Business Math Accounting Cohort

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 Business Math Accounting Cohort: Cash Budgeting with Credit 6 Months #69
Big-Bear began operations in July of the current year. The company plans to
purchase inventory for the second half of the year as follows: They usually
pay 60% of inventory purchases in the month of purchase, 30% in the
following month, and 10% in the second month. Based on this information,
what are the forecasted total cash payments for inventory purchased in the
second half of the year?
July = $120,000

August = $140,000

September = $160,000

October = $180,000

November = $200,000

December = $100,000

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 Business Math Accounting Cohort: Cash Budgeting with Credit 6 Months #69

Big-Bear began operations in July of the current year. The company plans to purchase inventory
for the second half of the year as follows: They usually pay 60% of inventory purchases in the
month of purchase, 30% in the following month of the purchase, and 10% in the second month
of the purchase. Based on this information, what are the forecasted total cash payments for
inventory purchased in the second half of the year?
Month July Aug Sept Oct Nov Dec

July -$120,000

Aug– $140,000

Sept–$160,000

Oct– $180,000

Nov– $200,000

Dec – $100,000

Total
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 Business Math Accounting Cohort: Cash Budgeting with Credit 6 Months

Big-Bear began operations in July of the current year. The company plans to purchase inventory
for the second half of the year as follows: They usually pay 60% of inventory purchases in the
month of purchase, 30% in the following month, and 10% in the second month.
Based on this information, what are the forecasted total cash payments for inventory
purchased in the second half of the year?
Month July Aug Sept Oct Nov Dec

July -$120,000 72,000 36,000 12,000

Aug– $140,000 84,000 42,000 14,000

Sept–$160,000 96,000 48,000 16,000

Oct– $180,000 108,000 54,000 18,000

Nov– $200,000 120,000 60,000

Dec – $100,000 60,000

Total = $840,000 $72,000 $120,000 $150,000 $170,000 $190,000 $138,000

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 Business Math Accounting Cohort: Cash Budgeting Credit #68
Kenmore Dryers sells the best dryers. The following sales for the last three months are as follows: June =
$250,000 in sales; July = $270,000 in sales, and August = $150,000 in sales. The pattern for credit receivables
collections is as follows:

The month of Sale 60%

Month After Sale 30%
Second Month After Sale 10%
What are the forecasted cash collections for the month of August?

Sales August Credit Sales

June = $250,000

July = $270,000

August = $150,000

Total
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 Business Math Accounting Cohort: Cash Budgeting Credit #68

Kenmore Dryers sells the best dryers. The following sales for the last three months are as follows: June = $250,000
in sales; July = $270,000 in sales, and August = $150,000 in sales. The pattern for credit receivables collections is as
follows:
The month of Sale 60%
Month After Sale 30%
Second Month After Sale 10%
What are the forecasted cash collections for the month of August?

Sales August Credit Sales

June = $250,000 .10 x 250,000 = $25,000
July = $270,000 .30 x 270,000 = $81,000
August = $150,000 .60 x 150,000 = $90,000

Total $196,000

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 Business Math Accounting Cohort: Cash Budgeting with Cash & Credit #67
All About Shoes projected the following sales for the year: 70% of all sales are paid for with cash and the
remainder is on credit. The pattern for credit receivables collections is as follows:

The month of Sale 50%

Month After Sale 30%
Second Month After Sale 20%

What are the forecasted cash collections for the month of December?

Months Cash Remaining Credit Credit Dec December Amount $

(Leftover Amount)
Oct = $180,000

Nov = $200,000

Dec = $100,000

Total Collection for

December
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 Business Math Accounting Cohort: Cash Budgeting with Cash & Credit #67
All About Shoes projected the following sales for the year: 70% of all sales are paid for with cash. The remainder is on credit.
The pattern for credit receivables collections is as follows:
The month of Sale 50%
Month After Sale 30%
Second Month After Sale 20%
What are the forecasted cash collections for the month of December?

