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BT12203- Tutorial Chapter 8- 2324

The document outlines tutorial questions related to business accounting, specifically focusing on budgeting and responsibility accounting for various companies. It includes scenarios for calculating production needs, labor costs, cash budgets, and merchandise purchases, along with a section for preparing sales, production, and material purchase budgets for a company making three products. Additionally, it discusses different types of budgeting and their purposes.

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NORSHAPIKA BINTI MASMUD BB22110942
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15 views5 pages

BT12203- Tutorial Chapter 8- 2324

The document outlines tutorial questions related to business accounting, specifically focusing on budgeting and responsibility accounting for various companies. It includes scenarios for calculating production needs, labor costs, cash budgets, and merchandise purchases, along with a section for preparing sales, production, and material purchase budgets for a company making three products. Additionally, it discusses different types of budgeting and their purposes.

Uploaded by

NORSHAPIKA BINTI MASMUD BB22110942
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BT12203 BUSINESS ACCOUNTING

SEMESTER 1 SESSION 2023/2024

CHAPTER 8: THE MASTER BUDGET AND RESPONSIBILITY ACCOUNTING

TUTORIAL QUESTIONS

Part A

1. Fab Manufacturing Corporation manufactures and sells stainless steel coffee


mugs. Expected mug sales at Fab (in units) for the next three months are as
follows:

Fab likes to maintain a finished goods inventory equal to 30% of the next month's
estimated sales. How many mugs should Fab plan on producing during the month
of November?
A. 23,200 mugs
B. 26,800 mugs
C. 25,900 mugs
D. 34,300 mugs

2. Modesto Company produces and sells Product AlphaB. To guard against


stockouts, the company requires that 20% of the next month's sales be on hand
at the end of each month. Budgeted sales of Product AlphaB over the next four
months are:

Budgeted production for August would be:


A. 62,000 units
B. 70,000 units
C. 58,000 units
D. 50,000 units

3. Corporation is working on its direct labor budget for the next two months. Each
unit of output requires 0.05 direct labor-hours. The direct labor rate is $7.50 per
direct labor-hour. The production budget calls for producing 9,100 units in May
and 8,800 units in June. If the direct labor work force is fully adjusted to the total
direct labor-hours needed each month, what would be the total combined direct
labor cost for the two months?
A. $3,300.00
B. $3,412.50
C. $6,712.50
D. $3,356.25
4. Mouw Inc. bases its manufacturing overhead budget on budgeted direct labor-
hours. The direct labor budget indicates that 5,400 direct labor-hours will be
required in January. The variable overhead rate is $4.40 per direct labor-hour.
The company's budgeted fixed manufacturing overhead is $77,220 per month,
which includes depreciation of $9,720. All other fixed manufacturing overhead
costs represent current cash flows. The January cash disbursements for
manufacturing overhead on the manufacturing overhead budget should be:
A. $67,500
B. $91,260
C. $100,980
D. $23,760

5. The manufacturing overhead budget at Ferrucci Corporation is based on


budgeted direct labor-hours. The direct labor budget indicates that 1,600 direct
labor-hours will be required in December. The variable overhead rate is $4.40 per
direct labor-hour. The company's budgeted fixed manufacturing overhead is
$25,120 per month, which includes depreciation of $5,440. All other fixed
manufacturing overhead costs represent current cash flows. The December cash
disbursements for manufacturing overhead on the manufacturing overhead
budget should be:
A. $7,040
B. $19,680
C. $26,720
D. $32,160

6. Thiel Inc. is working on its cash budget for October. The budgeted beginning cash
balance is $35,000. Budgeted cash receipts total $166,000 and budgeted cash
disbursements total $162,000. The desired ending cash balance is $50,000. The
excess (deficiency) of cash available over disbursements for October will be:
A. $31,000
B. $39,000
C. $4,000
D. $201,000

7. LDG Corporation makes and sells a product called Product WZ. Each unit of
Product WZ requires 2.0 hours of direct labor at the rate of $10.50 per direct
labor-hour. Management would like you to prepare a Direct Labor Budget for
June. The budgeted direct labor cost per unit of Product WZ would be:
A. $12.50
B. $10.50
C. $21.00
D. $5.25
The following information is for questions 8 until 10:

BrassFood Corporation is a small wholesaler of gourmet food products. Data


regarding the store's operations follow:

 Sales are budgeted at $350,000 for November, $330,000 for December, and
$340,000 for January.
 Collections are expected to be 70% in the month of sale, 26% in the month
following the sale, and 4% uncollectible.
 The cost of goods sold is 70% of sales.
 The company purchases 50% of its merchandise in the month prior to the month
of sale and 50% in the month of sale. Payment for merchandise is made in the
month following the purchase.
 Other monthly expenses to be paid in cash are $20,100.
 Monthly depreciation is $22,000.
 Ignore taxes.

8. Expected cash collections in December are:


A. $91,000
B. $330,000
C. $322,000
D. $231,000

9. The cost of December merchandise purchases would be:


A. $231,000
B. $119,000
C. $245,000
D. $234,500

10. December cash disbursements for merchandise purchases would be:


A. $119,000
B. $234,500
C. $231,000
D. $238,000
Part B

Question 1

An organisation is constructing its budget for the coming year. It makes three
products: Alpha, Beta and Gamma. Sales forecast for the year are as follows:

Alpha Beta Gamma


Northern Region (units) 3,000 5,000 4,000
Southern region (units) 5,000 7,000 6,000
Total 8,000 12,000 10,000

Selling prices are as budgeted:

Alpha RM 60
Beta RM
110
Gamm RM 90
a

You are given the following standard cost data to make one unit:

Alpha Beta Gamma


Material X (kilos) 2.00 3.00 2.5
Material Y (kilos) 3.00 4.00 1.5
Labour hours: Department 1 0.75 1.25 2.0
Department 2 1.50 2.00 2.5
Machine hours: Department 1 1.00 1.50 2.5
Department 2 2.00 2.00 3.0

You are told:

i. Material cost per kilo

Material RM
X 3
Material RM
Y 2

ii.

Department 1 Department 2
Labour rate per hour RM 4 RM 3
Production overhead RM 415,000 RM 567,000
Overhead application basis Labour hour Machine hour
basis basis
iii. Administration overhead of RM350,950 are to be applied on the basis of labour
cost.
iv. Opening and ending inventory are budgeted as follows:

Units Kilos
Alpha Beta Gamma X Y
Opening inventory 1,000 1,200 1,500 5,000 7,500
Closing inventory 1,200 1,000 1,800 8,000 10,000

Required:

a. Prepared the following budgets:

i. Sales budgets in revenue


ii. Production budgets in units for each product
iii. Material purchase budget

b. Discuss three (3) types of budgeting and the purpose of preparing them.

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