ACCTG 225 Fall 2009 Quiz # 3 Name: ______________________ Section: ___________ Student ID: ______________ Instructions: You have 15 minutes to complete this quiz. The quiz is out of 15 points. Berol Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in unit sales of 5% each month. The desired monthly ending inventory in units of finished product is 80% of the next month's estimated sales. There are 150,000 finished units on hand in inventory on June 30. Questions 1 and 2 relate to Berol Company. What is Berol Company's total production requirement in units of finished product for the month of July & August? (4 points) Berol Company?s sells its product for $10/unit. Their sales are 40% in cash and 60% on credit. Berol expects that it will collect 75% of the credit sales during the month of the sale, 20% the following month, and 5% will remain uncollected. What is their expected cash inflow for the month of September? (5 points) During March, company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March. Prepare the flexible budget for MOH and answer the following questions. (3+1+1+1 points) Activity Variance for Maintenance in March was . Spending Variance for Indirect Labor in March was . Variance for Supplies in March was $600 . Solutions: Total production for July is 218,000 and August is 218,400 units = 436,400 $2,126,250 Spending, Unfavorable (This table does not need to be filled out. It is here for your convenience) Jul Aug Sep Planned Sales ? Total Needs ? Production Req?d Actual Planning Budget Flexible Budget Machine-hours (q) 26,000 Utilities ($20,600 + $0.10q) $24,200 $ 23,600 ? Maintenance ($40,000 + $1.60q) $78,100 88,000 ? Supplies ($0.30q) $8400 9,000 ? Indirect labor ($130,000 + $0.70q) $149,600 ? ? Depreciation ($70,000) $71,500 70,000 _ ? Total $341,600 ? July August September October Sales (increasing by 5% each month) 200,000 210,000 220,500 231,525 Add ending inventory (next month?s sales x 80%) 168,000 176,400 185,220 Subtract beginning inventory 150,000 168,000 176,400 Production in units 218,000 + 218,400 + 229,320 July August September Planned Sales 200,000 units 210,000 units 220,500 units Sales Value $ 2,000,000 $ 2,100,000 $ 2,205,000 10*Planned Sales Cash Amount $ 800,000 $ 840,000 $ 882,000 40%*Planned Sales Credit Amount $ 1,200,000 $ 1,260,000 $ 1,323,000 60%*Planned Sales Credit Collected $ 900,000 $ 1,185,000 $ 1,244,250 75%*(This Month?s Credit) + 25%*(Last Month's Credit) Total Inflow $ 1,700,000 $ 2,025,000 $ 2,126,250 Cash Amount + Credit Collected Actual Planning Budget Flexible Budget Machine-hours (q) 26,000 26,000 Utilities ($20,600 + $0.10q) $24,200 $ 23,600 $ 23,200 Maintenance ($40,000 + $1.60q) $78,100 88,000 $ 81,600 Supplies ($0.30q) $8400 9,000 $ 7,800 Indirect labor ($130,000 + $0.70q) $149,600 ? $ 148,200 Depreciation ($70,000) $71,500 70,000 $ 70,000 Total $341,600 $ 330,800 a. Maintenance ($40,000 + $1.60q) 88,000 81,600 6,400 F b. Indirect labor ($130,000 + $0.70q) 148,200 149,600 1,400 U 1
