8th Edition

ISBN: 9781265096601

Author: BREWER

Publisher: MCG CUSTOM

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A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It…

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future…

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Textbook Question

Chapter 8, Problem 16E

Direct Materials and Direct Labor Budgets LOB—4, L08—5
The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Chapter 8, Problem 16E, Direct Materials and Direct Labor Budgets LOB—4, L08—5 The production department of Zan Corporation

In addition, 6,000 grams of raw materials inventor is on hand at the start of the 1st Quarter and the beginning accounts payable for the 1st Quarter is 52,880.
Each unit requires g grams of raw material that costs 51.20 per gram. Management desires to end each quarter with an inventory of raw materials equal to25% of the following quarters production needs. The desired ending inventory for the 4th Quarter is 8,000 grams. Management plans to pay for 60% of rawmaterial purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.20 direct labor-hours and direct laborers are paid S 11.50 perhour.
Required:
1. Calculate the estimated grams of raw material that need to be purchased each quarter and for the year as a whole (Hint: Refer to Schedule 3 for guidance).
2. Calculate the cost of raw material purchases for each quarter and for the year as a whole (Hint: Refer to Schedule 3 for guidance).
3. Calculate the expected cash disbursements for purchases of materials for each quarter and for the year as a whole (Hint: Refer to Schedule 3 for guidance).
4. Calculate the estimated direct labor cost for each quarter and for the year as a whole. Assume that the direct labor workforce is adjusted each quarter tomatch the number of hours required to produce the estimated number of units produced (Hint: Refer to Schedule 4 for guidance).

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Chapter 8, Problem 15E

Chapter 8, Problem 17E

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JH, Inc., is a calendar year, accrual basis corporation with Joe as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, JH Corporation has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E & P is $50,000. On November 1, JH distributes an office building to Joe. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $110,000. Assume that the building has been depreciated using the ADS method for both income tax and E & P purposes. What are the tax consequences of the distribution to JH and to Joe? (In your answer, be sure to describe the effects on taxable income for both JH and Joe, the impact of the distribution on JH’s E & P, and Joe’s basis in the building.)

Joe is the sole shareholder of JH Corporation. Joe sold his stock to Ethan on October 31 for $150,000. Joe’s basis in JH stock was $50,000 at the start of the year. JH distributed land to Joe immediately before the sale. JH’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Ethan received a $75,000 cash distribution from JH. During the year, JH has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true? a. Joe recognizes a $110,000 gain on the sale of his stock. b. Joe recognizes a $100,000 gain on the sale of his stock. c. Ethan receives $5,000 of dividend income.d. Joe receives $20,000 of dividend income. e. None of the above.

Chapter 8 Solutions

INTRO.TO MGRL.ACCT.(LL)W/CONNECT>IP<

Ch. 8 - What is a budget? What is budgetary control?Ch. 8 - Prob. 2Q Ch. 8 - What is meant by the term responsibility...Ch. 8 - What is a master budget? Briefly describe its...Ch. 8 - Why is the sales forecast the starting point in...Ch. 8 - “As a practical matter, planning and control mean...Ch. 8 - Prob. 7Q Ch. 8 - What is a self-imposed budget? What are the major...Ch. 8 - How can budgeting assist a company in planning its...Ch. 8 - Prob. 10Q

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Solution Summary: The author explains how to determine the cost of the raw material for each quarter for the year as whole.

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