the coming year: Sales. Manufacturing costs Selling and administrative expenses Capital additions 2. One System expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent \$6,400 of the probable monthly selling and administrative expenses. Insurance is paid in February and a \$40,000 installment on income taxes is expected to be paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred and the balance in the following month. Capital additions of \$250,000 are expected to be paid in March. Current assets as of March 1 are composed of cash of \$45,000 and accounts receivable of \$51,000. Current liabilities as of March 1 are composed of accounts payable of \$121,500 (\$102,000 for materials purchases and \$19,500 for operating expenses). Management desires to maintain a minimum cash balance of \$20,000. Prepare a