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Pinecove Industries, Pinecove Industries, Nesbit Corporation, and Foothills, Inc.

Use the following to answer questions 1-2.
The following information is from the manufacturing budget and
budgeted financial statements of Pinecove Industries:
Direct materials inventory, 1/1 $104,000
Direct materials inventory, 12/31 128,000
Direct materials budgeted for use during year 400,000
Accounts payable to suppliers, 1/1 80,000
Accounts payable to suppliers, 12/31 120,000
1. Refer to the information above. For the year, budgeted purchases of
direct materials amounted to:
a. $360,000
b. $376,000
c. $384,000
d. $424,000
2. Refer to the information above. For the year, budgeted cash
payments to suppliers amounted to:
a. $360,000
b. $376,000
c. $384,000
d. $424,000
3. Pinecove Industries has budgeted a total of $345,600 in costs and
expenses for the upcoming quarter. Of this amount, $30,000
represents depreciation expense and $3,600 represents the
expiration of prepayments. Rockgrove's current payables balance is
$240,000 at the beginning of the quarter. Budgeted payments on
current payables for the quarter amount to $360,000. The
company's estimated current payables balance at the end of the
quarter is:
a. $180,000
b. $192,000
c. $204,000
d. $312,000
4. Crane Company has budgeted sales for the upcoming quarter as
follows:
April May June
Units 1,500 1,800 1,650
The desired ending finished goods inventory for each month is onehalf
of next month's budgeted sales. Three pounds of direct material
are required for each unit produced. The desired ending inventory of
direct material is 20% of next month's production requirements. If
direct material costs $4 per pound, and must be paid for in the
month of purchase, the budgeted direct materials purchases (in
dollars) for April are:
a. $19,980
b. $20,700
c. $19,800
d. $18,000
Use the following to answer questions 5-7.
On July 1 of the current year, Nesbit Corporation prepared a cash
budget for July, August, and September. All of Nesbit's sales are
made on account. The following information was used in preparing
estimated cash collections:
May sales (actual) $30,000
June sales (actual) 40,000
July sales (estimated) 60,000
August sales (estimated) 70,000
September sales (estimated) 80,000
Approximately 50% of all sales are collected in the month of the sale.
Of the remaining amount outstanding, 30% is collected in the
following month, and 20% is collected in the month thereafter.
5. Refer to the information above. Budgeted collections from
customers in July total:
a. $42,000
b. $48,000
c. $50,000
d. $56,000
6. Refer to the information above. Budgeted collections from
customers in August total:
a. $35,000
b. $53,000
c. $59,000
d. $61,000
7. Refer to the information above. Budgeted collections from customers
in September total:
a. $51,000
b. $61,000
c. $73,000
d. $76,000
8. Foothills, Inc. uses a flexible budget. Foothills produced 14,000
units in May incurring direct materials cost of $18,000. Its master
budget for the year projected direct materials cost of $180,000, at a
production volume of 144,000 units. A flexible budget for May
should reflect direct materials cost of:
a. $18,000
b. $17,500
c. $21,000
d. $18,150

Solution Preview

Use the following to answer questions 1-2.
The following information is from the manufacturing budget and
budgeted financial statements of Pinecove Industries:
Direct materials inventory, 1/1 $104,000
Direct materials inventory, 12/31 128,000
Direct materials budgeted for use during year 400,000
Accounts payable to suppliers, 1/1 80,000
Accounts payable to suppliers, 12/31 120,000
1. Refer to the information above. For the year, budgeted purchases of
direct materials amounted to:
d. $424,000

Budgeted purchases = 128000 + 400000-104000

2. Refer to the information above. For the year, budgeted cash
payments to suppliers amounted to:
c. $384,000
=80000+424000-120000

3. Rockgrove Corporation has budgeted a total of $345,600 in costs and
expenses for the upcoming quarter. Of this amount, $30,000
represents depreciation expense and $3,600 represents the
expiration of ...

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