Exam 22: Master Budgets and Planning

Zhang Industries sells a product for $700.Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%.Compute the total sales dollars to be reported on the sales budget for month ended June 30.

A sporting goods manufacturer budgets production of 45,000 pairs of ski boots in the first quarter and 30,000 pairs in the second quarter of the upcoming year.Each pair of boots require 2 kg of a key raw material.The company aims to end each quarter with ending raw materials inventory equal to 20% of the following quarter's material needs.Beginning inventory for this material is 18,000 kg and the cost per kg is $8.What is the budgeted materials purchases cost for the first quarter?

Which of the following would not be used in preparing a cash budget for October?

Charm Enterprises' production budget shows the following units to be produced for the coming three months: A finished unit requires four ounces of a key direct material.The March 31 Raw Materials inventory has 2,560 ounces (oz. )of the material.Each month's ending Raw Materials inventory should be 35% of the following month's production needs.The materials to be purchased during May should be:

A sporting equipment store expects to purchase $8,000 of ski boots in October.The store had $2,000 of ski boots in merchandise inventory at the beginning of October,and expects to have $3,000 of ski boots in merchandise inventory at the end of October to cover part of anticipated November sales.What is the budgeted cost of goods sold for October?

Ratchet Manufacturing anticipates total sales for August,September,and October of $200,000,$210,000,and $220,500 respectively.Cash sales are normally 25% of total sales and the remaining sales are on credit.All credit sales are collected in the first month after the sale.Compute the amount of cash received for September.

A plan that states the number of units to be produced in a future period,based on the projected unit sales and inventory considerations,is the:

The ___________________________,prepared by manufacturing firms,shows the number of units to be produced in a period based on the unit sales projected in the sales budget,along with inventory considerations.

Memphis Company anticipates total sales for April,May,and June of $800,000,$900,000,and $950,000 respectively.Cash sales are normally 25% of total sales.Of the credit sales,30% are collected in the same month as the sale,65% are collected during the first month after the sale,and the remaining 5% are not collected.Compute the amount of cash received from credit sales for May.

Zhang Industries is preparing a cash budget for June.The company has $25,000 cash at the beginning of June and anticipates $95,000 in cash receipts and $111,290 in cash disbursements during June.The company has no loans outstanding on June 1.Compute the amount the company must borrow,if any,to maintain a $20,000 cash balance.

The master budget process usually ends with:

A capital expenditures budget is prepared before the operating budgets.

Grason Corporation is preparing a budgeted balance sheet for 2015.The retained earnings balance at December 31,2014 was $533,500.The 2015 budgeted income statement shows expected net income of $112,000.The company expects to declare dividends during 2015 amounting to $40,000.The expected balance in retained earnings on the 2015 budgeted balance sheet is:

Part of the budgeting process is summarizing the financial statement effects on the budgeted income statement and the budgeted balance sheet.

Budgets that are periodically revised and have new periods added to replace those that have lapsed are called:

Budget preparation is best determined in a top-down managerial approach.

Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 5% of the next month's sales.It estimates that May's ending inventory will consist of 14,000 units.June and July sales are estimated to be 280,000 and 290,000 units,respectively.Compute the number of units to be produced that would appear on the company's production budget for the month of June.

Larger,more complex organizations usually require a longer time to prepare their budgets than smaller organizations because of the considerable effort to coordinate the different units within the business.

The Ewing Company budgeted sales for January,February,and March of $96,000,$88,000,and $72,000,respectively.Seventy percent of sales are on credit.The company collects 60% of its credit sales in the month following sale,and 40% in the second month following sale.What are Ewing's expected cash receipts for March related to all current and past sales?

Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August.The direct labor requirement per unit is 0.50 hours.Labor is paid at the rate of $21 per hour.The total cost of direct labor for the month of August is: