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    payables, collections, manufacturing costs

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    1. Wateredge Corporation has budgeted a total of $361,800 in costs and expenses for the upcoming quarter. Of this amount, $45,000 represents depreciation expense and $7,300 represents the expiration of prepayments. Wateredge's current payables balance is $265,000 at the beginning of the quarter. Budgeted payments on current payables for the quarter amount to $370,000. The company's estimated current payables balance at the end of the quarter is:
    A. $179,500.
    B. $204,500.
    C. $203,500.
    D. $310,000.

    2. On October 1 of the current year, Molloy Corporation prepared a cash budget for October, November, and December. All of Molloy's sales are made on account. The following information was used in preparing estimated cash collections:

    Approximately 60% of all sales are collected in the month of the sale, 30% is collected in the following month, and 10% is collected in the month thereafter.

    August sales (actual) $40,000
    September sales (actual) $50,000
    October sales (estimated) $20,000
    November sales (estimated) $70,000
    December sales (estimated) $60,000

    Budgeted collections from customers in October total:
    A. $39,000.
    B. $27,000.
    C. $31,000.
    D. $110,000.

    3. Skelton Corporation had planned to produce 50,000 units of product during the first quarter of the current year. The company prepared the following budget on May 1:

    During the first quarter, Carson produced 60,000 units and incurred total manufacturing costs of $180,000.

    Refer to the information above. Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level?
    A. Direct materials used, $43,200.
    B. Direct labor, $54,000.
    C. Variable overhead, $27,000.
    D. Fixed manufacturing overhead, $70,200.

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    Solution Preview

    1. So, the AP account would increase by expenses that have to be paid and decreased by payments (given). Total expenses don't have to be paid since they include ...

    Solution Summary

    A sentence explains the strategy and then the computation is shown.