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Various budgets Compute the required answer for each of the following independen

ID: 2454432 • Letter: V

Question

Various budgets

Compute the required answer for each of the following independent situations.

a. For next year, Penny Suits projects $8,000,000 of sales and total fixed manufacturing costs of $2,000,000. Variable manufacturing costs are estimated at 65 percent of sales. Assuming no change in inventory, what is the company's projected cost of goods sold?
$ ____

What are expected cash disbursements for inventory purchases for October?
$ ____

c. Buda Corp. is attempting to budget its overhead costs for March 2014. Overhead is a mixed cost with the following flexible budget formula: y = $250,000 + $17.50X, where X represents machine hours. Fixed overhead includes $95,000 of depreciation. If Buda Corp. expects to utilize 7,500 machine hours in March, what is the company's budgeted March overhead cost?
$ ____

How much cash will the company pay for budgeted overhead in March?
$ ____

The company can, if necessary, borrow in $1,000 amounts. Prepare a cash budget for 2014.


Elizabeth Enterprises

Cash Budget

For the Year 2014

Beginning cash balance

Borrowings needed

Cash collections

Cash deficiency

Ending cash balance

Total cash available

Correct 4 of Item 2

Correct 5 of Item 2

Correct 6 of Item 2

Correct 7 of Item 2

Correct 8 of Item 2

Correct 9 of Item 2

Disbursements:

Payoff of note payable

$ 52500

Interest on note payable

4700

Purchase of computer system

17900

Operating costs and inventory purchases

193500

Direct labor wages

110000

Overhead costs

106400

Selling and administrative costs

94800

Correct 25 of Item 2

Correct 26 of Item 2

Correct 27 of Item 2

Correct 28 of Item 2

Correct 29 of Item 2

Beginning cash balance

Borrowings needed

Cash collections

Cash deficiency

Ending cash balance

Total cash available

Correct 30 of Item 2

$

Elizabeth Enterprises

Cash Budget

For the Year 2014

Beginning cash balance

Borrowings needed

Cash collections

Cash deficiency

Ending cash balance

Total cash available

Correct 4 of Item 2

$

Correct 5 of Item 2

Correct 6 of Item 2

Correct 7 of Item 2

Correct 8 of Item 2

$

Correct 9 of Item 2

Disbursements:

Payoff of note payable

$ 52500

Interest on note payable

4700

Purchase of computer system

17900

Operating costs and inventory purchases

193500

Direct labor wages

110000

Overhead costs

106400

Selling and administrative costs

94800

Correct 25 of Item 2

Correct 26 of Item 2

$

Correct 27 of Item 2

Correct 28 of Item 2

Correct 29 of Item 2

Beginning cash balance

Borrowings needed

Cash collections

Cash deficiency

Ending cash balance

Total cash available

Correct 30 of Item 2

$

Explanation / Answer

A)

Sales= $800000

Variable Cost= $520000 (65% of 800000)

Fixed Manufacturing Cost= $200000

COGS= Sales- Variable Cost- Fixed manufacturing Overhead= 800000-520000-200000=$80000

b) Cash disbursements

Sales= $800000

Gross Profit= 25%=$200000

COGS= 800000-200000=$600000

To calculate cash payment= COGS+ Increase in inventory ( as we have paid for purchasing more inventory+Decrease in Accounts payable( as we have paid to uur creditors)

= 600000+20000+45000= $665000