review questions Flashcards
Use the following to answer questions 70-73:
The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable Cost Per Unit Sold Monthly Fixed Cost Sales Commissions $0.70 Shipping $1.10 Advertising $0.20 $14,000 Executive Salaries - $34,000 Depreciation on Office Equipment - $11,000 Other $0.25 $19,000
All expenses other than depreciation are paid in cash in the month they are incurred.
70. If the company has budgeted to sell 25,000 units of Product SW in July, what will be the total budgeted selling and administrative expenses for July? A) $ 56,250. B) $ 78,000. C) $123,250. D) $134,250.
25,000 units x $2.25/unit = $56,250.00
Fixed costs $78,000.00
$134,250.00
D
Use the following to answer questions 70-73:
The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable Cost Per Unit Sold Monthly Fixed Cost Sales Commissions $0.70 Shipping $1.10 Advertising $0.20 $14,000 Executive Salaries - $34,000 Depreciation on Office Equipment - $11,000 Other $0.25 $19,000
All expenses other than depreciation are paid in cash in the month they are incurred.
71. If the company has budgeted to sell 20,000 units of Product SW in October, what will be the total budgeted variable selling and administrative expenses for October?
A) $40,000.
B) $45,000.
C) $56,250.
D) $78,000
20,000 units x $2.25/unit = $45,000.00
****Use the following to answer questions 70-73:
The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable Cost Per Unit Sold Monthly Fixed Cost Sales Commissions $0.70 Shipping $1.10 Advertising $0.20 $14,000 Executive Salaries - $34,000 Depreciation on Office Equipment - $11,000 Other $0.25 $19,000
All expenses other than depreciation are paid in cash in the month they are incurred.
72. If the budgeted cash disbursements for selling and administrative expenses for November total $123,250, then how many units of Product SW does the company plan to sell in November (rounded to the nearest whole unit)?
A) 20,111 units.
B) 22,952 units.
C) 25,000 units.
D) 33,444 units.
Total cash disbursements $123,250.00 Less fixed costs -$78,000.00 Add back depreciation $11,000.00 $56,250.00 $56,250/ $2.25= 25,000
73. If the company has budgeted to sell 24,000 units of Product SW in September, what would be the total budgeted fixed selling and administrative expenses for September? A) $48,000. B) $54,000. C) $67,000. D) $78,000.
78,000
Use the following to answer questions 50-53:
Information on the actual sales and inventory purchases of the Law Company for the first quarter follow:
Inventory Sales Purchases January $120,000 $60,000 February $100,000 $78,000 March $130,000 $90,000
Collections from Law Company’s customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.
The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company’s cash balance on March 1 was $43,000, and on April 1 was $35,000.
50. What would be the expected cash collections from customers during April? A) $117,600. B) $137,000. C) $139,000. D) $150,000.
Cash Collections during April
- Feb Sales $100,000 x 8% $8,000.00
- Mar Sales $130,000 x 30% $39,000.00
- Apr Sales $ 150,000 x 60% $90,000.00
$137,000.00
Sales Purchases
January $120,000 $60,000
February $100,000 $78,000
March $130,000 $90,000
Collections from Law Company’s customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.
The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company’s cash balance on March 1 was $43,000, and on April 1 was $35,000.
51. What would be the expected cash disbursements during April for inventory purchases?
A) $ 87,300.
B) $ 90,000.
C) $ 97,000.
D) $100,000
Mar purchases $90,000 less 3% $87,300.00
