Question : 81) Barrieland Merchandising Firm developing its budgets for 20×07 The : 1196253

 

81) Barrieland Merchandising Firm is developing its budgets for 20×07 The 2006 income statement is as follows:

 

Sales (100,000 units)$250,000

Less: Cost of goods sold150,000

Gross profit $100,000

Operating expenses (includes

$10,000 of Amortization)60,000

Net income$ 40,000

 

Selling prices will increase by 10 percent and sales volume in units will decrease by 5 percent. The cost of goods sold as a percent of sales will increase to 62 percent. Other than amortization, all

operating costs are variable.

 

Required:

 

Prepare a budgeted income statement for 2007. 81)

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82) Stark Company is developing its budgets for 2007 and for the first time will use the Kaizen approach. The initial 2007 income statement, based on static data from 2006, is as follows:

 

Sales (300,000 units)$450,000

Less: cost of goods sold300,000

Gross margin$150,000

Operating expenses (includes

$40,000 of amortization)120,000

Net income$ 30,000

 

Selling prices for 20×2 are expected to increase by 6 percent, and sales volume in units will decrease by 10 percent. The cost of goods sold as estimated by the Kaizen approach will decline by 10 percent per unit. Other than amortization, all other operating costs are expected to decline by 5 percent.

 

Required:

 

Prepare a Kaizen-based budgeted income statement for 2007. 82)

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83) Jermaine Company is developing its budgets for 2007 and for the first time will use the Kaizen approach. The initial 20×5 income statement, based on static data from 2006, is as follows:

 

Sales (200,000 units)$300,000

Less: cost of goods sold

200,000

Gross margin$100,000

Operating expenses (includes $20,000 of amortization)80,000

Net income$ 20,000

 

Selling prices for 2007 are expected to increase by 8 percent, and sales volume in units will decrease by 10 percent. The cost of goods sold as estimated by the Kaizen approach will decline by 10 percent per unit. Other than amortization, all other operating costs are expected to decline by 5 percent.

 

Required:

 

Prepare a Kaizen-based budgeted income statement for 2007. 83)

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84) Shamokin Manufacturing produces two products, Big and Bigger.

Shamokin expects to sell 20,000 units of Big and 10,000 units of Bigger. Shamokin plans on having an ending inventory of 4,000 units of Big and 2,000 units of Bigger.

Currently, Shamokin has 1,000 units of Big in its inventory and 800 units of Bigger.

Each product requires two labour operations: molding and polishing.

Product Big requires one hour of molding time and one hour of polishing time.

Product Bigger requires one hour of molding time and two hours of polishing time.

The direct labour rate for molders is $20 per molding hour, and the direct labour rate for polishers is $25 per polishing hour.

 

 

Required:

 

Prepare a direct labour budget in hours and dollars for each product.

 

 84)

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85) Perry Company has gathered the following information:

 

April 30, cash balance, $90,000

Dividends paid in May,$24,000

Cash expenditures in May for operating expenses,$73,600

Amortization expense in May,$9,000

Cash collections in May,$178,000

Merchandise purchases paid in cash in May, $112,400

Purchased equipment for cash in May,$35,000

 

Perry desires to keep a minimum cash balance of $20,000.

 

Required:

 

Prepare a cash budget for May, and indicate whether or not Perry meets minimum cash requirements. 85)

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86) Duffy Corporation has prepared the following sales budget:

 

MonthCash SalesCredit Sales

May$16,000$68,000

June20,00080,000

July18,00074,000

August24,00092,000

September22,00076,000

 

Collections are 40% in the month of sale, 45% in the month following the sale, and 10% two months following the sale. The remaining 5% is expected to be uncollectible.

 

Required:

 

Prepare a schedule of cash collections for July through September. 86)

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87) The following information pertains to Amigo Corporation:

 

 

MonthSalesPurchases

July$30,000$10,000

August34,00012,000

September38,00014,000

October42,00016,000

November48,00018,000

December60,00020,000

 

Cash is collected from customers in the following manner:

Month of sale (2% cash discount)30%

Month following sale50%

Two months following sale15%

Amount uncollectible5%

40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.

 

Required:

a.Prepare a summary of cash collections for the 4th quarter.

b.Prepare a summary of cash disbursements for the 4th quarter.

87)

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