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Lecture

Chapter 9 In Class Problems.pdf

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Department
Accounting
Course
ACCTG322
Professor
Trish Stringer
Semester
Winter

Description
In Class #9.1 – Prepare the sales budget Royal Company is preparing budgets for the quarter ending June 30 . th Actual sales for January to March are as follows: Month Sales Budget Januarynits0,000 Februaryunit5,000 Marc unit12,000 Budgeted sales for the next five (5) months are: Month Sales Budget Apurilits20,000 M uayits50,000 Juuneits30,000 Julits25,000 Auguu st s5,000 The selling price per unit is $10 per unit. All sales are on account. Royal’s usual collection pattern is as follows:  70% collected in the month of sale,  25% collected in the month following sale, and  5% uncollectible. st Actual accounts receivable at April 1 is $30,000 (net of allowance for doubtful accounts). Required 1: Prepare the sales budget for the quarter ending June 30th. Required 2: Prepare the cash collections budget for the quarter ended June 30 . What amount is in accounts receivable at June 30th? In Class #9.2 – Prepare the production budget Continuing from the previous example, Royal Company is preparing the production budget for the quarter ending June 30 .th The March 31 actual inventory is consistent with budget. Management wants an ending finished goods inventory each month that is equal to 20% of the next month’s budgeted sales. Required th Prepare the production budget for the quarter. What is the budgeted inventory at June 30 ? In Class #9.3 – Prepare the direct materials purchases budget Continuing from the previous example, Royal Company is preparing the direct material purchases budget for the quarter ending June 30 . th Each unit of finished goods requires five (5) kilograms of raw materials. Each kilogram costs $0.40. On March 31 the actual ending direct materials inventory was consistent with budget. Management wants to have direct materials inventory at the end of the month equal to 10% of the next month’s production requirements. All direct materials purchases are on account. Royal’s usual payment pattern is as follows:  50% paid in the month of purchase,  50% paid in the month following purchase The March 31, direct materials accounts payable balance is $12,000. Required 1: th Prepare a direct materials purchases budget for the quarter ended June 30 . What is the direct materials inventory balance at June 30 ? th Required 2: th Prepare the cash disbursements budget for the quarter ended June 30 . What amount is in accounts payable at June 30 ?th In Class #9.4 - Prepare a direct labour budget Continuith from the previous example, Royal Company is preparing budgets for the quarter ending June 30 .  Each unit of product (finished goods) requires 0.05 hours (3 minutes) of direct labour.  Workers are paid $10 per hour and there is no overtime pay.  Direct labour is paid in the month incurred. Required th Prepare the direct labour budget for the quarter ended June 30 . In Class #9.5 - Prepare a manufacturing overhead budget Continuith from the previous example, Royal Company is preparing budgets for the quarter ending June 30 .  The variable manufacturing overhead rate is $20 per direct labour hour.  Fixed manufacturing overhead is $50,500 per month and includes $20,000 of depreciation of plant assets.  All manufacturing overhead is paid in the month incurred. Required: Prepare the manufacturing overhead budget for the quarter ended June 30 . th In Class #9.6 - Prepare a selling & administrative budget for the year Continuith from the previous example, Royal Company is preparing budgets for the quarter ending June 30 .  Selling and administrative expenses budget is divided into variable and fixed components. Selling and administrative expenses do not include bad debts expense or interest.  The variable selling and administrative expenses are $0.50 per unit sold.  The fixed selling and administrative expenses are $70,000 per month.  The fixed selling and administrative expenses include $10,000 in depreciation.  Selling and administrative expenses are paid in the month incurred. Required th Prepare the selling and administrative budget for the quarter ended June 30 . In Class #9.7 - Prepare a finished goods budget for the year Continuing from the previous example, Royal Company is preparing budgets for the quarter ending June 30 .h  Manufacturing overhead is applied to units of product on the basis of direct labour hours.  Product costs for this quarter are consistent with the MOH applied in the prior quarter. Required 1: Prepare the product cost per unit (using MOH applied) using absorption costing for the quarter ended June 30th. Required 2: Calculate the ending budgeted finished goods inventory balance at June 30 . th Required 3: Calculate the MOH applied each month as well as the MOH over/under-applied for each month. In Class #9.8 - Prepare a cash budget Continuith from the previous example, Royal Company is preparing budgets for the quarter ending June 30 .  Royal maintains a line of credit to a maximum of $75,000. The interest rate is 16% per annum calculated monthly and is paid the 1 day of the following month.  Royal maintains a minimum cash balance of $30,000.  Any monies taken out of the line of credit are removed on the first day of the month.  Any monies repaid to the line of credit are paid on
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