Months Cash Remaining Credit Credit Dec December Amount $

(Leftover Amount)
Oct = $180,000 .30 x $180,000 $54,000 x 0.20 = $10,800

Nov = $200,000 .30 x $200,000 $60,000 x 0.30 = $18,000

Dec = $100,000 .70 x $100,000 = $70,000 .30 x $100,000 $30,000 x 0.50 = $15,000

Total Collection for $70,000(cash) + $43,800 $43,800

December
(credit collection )=

$113,800

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 Business Math Accounting Cohort: Activity Base Costing #56 & 57

Ace Hardware manufactures the following products: Spoons, Forks, and Knives.
What was the amount of overhead applied to the Knives?

Cost Pool Costs Total Activity Cost Drivers Spoons Forks Knives

Utensil $114,000 1,000 hours

Number of Hours 400 500 100
Production

Utensil Batches $113,400 720 batches

Number of batches 360 216 144
Utensil Design $12,000 30 designs

Number of designs 6 15 9
Total Cost $239,400

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 Business Math Accounting Cohort: Activity Base Costing
Ace Hardware manufactures the following products: Spoons, Forks, and Knives.
What was the amount of overhead applied to the Knives?
Cost Pool Costs Total Activity Cost Drivers Spoons Forks Knives

Utensil Production $114,000 1,000 hours

Number of Hours 400 500 100
Utensil Batches $113,400 720 batches
Number of batches 360 216 144
Utensil Design $12,000 30 designs

Total Cost $239,400 Number of designs 6 15 9

Step 1:

Calculate application rates for each of the cost pools in the first table

Utensil Production: $114,000 ÷ 1,000 hours = $114.00/hour

Utensil Batches: $113,400 ÷ 720 batches = $157.50/batch
Utensil Design: $12,000 ÷ 30 designs = $400.00/design

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 Business Math Accounting Cohort: Activity Base Costing
Ace Hardware manufactures the following products: Spoons, Forks, and Knives.
What was the amount of overhead applied to the Knives?
Cost Pool Costs Total Activity Cost Drivers Spoons Forks Knives

Utensil Production $114,000 1,000 hours Number of Hours 400 500 100
Utensil Batches $113,400 720 batches
Number of batches 360 216 144
Utensil Design $12,000 30 designs

Total Cost $239,400 Number of designs 6 15 9

Step 2

Apply overhead to Knives using the data for Knives in the second table and application rates calculated in Step 1 above.

100 hours x $114.00/hour = $11,400

144 batches x $157.50/batch = $22,680
9 designs x $400.00/design = $ 3,600
Overhead applied to Knives $37,680

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 Business Math Accounting Cohort: Applied Overhead #58

Given the following information:

Pairs of gloves expected (aka Pre-determined) to be produced in 2,529,130
units
Pairs of gloves actually produced 3,500,000 units

Overhead Rate $0.95

What is the amount of applied overhead?

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 Business Math Accounting Cohort: Applied Overhead #58

Given the following information:

Pairs of gloves expected (aka Pre-determined) to be produced in 2,529,130 units
Pairs of gloves produced 3,500,000 units

Overhead Rate $0.95

What is the amount of applied overhead?

Applied Overhead = 3,500,000 x $0.95 = $3,325,000

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 Business Math Accounting Cohort: Proforma Calculation #29

What was the 2019 net profit amount if the 2020 Pro-forma net
profit of $200,000 was based on a 25% increase?

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑌𝑒𝑎𝑟 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡

Proforma Net Profit (Previous Year) =
(1+𝑅𝑎𝑡𝑒 𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒)

This formula is not on the formula sheet!

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 Business Math Accounting Cohort: Proforma Calculation

What was the 2019 net profit amount if the 2020 Pro-forma
net profit of $200,000 was based on a 25% increase?

