### How much is budgeted sales revenue for the third quarter

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Assignation

1. Cotto, Inc. had the following information available:

Expected Costs and Selling Price Based on 5,000 units:

Variable manufacturing costs per unit\$32

Fixed manufacturing costs per unit    \$20

Selling price per unit   \$70

Expected production level      5,000 units

In the flexible budget at 10,000 units, what is the total manufacturing cost?

a. \$250,000                 b. \$420,000                 c.  \$520,000    d. \$700,000

2. At January 1, 2008, Cotto, Inc. has beginning inventory of 2,000 surfboards. Cotto estimates it will sell 5,000 units during the first quarter of 2008 with a 12% increase in sales each quarter. Cotto's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each surfboard costs \$100 and is sold for \$150. How much is budgeted sales revenue for the third quarter of 2008?

a.\$225,000      b. \$975,000                 c. \$940,800                 d. \$6,272

3. If the required direct materials purchases are 18,000 pounds, the direct materials required for production is three times the direct materials purchases, and the beginning direct materials are three and a half times the direct materials purchases, what are the desired ending direct materials in pounds?

a. 45,000                     b. 9,000                       c. 27,000                     d. 18,000

4. For the current year, Andres Company's static budget sales were \$225,000.  Actual sales for the current year were \$220,000.  Actual sales last year were \$219,000.  Expected sales last year were \$225,000.  What is the static budget variance for sales in the current year?

a. \$5,000 Favorable                 b. \$5,000 Unfavorable

c. \$6,000 Favorable                 d. \$6,000 Unfavorable

5. Cotto Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs \$0.50 per pound and employees of the company are paid \$15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Cotto has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 pounds in ending inventory.

What is the total amount to be budgeted for direct labor for the month?

a.\$2,175                      b. \$8,700                     c. \$2,250                     d. \$34,800

6. Cotto Company expects to purchase \$90,000 of materials in July and \$105,000 of materials in August. Three-quarters of all purchases are paid for in the month of purchase, and the other one-fourth is paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?

a.\$67,500        b. \$78,750                   c. \$101,250                 d. \$105,000

7. Cotto Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs \$0.50 per pound and employees of the company are paid \$15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Cotto has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 pounds in ending inventory.

What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

a.25,520             b. 25,120                     c. 25,920                     d. 26,800

8. A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were:

January            \$180,000

February          108,000

March              270,000

The cash inflow in the month of March is expected to be

a. \$203,400     b. \$153,900                 c. \$162,000                 d. \$194,400

9. CottoCom plans to sell 2,000 purple lawn chairs during May, 1,900 in June, and 2,000 during July. The company keeps 15% of the next month's sales as ending inventory. How many units should Cotto.Com produce during June?

a.1,915                        b. 2,200           c. 1,885           d. Not enough information to determine.

10. Cotto Company currently produces cardboard boxes in an automated process.  Expected production per month is 40,000 units.  The required direct materials cost \$0.30 per unit.  Manufacturing fixed overhead costs are \$24,000 per month.  The cost driver for manufacturing fixed overhead costs is units of production.  In a flexible budget at 20,000 units, the total fixed cost is ________ per month and the total variable cost is ________ per month.

a. \$24,000; \$6,000                  b. \$24,000; \$12,000    c. \$12,000; \$6,000      d. \$12,000; \$12,000

11. The following data are for Cotto Corporation:

Actual             Static Budget       Flexible Budget for Actual Sales Activity

Units                                       18,000            16,000                        18,000

Sales                                      \$360,000         \$320,000                    \$360,000

Variable costs                          234,000          192,000                      216,000

Contribution margin                   \$126,000         \$128,000                    144,000

Fixed costs                              76,000            80,000                        80,000

Operating income                     \$50,000            \$48,000                      \$64,000

The flexible budget variance for operating income is:

a. \$2,000 Favorable                         b. \$2,000 Unfavorable

c. \$14,000 Favorable                       d. \$14,000 Unfavorable

12. Cotto Company's direct materials budget shows total cost of direct materials purchases for April \$200,000, May \$240,000 and June \$280,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for June are

a. \$264,000                 b. \$256,000                 c. \$240,000                 d. \$208,000

13. CottoProduction is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs \$0.50 per pound and employees of the company are paid \$15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Cotto has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 pounds in ending inventory.

