Question

The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year....

The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable manufacturing overhead is $5.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $75,000 per month, of which $15,000 is factory depreciation.

If the budgeted cash disbursements for manufacturing overhead for December total $105,000, then the budgeted direct labor-hours for December must be:

Multiple Choice

  • 6,000 direct labor-hours

  • 21,000 direct labor-hours

  • 9,000 direct labor-hours

  • 3,000 direct labor-hours

The usual starting point for a master budget is:

Multiple Choice

  • the direct materials purchase budget.

  • the budgeted income statement.

  • the sales forecast or sales budget.

  • the production budget.

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?

Multiple Choice

  • It details the required direct labor hours.

  • It details the required raw materials purchases.

  • It is calculated based on the sales budget and the desired ending inventory.

  • It summarizes the costs of producing units for the budget period.

When preparing a direct materials budget, the required purchases of raw materials in units equals:

Multiple Choice

  • raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials.

  • raw materials needed to meet the production schedule − desired ending inventory of raw materials − beginning inventory of raw materials.

  • raw materials needed to meet the production schedule − desired ending inventory of raw materials + beginning inventory of raw materials.

  • raw materials needed to meet the production schedule + desired ending inventory of raw materials + beginning inventory of raw materials.

Homework Answers

Answer #1
1
Budgeted cash disbursements 105000
Less:Cash fixed manufacturing overhead 60000 =75000-15000
Budgeted variable manufacturing overhead 45000
Divide by Variable manufacturing overhead rate 5.00
Budgeted direct labor-hours for December 9000
9,000 direct labor-hours is correct option
2
The usual starting point for a master budget is the sales forecast or sales budget.
All other budgets are based on budgeted sales for the period.
Option C is correct
3
Production budget- It is calculated based on the sales budget and the desired ending inventory.
Option C is correct
4
The required purchases of raw materials in units equals raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials.
Option A is correct
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