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Master Budget.5

The document appears to be a collection of practice problems related to master budgeting. Specifically, it includes 10 multiple choice questions testing concepts like: estimating revenue, preparing cash budgets, predicting costs based on number of sales offices, calculating direct labor budgets, and flexible budget formulas for indirect costs. It also provides additional context for two questions regarding a manufacturing budget for a company producing 50,000 units of a product.

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Hiraya Manawari
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292 views2 pages

Master Budget.5

The document appears to be a collection of practice problems related to master budgeting. Specifically, it includes 10 multiple choice questions testing concepts like: estimating revenue, preparing cash budgets, predicting costs based on number of sales offices, calculating direct labor budgets, and flexible budget formulas for indirect costs. It also provides additional context for two questions regarding a manufacturing budget for a company producing 50,000 units of a product.

Uploaded by

Hiraya Manawari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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MASTER BUDGET

PROBLEMS
6. The amount of expected revenue based on the estimated number of parts to be sold in
1985 is
a. P9,796,850 b. P16,000,000 c. P17,597,200 d. P17,796,850

7. In preparing its cash budget for July, 19x7, Art Company made the following projections
Sales P1,500,000
Gross Profit 25%
Decrease in inventories P 70,000
Decrease in accounts payable for inventories 120,000
For July, 19X7, what were the estimated cash disbursement for inventories?
a. P1,050,000. b. P1,055,000. c. P1,175,000. d. P 935,000.

8. Cook Co.’s total costs of operating five sales offices last year were $500,000, of which
$70,000 represented fixed costs. Cook has determined that total costs are significantly
influenced by the number of sales offices operated. Last year’s costs and number of sales offices
can be used as the bases for predicting annual costs. What would be the budgeted cost for the
coming year if Cook were to operate seven sales offices?
a. $700,000 b. $672,000 c. $602,000 d. $586,000

9. Each unit of product ZIM takes five direct labor hours to make. Quality standards are
high and 8% of units produced are normally rejected due to substandard quality. Next month’s
budgets are as follows:
Beginning inventory of finished goods 3,000 units
Planned ending inventory of finished goods 7,600 units
Budgeted sales of ZIM 36,800 units
All stocks of finished goods must have successfully passed the quality control check. What is
the direct labor budget for the month?
a. 198,720 hours b. 200,000 hours c. 223,500 hours d. 225,000 hours

10. Tropical Manufacturing Corporation is using the following flexible-budget formula for
annual indirect labor cost: Total cost = P12,000 + P0.75 per machine hour. For the month of
June, the operating budgets are based upon 10,000 hours of planned machine time. Indirect labor
costs included in this planning budget are
a. P7,500 b. P8,500 c. P17,500 d. P19,500

Questions 11 and 12 are based on the following information.


The budget committee of Ferbel Company is preparing its manufacturing budget for the year
1983. Initial estimates indicate an annual sales forecast of 40,000 units. The company shall also
need 10,000 units for stock. Economic lot purchases of 1,750 kilos of material A at P8 per kilo
and 1,000 liters of material B at P15 per liter are required to produce the 50,000 units.
Budgeted factory overhead expenses for this production are:
Fixed factory overhead
Supervision P4,000
Depreciation P2,300
Insurance P 500
Variable factory overhead
Indirect labor P0.50 per direct labor hour
Indirect supplies P0.008 per unit
General factory P0.10 per direct labor hour
Labor hours and rates for the two operations are
Operation 1 4,000 hours at P5.00 per hour
Operation 2 2,000 hours at P4.50 per hour

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