What is the total amount to be budgeted for manufacturing overhead for the month?

a.\$2,392.50        b. \$2,475                     c. \$9,570                     d. \$9,900

14.Cotto Company makes and sells umbrellas. 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                   \$0.60                                                   \$ 3,000

Shipping                                  1.20

Executive salaries                                                                                20,000

Depreciation on office equipment                                                           4,000

Other                                       0.35                                                     14,000

Expenses are paid in the month incurred. If the company has budgeted to sell 4,000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?

a.       \$8,400             b. \$9,200                     c. \$50,800                   d. \$9,800

15. The direct materials budget shows:

Desired ending direct materials          36,000 pounds

Total materials required                    54,000 pounds

Direct materials purchases                47,400 pounds

The total direct materials needed for production is

a. 18,000 pounds      b. 6,600 pounds         c. 11,400 pounds         d. 101,400 pounds

16. The production budget shows that expected unit sales are 40,000. The total required units are 45,000. What are the required production units?

a.5,000            b. 7,500           c. 10,000         d. Cannot be determined from the data provided.

17. A company budgeted unit sales of 102,000 units for January, 2008 and 120,000 units for February, 2008. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January, 2008 in order for the company to meet its goals?

a. 107,400 units           b. 102,000 units                      c. 96,600 units             d. 138,000 units

18.The following information is taken from the production budget for the first quarter:

Beginning inventory in units   900

Sales budgeted for the quarter            342,000

Capacity in units of production facility          354,000

How many finished goods units should be produced during the quarter if the company desires 2,400 units available to start the next quarter?

a. 343,500                       b. 340,500                   c. 355,500                   d. 344,400

19. Cotto has a standard of 1.5 pounds of materials per unit, at \$2 per pound. In producing 2,000 units, Cotto used 3,100 pounds of materials at a total cost of \$6,045. Cotto's materials price variance is

a.  \$155 F              b. \$45 U                      c. \$200 F                     d. \$350 F

20. Cotto has a standard of 1.5 pounds of materials per unit, at \$2 per pound. In producing 2,000 units, Cotto used 3,100 pounds of materials at a total cost of \$6,045. Cotto's materials quantity variance is

a.  \$45 F                b. \$155 U                    c. \$350 U                    d. \$200 U

21. Cottohas a standard of 2 hours of labor per unit, at \$18 per hour. In producing 2,000 units, Cotto used 3,850 hours of labor at a total cost of \$70,455. Cotto's labor price variance is

a.  \$2,895 F                       b. \$1,200 U                 c. \$1,555 F                  d. \$1,155 U

22. Cottohas a standard of 2 hours of labor per unit, at \$18 per hour. In producing 2,000 units, Cotto used 3,850 hours of labor at a total cost of \$70,455. Cotto's labor quantity variance is

a.  \$1,155 U           b. \$1,555 F                  c. \$2,895 F                  d. \$2,700 F

23. The predetermined overhead rate for Cotto is \$10, comprised of a variable overhead rate of \$6 and a fixed rate of \$4. The amount of budgeted overhead costs at normal capacity of \$300,000 was divided by normal capacity of 30,000 direct labor hours, to arrive at the predetermined overhead rate of \$10. Actual overhead for June was \$17,800 variable and \$10,800 fixed, and 1,500 units were produced. The direct labor standard is 2 hours per unit produced. The total overhead variance is

a.  \$3,600 F                       b. \$1,400 U                 c. \$1,400 F                  d. \$3,600 U

24. Cotto Corporation's variance report for the purchasing department reports 500 units of material A purchased and 1,200 units of material B purchased. It also reports standard prices of \$2 for Material A and \$3 for Material B. Actual prices reported are \$2.10 for Material A and \$2.80 for Material B. Sonic should report a total price variance of

a.  \$190 U              b. \$20 F                       c. \$20 U                      d. \$190 F

25. The following information was taken from the annual manufacturing overhead cost budget of Coen Company.

Normal production level in labor hours                23,100

Normal production level in units                         5,775

Standard labor hours per unit                             4

During the year, 5,600 units were produced, 18,340 hours were worked, and the actual manufacturing overhead was \$113,400. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. Coen's total overhead variance is

a.       \$1,260 U.          b.   \$4,620 U.            c. \$16,800 U.                      d. \$5,880 U.

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