Chapter 9

Question 1

Required production units

Answer 1

Desired sales units
+ desired ending finished goods units - beginning finished goods units
= required production units

Question 2

Require direct materials to be purchased

Answer 2

(Unit required for production * amount of DM per unit)
+ desired ending DM
- beginning DM
= required DM to be purchased

Question 3

Budgeted cost of direct materials to be purchased

Answer 3

Required DM to be purchased * anticipated cost per unit

Question 4

Total direct labour cost

Answer 4

Units to be produced
* DL time per unit
* DL cost per unit
= total direct labour cost

Question 5

Sales Budget

Answer 5

Budget Sales in Units
x selling price per unit

Budgeted Sales

Question 6

Production budget

Answer 6

Budgeted sales in the units
Add: desired ending finish goods in units
Less: beginning finished goods and units

Budgeted production in units

Question 7

Direct material purchase budget

Answer 7

Budgeted production in units
x DM in kilogram per unit
= budgeted DM in kilograms

Add desired ending DM in kilograms it
Less beginning DM in kilogram

=Budgeted DM purchases in kilograms
x DM $ per kg

Budgeted DM purchases

Question 8

Cash disbursements budget

Answer 8

AP

Month purchases
%1 (current month)
%2 (next month)

Ext

Total Cash disbursement’s

Usually for purchasing inventory

Question 9

Cash collections

Answer 9

A/R (previous months credit/uncollected dales)

Month sales (cash and credit)
%1(current month)
%2 (next month)

Ext

Total Cash collections

Question 10

Manufacturing overhead budget

Answer 10

Budgeted allocated unit (Budgeted DLH)
x variable MOH per allocated unit

Budgeted VMOH
+ budgeted FMOH

Less: depreciation

Budgeted/ cash disbursements for MOH (actual)

Question 11

Product cost per unit

Answer 11

POHR = budgeted MOH/budgeted allocated unit

DL
DM
Applied MOH

Make sure they are all per unit
(how much of allocated unit is used per unit )

Question 12

Budgeted ending finished goods balance

Answer 12

Budgeted ending finished goods in units
x product cost per unit
= budget and ending finished goods balance

Question 13

MOH applied per month

Answer 13

Budgeted allocated unit (DLH)
x POHR (total MOH / allocated unit)
= budgeted applied MOH

Less budgeted actual MOH

=Budgeted over/under applied MOH

Question 14

Cash Budget and

Answer 14

Beginning Cash Balance
Add: Cash collections (collections from sales statement)
=cash available

Less: cash dispersements
Inventory purchases (inventory cash disbursements)
DM
DL
MOH
SG&A
Dividends
Equipment purchase
Interest (if beginning of month)

=excess or deficient y of cash
Add: borrowed
Less Repayments (notes payable)
Less Interest (if end of month)
Ending cash balance

Question 15

Income Statement

Answer 15

Sales

Less COGS (product cost * units sold +MOH under applied - MOH over applied

Or (beginning inventory + sales - ending inventory)

=Gross Margin

Less SG&A
Less Bad debt expense (budget sales $ x % uncollectible)
Less interest expense

= net income

Question 16

Balence sheet

Answer 16

Assets

Cash (ending budget of cash balance)
AR (cash collections last month)
RM (ending RM per month * price per kg)
Finished goods/inventory (ending inventory)
Equipment and buildings (less depreciation)

Total assets

L & SE

Acct payable (purchases less what was payed this month)

Notes payable
Common shares
Retained earnings (previous retained earnings + net income)

Question 17

Merchandise purchases budget

Answer 17

COGS
Add: desired ending inventory
= total needs

Less beginning inventory

=required purchases