Question 1:Fosdick Company has 1,200 pounds of raw materials in its December 31, 2004 ending inventory. Required production for January and February are 4,000 and 5,000 units, respectively. Three pounds of raw materials are needed for each unit, and the estimated cost per pound is $6. Management desires an ending inventory equal to 10% of next month’s materials requirements. Prepare the direct materials budget for January.
For McNulty, Inc., variable manufacturing overhead costs are expected to be $30,000 in the first quarter of 2004 with $4,000 increments in each of the remaining three quarters. Fixed overhead costs are estimated to be $35,000 in each quarter. This includes $15,000 in depreciation costs each quarter. Prepare the manufacturing overhead budget, by quarters and in total, for the year.
Liang Industries expects credit sales for January, February, and March to be $200,000, $275,000, and $310,000, respectively. It is expected that 60% of the sales will be collected in the month of sale, and 40% will be collected in the following month. Compute cash collections from customers for February and March.
Thornton Company specializes in home computer speakers. It budgets its monthly cost of goods sold to equal 70% of sales. The inventory policy calls for a beginning inventory in each month equal to 25% of the budgeted cost of goods sold for that month. All purchases are on credit, and 20% of the purchases in any month are paid during the same month. Another 50% is paid during the first month after purchase, and the remaining 30% is paid in the second month after purchase. The following sales budgets have been established:
a. Calculate the budgeted purchases for July, August, September, and October. 5 marks
b. Calculate the budgeted payments on accounts payable for September and October. 5 marks
c. Calculate the budgeted ending balances of accounts payable for September and October.