1) Nebraska Corporation began its operations on September 1 of the current year.
ID: 2496827 • Letter: 1
Question
1) Nebraska Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $240,000, $300,000, and $420,000, respectively, for September, October, and November. The company expects to sell 20% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 25% in the month following the sale, and the remainder in the following month. Calculate the cash collections in September from accounts receivable:
a.
$240,000
b.
$134,400
c.
$192,000
d.
$168,000
2) Florida Company opened its doors on March 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on March 31, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month. Calculate the cash payments for manufacturing in the month of June:
a.
$14,600
b.
$188,800
c.
$217,600
d.
$183,200
3) CK Venkat Chemicals releases the following data related to direct materials costs for November:
Actual costs
4,600 pounds at $5.50
Standard costs
4,500 pounds at $6.00
Calculate the direct materials price variance?
a.
$2,250 favorable
b.
$2,250 unfavorable
c.
$2,300 favorable
d.
$1,700 unfavorable
4) CK Venkat Chemicals releases the following data relate to direct materials costs for November:
Actual costs
4,600 pounds at $5.50
Standard costs
4,500 pounds at $6.00
Calculate the direct materials quantity variance?
a.
$550 unfavorable
b.
$600 favorable
c.
$550 favorable
d.
$600 unfavorable
a.
$240,000
b.
$134,400
c.
$192,000
d.
$168,000
Explanation / Answer
1. Credit Sales of September = 240000 x 0.80 = $192000
Amount collectible from debtors in September = 192000 x 0.70 = $134400
2. Cash manufacturing expenses of May = 195200 - 28800 = $166400
Cash manufacturing expenses of June = 217600 - 28800 = $188800
Cash Payment of manufacturing expenses in June = [166400/4] + [188800x3/4]
= $183200
3. Direct Material Price Variance = (Standard Price - Actual Price) x Actual Quantity
= (6 - 5.5) x 4600
= $2300 Favorable
4. Direct Material Quantity Variance = (Standard Quantity - Actual Quantity) x Standard Price
= (4500 - 4600) x 6
= $600 Unfavorable.
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