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

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    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

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    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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