Question :
PART II — BUDGETARY PLANNING (32 points)
This problem consists of : 1311542
PART II — BUDGETARY PLANNING (32 points)
This problem consists of four independent mini-problems. Omit headings other than those already given.
A.Kriter Kitchen Tools produces and sells insulated ice buckets. The sales budget for 2014 is as follows:
1st quarter — 8,000 units3rd quarter — 13,000 units
2nd quarter — 11,000 units4th quarter — 10,000 units
Kriter desires an ending inventory equal to 10% of the next quarter’s sales. The January 1, 2014 inventory is 800 units. Unit sales during the 1st quarter of 2015 are estimated at 9,000 units.
Instructions: Compute required production for 2014, showing quarterly data.
DescriptionQuarter 1Quarter 2Quarter 3Quarter 4
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B.Shanigan’s Manufacturers is preparing its direct labor budget for the second quarter of 2014 from the following budgeted production figures: April—8,000 units; May—7,000 units; and June—9,000 units. Each unit requires 3.25 hour of direct labor. The hourly wage rates are expected to be $15 in April, and $15.50 in May and June.
Instructions: Prepare a direct labor budget for the quarter, showing monthly data.
DescriptionAprilMayJuneQuarter
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C.JetGreen Cleaners makes 80% of its sales on credit. Experience shows that 25% of the credit customers pay in the month of sale, 55% within the following month, the rest during the next month. Total sales for May, June, July, and August are estimated at $180,000; $220,000; $280,000; and $200,000, respectively.
Instructions: Determine budgeted cash receipts for July and August.
DescriptionJulyAugust
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D.Southside Sports is preparing its annual cash budget, showing quarterly data, for 2014. A $14,000 cash balance is desired at the end of each quarter. Borrowings and repayments are in $1,000 increments at 6% annual interest. The company borrows at the beginning of a quarter based on the estimated deficiency. Interest is paid only when principal is repaid at the end of a quarter with excess cash. The maximum amount of principal was repaid in the second and fourth quarters. The cash balance on December 31, 2013 is $17,000. Total receipts and disbursements, other than borrowings and principal or interest payments, are estimated at:
Quarter 1Quarter 2Quarter 3Quarter 4
Disbursements:$110,000$135,000$124,000$140,000
Receipts:102,000142,000120,000155,000
Instructions: Prepare a schedule of estimated borrowings and repayments of principal and interest for the four quarters of 2014.
DescriptionQuarter 1Quarter 2Quarter 3Quarter 4
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