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Davie Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable factory overhead rate is $6.00 per direct labor-hour; the budgeted fixed factory overhead is $92,000 per month, of which $16,000 is factory depreciation.

If the budgeted direct labor time for November is 9,000 hours, then the total budgeted cash disbursements for

November must be:

a)            $76,000

b)            $130,000

c)            $146,000

d)            $70,000




Yumm Dairy Corporation manufactures carrot-flavored ice cream. Yumms production budget indicated the following units to be produced for the upcoming months:

                                                                January                                February              March

Units to be produced                     100,000 120,000 150,000

Four (4) ounces of carrots are needed for each gallon of ice cream. Yumm also likes to have enough carrots on hand to cover 5% of the next months production needs for carrots. How many ounces of carrots should Yumm plan on purchasing during the month of February?

a)            510,000 ounces

b)            474,000 ounces

c)            486,000 ounces

d)            490,000 ounces




Modesto Company produces and sells Product AlphaB. To guard against stockouts, the company requires that 25% of the next months sales be on hand at the end of each month. Budgeted sales of Product AlphaB over the next four months are:

                June      June      August  September

  Budgeted sales in units               40,000  50,000  70,000  60,000   

Budgeted production for August would be:

a)            60,000 units

b)            72,500 units

c)            67,500 units

d)            90,000 units




The PDQ Company makes collections on credit sales according to the following schedule:

25% in month of sale

70% in month following sale

4% in second month following sale

1% uncollectible

The following sales have been budgeted:

Months                                Sales

April                       $100,000

May                       $120,000

June                      $110,000

Cash collections in June would be:

a)            $115,500

b)            $113,400

c)            $110,000

d)            $111,000




Palmerin Corporation is preparing its cash budget for November. The budgeted beginning cash balance is $30,000. Budgeted cash receipts total $167,000 and budgeted cash disbursements total $171,000. The desired ending cash balance is $50,000.

To attain its desired ending cash balance for November, the company should borrow:

a)            $24,000

b)            $76,000

c)            $50,000

d)            $0

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