Student Name_____________________

Managerial Accounting SI Worksheet

Chapter 8 WITH ANSWERS

1. Craney Corporation makes one product and it provided the following information to help
prepare the master budget for the next four months of operations:
 The budgeted selling price per unit is $87.
 Budgeted unit sales for January, February, March, and April are 7,100, 8,300,
13,700, and 13,600 units, respectively. All sales are on credit.
 Regarding credit sales, 20% are collected in the month of the sale and 80% in
the following month.
 The ending finished goods inventory equals 40% of the following month's
sales.
 The ending raw materials inventory equals 40% of the following month’s raw
materials production needs. Each unit of finished goods requires 5 pounds of
raw materials. The raw materials cost $1.00 per pound.
 Regarding raw materials purchases, 30% are paid for in the month of purchase
and 70% in the following month.
 The direct labor wage rate is $19.00 per hour. Each unit of finished goods
requires 2.7 direct labor-hours.
Required:
a. What are the budgeted sales for February?
b. What are the expected cash collections for February?
c. According to the production budget, how many units should be produced in February?
d. If 68,300 pounds of raw materials are needed for production in March, how many pounds of
raw materials should be purchased in February?
e. What is the estimated cost of raw materials purchases for February?
f. If the cost of raw material purchases in January is $43,660, then in February what are the
estimated cash disbursements for raw materials purchases?
g. What is the total estimated direct labor cost for February assuming the direct labor workforce
is adjusted to match the hours required to produce the forecasted number of units produced?

2. Zolezzi Inc. is preparing its cash budget for March. The budgeted beginning cash balance is
$42,000. Budgeted cash receipts total $178,000 and budgeted cash disbursements total
$175,000. The desired ending cash balance is $50,000. The company can borrow up to $160,000
at any time from a local bank, with interest not due until the following month.
Required:
Prepare the company's cash budget for March in good form. Make sure to indicate what
borrowing, if any, would be needed to attain the desired ending cash balance.

3. Sioux Corporation is estimating the following sales for the first four months of next year:
 Sales are normally collected 60% in the month of sale, 35% in the month following the sale, and
the remaining 5% being uncollectible. Based on this information, what are the cash receipts that
Sioux would expect to collect during the month of April?
A. $286,500
B. $320,000
C. $192,000
D. $94,500

4. Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs. Expected
mug sales at Fab (in units) for the next three months are as follows:

Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs. Expected
mug sales at Fab (in units) for the next three months are as follows:
Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated
sales. How many mugs should Fab plan on producing during the month of November?
A. 23,200 mugs
B. 26,800 mugs
C. 25,900 mugs
D. 34,300 mugs

5. The following are budgeted data:

Two pounds of material are required for each finished unit. The inventory of materials at the
end of each month should equal 20% of the following month's production needs. Purchases of
raw materials for May should be:

A. 39,200 pounds
B. 52,000 pounds
C. 36,800 pounds
D. 38,000 pounds

6. Harrti Corporation has budgeted for the following sales:

Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale;
and the remaining 30% in the second month following the sale. In Razz's budgeted balance
sheet at December 31, at what amount will accounts receivable be shown?
 A. $680,000
B. $612,000
C. $826,500
D. $214,500

7. Triste Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.6 yards of
cloth. Selected data from Triste's master budget for next quarter are shown below:

Each unit requires 1.6 hours of direct labor, and the average hourly cost of Triste's direct labor is
$15. What is the cost of Triste Corporation's direct labor in September?
A. $336,000
B. $240,000
C. $150,000
D. $210,000

8. For May, Young Corporation has budgeted its cash receipts at $125,000 and its cash
disbursements at $138,000. The company's cash balance on May 1 is $17,000. If the desired
May 31 cash balance is $20,000, then how much cash must the company borrow during the
month (before considering any interest payments)?
A. $4,000
B. $8,000
C. $12,000
D. $16,000