Question

Webster Corporation is preparing its cash budget for April. The March 31 cash balance is $37,800. Cash receipts are expected to be $648,000 and cash payments for purchases are expected to be $612,000. Other cash expenses expected are $27,700 selling and $34,200 general and administrative. The company desires a minimum cash balance at the end of each month of $37,000. If necessary, the company borrows enough cash to meet the minimum using a short-term note. The amount Webster must borrow during April is:

Multiple Choice

Top of Form

$0.

$25,100.

$11,900.

$110,800.

$73,800.

Bottom of Form

Webster Corporation is preparing a master budget for the first quarter of the year. The company budgets production of 2,700 units in January, 2,610 units in February and 2,790 units in March. Each unit requires 0.5 hours of direct labor. The direct labor rate is $11 per hour. Compute the budgeted direct labor cost for the first quarter budget.

Multiple Choice

Top of Form

$43,065.

$44,550.

$89,100.

$86,130.

$40,500.

Bottom of Form

Factor Co. can produce a unit of product for the following costs:

Direct material	$	8.50
Direct labor		24.50
Overhead		42.50
Total costs per unit	$	75.50

An outside supplier offers to provide Factor with all the units it needs at $45.88 per unit. If Factor buys from the supplier, the company will still incur 65% of its overhead. Factor should choose to:

Multiple Choice

Top of Form

Buy since the relevant cost to make it is $60.63.

Make since the relevant cost to make it is $47.88.

Buy since the relevant cost to make it is $47.88.

Make since the relevant cost to make it is $33.00.

Buy since the relevant cost to make it is $33.00.

Bottom of Form

Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $7 per unit. Minor currently produces and sells 7,500 units at $8.00 each. This level represents 75% of its capacity. Production costs for these units are $7.50 per unit, which includes $5.00 variable cost and $2.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $525 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $775 on the special order, the size of the order would need to be:

Multiple Choice

Top of Form

650 units.

350 units.

1,300 units.

214 units.

2,600 units.

Bottom of Form

33)Walters manufactures a specialty food product that can currently be sold for $21.90 per unit and has 19,900 units on hand. Alternatively, it can be further processed at a cost of $11,900 and converted into 11,900 units of Deluxe and 5,900 units of Super. The selling price of Deluxe and Super are $31.10 and $19.90, respectively. The incremental net income of processing further would be:

Multiple Choice

·       $39,790.

·       $51,690.

·       $17,900.

·       $43,900.

·       $11,900.

34)Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $6,000. The division sales for the year were $1,042,000 and the variable costs were $863,000. The fixed costs of the division were $185,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be:

Multiple Choice

·       $55,500 decrease

·       $123,500 decrease

·       $49,500 decrease

·       $179,000 increase

·       $179,000 decrease

Answer 1

As per policy, only four Multiple choice questions are allowed to answer at a time, so answer first four :

1) Answer : $25100

=> 37800 + 648000 - 612000 - 27700 - 34200 = 11900 + 25100 = 37000

2) Answer : $44550

=> (2700 + 2610 + 2790) * 0.5 hr/unit * $11/hr = 8100 units * 0.5 hr/unit * $11/hr = $44550

3) Answer : Buy since the relevant cost to make it is $47.88.

=> To Make relevant cost = overhead variable 42.50 * (100 - 65)% = $14.875 + DM $24.50 + DL $8.50 = $47.88

Relevant cost for Buying factor is $45.88. Buy because buying cost is less than making.

4) Answer : 650 units

=> let the special order quantity be x

So, revenue of special order (x * 7 ) - variable cost (x * 5) = x * 2 = special cost + expected income = 525 + 775

=> x * 2 = 1300

=> x = 1300 / 2 = 650 units