Accounting Ch7 Problems

An abbreviated cash budget for Big Chuck Enterprises follows.

 July  August  September Beginning cash balance  $10,000  $ ?  $ ? Add: Cash receipts  50,000 63,000 71,000Deduct: Cash payments  -64,000 -58,000 -64,000Cash excess (deficiency) before financing ($4,000) $ ?  $ ? Financing    Borrowing to maintain minimum balance  ?  ?  ? Principal repayment  ?  ?  ? Interest payment  ?  ?  ? Ending cash balance  $ ?  $ ?  $ ?

Big Chuck wishes to maintain a $10,000 minimum cash balance at all times. Additional financing is available (and retired) in $1,000 multiples at a 12% interest rate. Assume that borrowings take place at the beginning of the month; retirements, in contrast, occur at the end of the month. Interest is paid at the time of repaying principal and computed on the portion of principal repaid.

a. Find the unknowns in Big Chuck’s abbreviated cash budget.b. Determine the outstanding loan balance as of September 30, after any repayments have been made.

 

Banner Company manufactures flags of various countries. Each flag has a standard of eight square feet of fabric and three hours of direct labor time. Information about recent production activity follows.

 

Nova Manufacturing applies factory overhead to products on the basis of direct labor hours. At the beginning of the current year, the company’s accountant made the following estimates for the forthcoming period: 

• Estimated variable overhead: $500,000 

• Estimated fixed overhead: $400,000 

• Estimated direct labor hours: 40,000

 

 

Arrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows.

Direct materials: 4 units @ $6.50 $26.00

Direct labor: 8 hours @ $8.50 68

Variable factory overhead: 8 hours @ $7.00 56

Fixed factory overhead: 8 hours @ 2.5 20

Total standard cost per unit $170.00

The following information pertains to activity for December:

1. Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.

2. Arrow incurred an average wage rate of $8.75 for 51,400 hours of activity.

3. Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread evenly throughout the year.

4. Actual production amounted to 6,500 completed units.