Question

A. Direct Labor Budget

Evans Company produces asphalt roofing materials. The production budget in bundles for Evans' most popular weight of asphalt shingle is shown for the following months:

	Units
March	4,400
April	14,300
May	15,840
June	18,700

Each bundle produced requires (on average) 0.40 direct labor hours. The average cost of direct labor is $22 per hour.

Required:

Prepare a direct labor budget for March, April, and May, showing the hours needed and the direct labor cost for each month and in total. Do not include a multiplication symbol as part of your answer.

Evans Company
Direct Labor Budget
For March, April, and May
	March	April	May	Total
Units to be produced
Direct labor time per unit (hours)
Total hours needed
Cost per hour	$	$	$	$
Total direct labor cost	$	$	$	$

B.

Cash Budget

Aragon and Associates has found from past experience that 25% of its services are for cash. The remaining 75% are on credit. An aging schedule for accounts receivable reveals the following pattern:

1. Ten percent of fees on credit are collected in the month that service is rendered.
2. Sixty percent of fees on credit are collected in the month following service.
3. Twenty-six percent of fees on credit are collected in the second month following service.
4. Four percent of fees on credit are never collected.

Fees (on credit) that have not been paid until the second month following performance of the legal service are considered overdue and are subject to a 3% late charge.

Aragon has developed the following forecast of fees:

May	$180,000
June	200,000
July	190,000
August	194,000
September	240,000

Required:

Prepare a schedule of cash receipts for August and September. If an amount box does not require an entry, leave it blank or enter "0". Round answers to the nearest dollar.

Aragon and Associates
Schedule of Cash Receipts
For August and September
	August	September
Cash fees	$	$
Received from sales in:
June
July
August
September
Total	$	$

Answer 1