Question

1.

For February, sales revenue is $575,000, sales commissions are 4% of sales, the sales manager's salary is $80,000, advertising expenses are $83,700, shipping expenses total 3% of sales, and miscellaneous selling expenses are $2,500 plus ½ of 1% of sales. Total selling expenses for the month of February are

a.$166,200

b.$209,325

c.$206,450

d.$189,200

2.

Stephanie Corporation sells a single product. Budgeted sales for the year are anticipated to be 634,000 units, estimated beginning inventory is 103,000 units, and desired ending inventory is 81,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.

Material A: 0.50 lb. per unit @ $0.55 per pound
Material B: 1.00 lb. per unit @ $1.92 per pound
Material C: 1.20 lb. per unit @ $1.10 per pound

The dollar amount of Material A used in production during the year is

a.$1,175,040

b.$168,300

c.$174,350

d.$807,840

3.

Consider Derek's budget information: materials to be used, $65,500; direct labor, $198,900; factory overhead, $394,700; work in process inventory on January 1, $190,000; and work in progress inventory on December 31, $192,600. What is the budgeted cost of goods manufactured for the year?

a.$659,100

b.$192,600

c.$656,500

d.$849,100

4.

Woodpecker Co. has $300,000 in accounts receivable on January 1. Budgeted sales for January are $960,000. Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month. The January cash collections from sales are

a.$1,068,000

b.$640,800

c.$1,368,000

d.$854,400

Answer 1

1.)	Sales	575000
	Sales commission(575000x4%)	23000
	Sales manager salary	80000
	Advertising	83700
	Shipping exp (575000*3/100)	17250
	Misc (2500+575000*1%*0.5)	5375
	Total selling exp	209325
	Ans. B
2.)	Budgeted sales	634000	units
	Desired ending inventory	81000	units
	(-)Beginning Inventory	-103000	units
	Newly added material during the year	612000	units
	Material A to be used as proportinate	306000	units
	(612000*0.5)
	Dollar amount of Material A to be used	168300	$
	(306000*0.55)
	Ans. B
3.)	Material to be used	65500
	Direct labour	198900
	Overhead cost	394700
	(+) Opening WIP	190000
	(-) Closing WIP	-192600
	Budjeted cost of goods manufactured for the year	656500
	Ans. C
4.)	Total Budgeted sales	960000
	Cash sales(960000*20/100)	192000
	Credit sales (960000*80/100)	768000
	Cash collected from credit sales (768000*75/100)	576000
	Total cash collected from Debtors	876000
	(576000+300000(last year balance))
	Total cash collected from sales during the year	1068000
	(192000+876000)
	Ans. A