Question 1. A Company collected the following information to prepare its cash budget for the first quarter of 2005:
Beginning cash balance $ 4,250
Capital expenditures 3,000
Collections on account 23,000
Depreciation on factory equipment 1,000
Dividends 1,000
Period costs 11,000
Product costs (excludes depreciation) 20,150
(i). At the end of the quarter, the company will have
a. a cash excess.
b. a cash deficiency.
c. neither an excess nor a deficiency.
d. Cannot be determined from the information given.
(ii). Kirkland's ending work in process inventory for the quarter will be
a. $20,150
b. $21,150
c. $23,350
d. Cannot be determined from the information given.
(iii). If Kirkland wants an ending cash balance of $4,000, how much will it have to borrow in the first quarter?
a. $0
b. $12,000
c. $13,000
d. Some other amount
(iv). Kirkland spent $4,950 on direct materials purchases and $8,400 on direct labor. Its total cash expenditures for manufacturing overhead must have been
a. $5,800
b. $6,800
c. $7,800
d. Some other amount
Question 2. Melodee’s Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars:
Direct materials $0.25
Direct labor 0.03
Unit-related support costs 0.10
Batch-related support costs 0.12
Product-sustaining support costs 0.22
Facility-sustaining support costs 0.28
Total cost per jar $1.00
(i). The relevant cost per jar is:
a. $0.28 per jar
b. $0.38 per jar
c. $0.72 per jar
d. $1.00 per jar
(ii). The maximum price that Melodee’s Preserves should be willing to pay for the decorative jars is:
a. $0.28 per jar
b. $0.38 per jar
c. $0.72 per jar
d. $1.00 per jar
Question 3. The Bowley Company manufactures several different products. Unit costs associated with product ICT101 are as follows:
Direct materials $ 60
Direct labor 10
Variable manufacturing support costs 18
Fixed manufacturing support costs 32
Sales commissions (2% of sales) 4
Administrative salaries 16
Total $140
(i). Total product costs associated with product ICT101 are:
a. $ 50
b. $ 88
c. $120
d. $140
(ii). Total period costs associated with product ICT101 are:
a. $ 4
b. $16
c. $20
d. $52
(iii). Total variable costs associated with product ICT101 are:
a. $18
b. $22
c. $88
d. $92
(iv). Total fixed costs associated with product ICT101 are:
a. $16
b. $32
c. $48
d. $52
(v). Total nonmanufacturing costs associated with product ICT101 are:
a. $ 4
b. $16
c. $20
d. $52
(vi). Total manufacturing costs associated with product ICT101 are:
a. $70
b. $88
c. $120
d. $140
(vii). Direct manufacturing costs associated with product ICT101 are:
a. $70
b. $88
c. $92
d. $108