$200,000
Proforma Net Profit =
1.25

Proforma Net Profit for 2019 = $160,000

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 Business Math Accounting Cohort: Gross Profit #60
Mountain Dew reported the following information for the production and sale of 750,000 gallons of soda:

Sales $ 712,500
Production Costs
Direct Materials $175,000
Direct Labor $100,000
Applied Overhead (using ABC)
Overhead based on the number of gallons $187,500
Overhead based on number of batches $200,000
Overhead based on the number of ingredients $120,000
Less: Total Production Costs $782,500
Gross Profit $( 70,000)

Overhead was applied based on the following predetermined overhead rates:

$0.25 per gallon
$250 per batch
$3,000 per ingredient

What would be the gross profit if the company increased its selling price per gallon by 0.15?
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 Business Math Accounting Cohort: Gross Profit
Mountain Dew reported the following information for the production and sale of 750,000 gallons of soda:

Sales $ 712,500
Production Costs
Direct Materials $175,000
Direct Labor $100,000
Applied Overhead (using ABC)
Overhead based on the number of gallons $187,500
Overhead based on the number of batches $200,000
Overhead based on the number of ingredients $120,000
Less: Total Production Costs $782,500

Gross Profit $( 70,000)

What would be the gross profit if the company increased its selling price per gallon by 0.15?
750,000 gallons sold x 0.15 selling price increase = $112,500
New Sale Total = $712,500 (prior sales) + $112,500 (increase sales price) = $825,000
The new Gross Profit after the increase is $42,500

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 Business Math Accounting Cohort: Break-Even in Units #63

Ledora Cookie Company makes the greatest chocolate chip cookies in the world. The following information is available:

• Each bag of cookies sells for $10

• The variable cost per bag is $3

• The total fixed costs per month are $10,500

How many bags of Ledora’s chocolate chip cookies will she have to sell each month to break even?

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 Business Math Accounting Cohort: Break-Even in Units

Ledora Cookie Company makes the greatest chocolate chip cookies in the world. The following information is available:

• Each bag of cookies sells for $10

• The variable cost per bag is $3

• The total fixed costs per month are $10,500

How many bags of Ledora’s chocolate chip cookies will she have to sell each month to break even?

Break-Even Equation = (S – VC) – Fixed Cost = 0 – *on the formula sheet*

Break-Even with Target Income = (S –VC) – Fixed Cost = Target Income

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 Business Math Accounting Cohort: Break-Even in Units

Ledora Cookie Company makes the greatest chocolate chip cookies in the world. The following information is available:

• Each bag of cookies sells for $10

• The variable cost per bag is $3
• The total fixed costs per month are $10,500
How many bags of Ledora’s chocolate chip cookies will she have to sell each month to break even?
Break-Even Equation = (Sn – VCn) – Fixed Cost = 0
Break-even Equation = $10n - $3n - $10,500 = 0

Break-even Equation = $7n -$10,500 = 0

Break-even Equation = $7n = $10,500

$7 $10,500
Divided by $7 on both sides = $7 𝑛 = $7
= 1,500 units.

Break-even Equation = N = 1,500 bags of cookies

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 Business Math Accounting Cohort: Break-Even in Units

Ledora Cookie Company makes the greatest chocolate chip cookies in the

world. The following information is available:

• Each bag of cookies sells for $10
• The variable cost per bag is $3
• The total fixed costs per month are $10,500

How many bags of Ledora’s chocolate chip cookies will she have to sell each
month to break even with a Target Income of $10,500

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 Business Math Accounting Cohort: Break-Even in Units
Ledora Cookie Company makes the greatest chocolate chip cookies in the world. The following information is available:

• Each bag of cookies sells for $10

• The variable cost per bag is $3
• The total fixed costs per month are $10,500
How many bags of Ledora’s chocolate chip cookies will she have to sell each month to break even with a Target Income of $10,500
Break-Even Equation Target Income = (Sn – VCn) – Fixed Cost = Target Income
Break-even Equation = ($10n - $3n) - $10,500 = $10,500

Break-even Equation = $7n - $10,500 = $10,500

Break-even Equation = $7n = $10,500 + $10,500

Break-even Equation = $7n = $21,000

$7 $21,000
Divided by $7 on both sides = $7 𝑛 = = 3,000 units.
$7

Break-even Equation = N = 3,000 bags of cookies

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 Business Math Accounting Cohort

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