Posted: April 21st, 2016
Which of the following statements is NOT correct concerning the Manufacturing Overhead Budget?
A) The Manufacturing Overhead Budget provides a schedule of all costs of production other than direct materials and labor costs.
B) The Manufacturing Overhead Budget shows only the variable portion of manufacturing overhead.
C) The Manufacturing Overhead Budget shows the expected cash disbursements for manufacturing overhead.
D) The Manufacturing Overhead Budget is prepared after the Sales Budget.
When preparing a merchandise purchases budget, the required purchases in units equals:
A) budgeted unit sales + beginning merchandise inventory + desired merchandise ending inventory.
B) budgeted unit sales beginning merchandise inventory + desired merchandise ending inventory.
C) budgeted unit sales beginning merchandise inventory desired merchandise ending inventory.
D) budgeted unit sales + beginning merchandise inventory desired merchandise ending inventory.
Information on the actual sales and inventory purchases of the Law Company for the first quarter follow:
Collections from Law Company s customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.
The company expects sales in April of $150,000 and inventory purchases of $100,000. Selling and administrative expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining selling and administrative expenses are variable with respect to the amount of sales in dollars. Those selling and administrative expenses requiring a cash outlay are paid for during the month incurred. Law Company s cash balance on March 1 was $43,000, and on April 1 was $35,000.
The expected cash disbursements during April for inventory purchases would be:
Arciba Inc. bases its manufacturing overhead budget on budgeted direct labor hours. The direct labor budget indicates that 7,400 direct labor hours will be required in January. The variable overhead rate is $9.50 per direct labor hour. The company s budgeted fixed manufacturing overhead is $130,980 per month, which includes depreciation of $10,360. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for January should be:
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