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EA 1.

LO 7.2Blue Book printing is budgeting sales of 25,000 units and already has 5,000 units in beginning inventory. How many units must be produced to also meet the 7,000 units required in ending inventory?

EA 2.

LO 7.2How many units are in beginning inventory if 32,000 units are budgeted for sales, 35,000 units are produced, and the desired ending inventory is 9,000 units?

EA 3.

LO 7.2Navigator sells GPS trackers for $50 each. It expects sales of 5,000 units in quarter 1 and a 5% increase each subsequent quarter for the next 8 quarters. Prepare a sales budget by quarter for the first year.

EA 4.

LO 7.2One Device makes universal remote controls and expects to sell 500 units in January, 800 in February, 450 in March, 550 in April, and 600 in May. The required ending inventory is 20% of the next month’s sales. Prepare a production budget for the first four months of the year.

EA 5.

LO 7.2Sunrise Poles manufactures hiking poles and is planning on producing 4,000 units in March and 3,700 in April. Each pole requires a half pound of material, which costs $1.20 per pound. The company’s policy is to have enough material on hand to equal 10% of the next month’s production needs and to maintain a finished goods inventory equal to 25% of the next month’s production needs. What is the budgeted cost of purchases for March?

EA 6.

LO 7.2Given the following information from Rowdy Enterprises’ direct materials budget, how much direct materials needs to be purchased?

Beginning materials inventory $75,800, Ending materials inventory 79,200, Materials needed for production 500,000.
EA 7.

LO 7.2Each unit requires direct labor of 2.2 hours. The labor rate is $11.50 per hour and next year’s direct labor budget totals $834,900. How many units are included in the production budget for next year?

EA 8.

LO 7.2How many units are estimated to be sold if Skyline, Inc., has a planned production of 900,000 units, a desired beginning inventory of 160,000 units, and a desired ending inventory of 100,000 units?

EA 9.

LO 7.3Cash collections for Wax On Candles found that 60% of sales were collected in the month of the sale, 30% was collected the month after the sale, and 10% was collected the second month after the sale. Given the sales shown, how much cash will be collected in January and February?

November $25,000, December 35,000, January 20,000, February 25,000.
EA 10.

LO 7.3Nonna’s Re-Appliance Store collects 55% of its accounts receivable in the month of sale and 40% in the month after the sale. Given the following sales, how much cash will be collected in February?

December 2017 $20,000, January 2018 60,000, February 2018 70,000.
EA 11.

LO 7.3Dream Big Pillow Co. pays 65% of its purchases in the month of purchase, 30% the month after the purchase, and 5% in the second month following the purchase. It made the following purchases at the end of 2017 and the beginning of 2018:

November 2017 $60,000, December 2017 50,000, January 2018 35,000, February 2018 40,000, March 2018 45,000.
EA 12.

LO 7.3Desiccate purchases direct materials each month. Its payment history shows that 70% is paid in the month of purchase with the remaining balance paid the month after purchase. Prepare a cash payment schedule for March if in January through March, it purchased $35,000, $37,000, and $39,000, respectively.

EA 13.

LO 7.3What is the amount of budgeted cash payments if purchases are budgeted for $420,000 and the beginning and ending balances of accounts payable are $95,000 and $92,000, respectively?

EA 14.

LO 7.3Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is collected in the month of sale, 25% is collected the month after the sale, and 5% is collected the second month after the sale. How much cash will be collected in August if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August?

EA 15.

LO 7.4Cold X, Inc. uses this information when preparing their flexible budget: direct materials of $2 per unit, direct labor of $3 per unit, and manufacturing overhead of $1 per unit. Fixed costs are $35,000. What would be the budgeted amounts for 20,000 and 25,000 units?

EA 16.

LO 7.4Using the provided budgeted information for production of 10,000 and 15,000 units, prepare a flexible budget for 17,000 units.

Production, 10,000 units, 15,000 units; Expense A, $15,000, 22,500; Expense B, 21,000, 21,000; Expense C, 43,000, 43,000.
EA 17.

LO 7.5The production cost for a waterproof phone case is $7 per unit and fixed costs are $23,000 per month. How much is the favorable or unfavorable variance if 5,500 units were produced for a total of $61,000?

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