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Solved by verified expert :Problem 5-1:
Your Company, Inc. has determined that its planned production for the upcoming
fiscal year is:
Units
to be produced; First Quarter = 6,000
Second
Quarter = 7,000
Third
Quarter = 5,000
Fourth
Quarter = 4,000
Beginning raw materials inventory for the first quarter is 2,400 pounds.
Beginning accounts payable for the first quarter is \$2,520. Each unit requires
4 pounds of raw material that costs \$0.70 per pound. Management desires to end
each quarter with an inventory equal to 10% of the following quarter’s
production needs. The desired ending inventory for the fourth is 2,600 pounds.
Management plans to pay 80% of the raw material purchases in the quarter
acquired and 20% in the following quarter. Each unit requires 0.70 direct labor
hours and the labor rate is \$16.00 per hour.

Required:
1] Prepare the company’s direct
materials budget and schedule of expected cash disbursements for purchases of
raw materials for the upcoming fiscal year.
2] Prepare the company’s direct labor
budget for the upcoming fiscal year, assuming that the direct labor workforce
is adjusted each quarter to match the number of hours required to produce the
forecasted number of units produced.

Problem 5-2:
My Company, Inc. has determined that its planned production for the upcoming
fiscal year is:
Units
to be produced: First Quarter
= 6,000
Second
Quarter = 7,000
Third
Quarter = 6,500
Fourth
Quarter = 5,500
Each unit requires 1.4 direct labor hours and workers are paid \$12.50 per hour.
The variable manufacturing overhead rate is \$0.75 per direct labor hour. The
fixed manufacturing overhead is \$90,000 per quarter. The only non-cash element
of manufacturing overhead is depreciation, which is \$20,000 per quarter. All labor
costs and manufacturing overhead is paid in the quarter incurred.
Required:
1] Prepare the company’s direct labor
budget for the upcoming fiscal year, assuming that the direct labor work force
is adjusted each quarter to match the number of hours required to produce the
forecasted number of units produced.
2] Prepare the company’s manufacturing

Problem 5-3:
You will be required to prepare a December cash budget. You are provided with
the following information:
a] Cash balance on December 1 is
\$60,000.
b] Actual sales for October and
November and expected sales for December are as follows:
October November December
Cash
sales \$95,000 \$105,000 \$125,000
Sales
on account \$600,000 \$785,000 \$900,000
Sales on account are collected over
a three month period as follows:
Month
of sale: 15%
Month
following sale: 60%
Second month following sale: 20%
Five percent of sales on account
are uncollectible.
c] Purchases of inventory for December
will total \$420,000. Forty percent of a month’s inventory purchases are paid in
the month of purchase. The accounts payable remaining from November inventory
purchases total \$205,000, all of which will be paid in December.
d] Selling and administrative expenses
are budgeted at \$440,000 for December; of this amount \$50,000 is for
depreciation.
e] A new machine will be purchased for
cash, in December, at a cost of \$205,000; dividends totaling \$25,000 will be
paid in December.
f] The company maintains a minimum
cash balance of \$60,000. An open line of credit is available from the company’s
bank to bolster the cash position as needed.
Required:
1] Prepare a schedule of cash
collections for December.
2] Prepare a schedule of cash
disbursements for merchandise purchases for December.
3] Prepare a cash budget for December.
Indicate in the financing section any borrowing that will be needed during the
month. Assume that no interest payments are due or will be paid before January.

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