Exam 10: Budgetary Planning

Streak Merchandising Company expects to purchase $60,000 of materials in July and $70,000 of materials in August.Three-quarters of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase.In addition, a 2% discount is received for payments made in the month of purchase.How much will cash disbursements for materials purchases be in August?

Nunnallikash Manufacturing Company has furnished the following information which occurred during May: Accounts Payable balance at April 30 \ 29,000 Purchases on account during May 150,000 Cash payments for materials purchased in April 82,000 Cash pavments for materials purchased in May 76,000 The accounts payable account is used only for direct materials.How much will Nunnallikash report as accounts payable on the balance sheet at the end of May?

Which of the following would most likely appear as a fixed expense on the Selling and Administrative Expense Budget?

DaDum Company desired 12,000 kilograms of raw material on hand on June 1 and 10,500 on June 30.The number of kilograms required for production for June totalled 240,000 kilograms.How many kilograms of raw material should DaDum purchase in June?

The number of direct labour hours needed for production is obtained from the direct labour budget.

A budget facilitates coordination of activities within the business but is a poor tool for evaluating performance.

Which of the following is a proper match-up?

Skate Rink Company revised its sales budget to show a 15% increase in sales.As a result of this change, which other budgets would change?

Which problem might be a result of an unrealistic budget?

Waco's Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during July.Waco's policy is to keep 10% of the next month's sales as ending inventory.How many units should Waco produce during June?

Sudler Production is planning to sell 700 boxes of ceramic tile, with production estimated at 800 boxes during May.Each box of tile requires 23 kilograms of clay mix and a half hour of direct labour.Clay mix costs $0.75 per kilogram and employees of the company are paid $20.00 per hour.Manufacturing overhead is applied at a rate of 125% of direct labour costs.Sudler has 3,000 kilograms of clay mix in beginning inventory and wants to have 4,000 kilograms in ending inventory.What is the total amount to be budgeted for manufacturing overhead for the month?

What sources of information does a manufacturing company use to determine cost of goods sold?

The production budget shows that expected unit sales are 86,000 for May and 87,000 for June.The company desires to have units on hand at the end of the month equal to 10% of next month's sales.How many units should the company produce during May?

One statement about budgeting that is generally true is

Use the following information for questions At January 1, 2016, Jake, Inc.has beginning inventory of 4,000 surfboards.Jake estimates it will sell 15,000 units during the first quarter of 2016 with a 10% increase in sales each quarter.Jake's policy is to maintain an ending inventory equal to 25% of the next quarter's sales.Each surfboard costs $200 and is sold for $250. -How many units should Jake produce during the first quarter of 2016?

Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April.Each mug requires 2 kilograms of resin and one-half hour of direct labour.Resin costs $1 per kilogram and employees of the company are paid $12.50 per hour.Manufacturing overhead is applied at a rate of 120% of direct labour costs.Gottberg has 2,000 kilograms of resin in beginning inventory and wants to have 2,400 kilograms in ending inventory.How much is the total amount of budgeted direct labour for April?

Which of the following statements is correct?

A budget committee coordinates the budget activities of a company.

At January 1, 2016, Ceatric, Inc.has beginning inventory of 10,000 boogie boards.Ceatric estimates it will sell 7,000 units during the first quarter of 2016 with a 7% increase in sales each quarter.Ceatric's policy is to maintain an ending inventory equal to 14% of the next quarter's sales.Each surfboard costs $95 and is sold for $130.How much is budgeted sales revenue for the third quarter of 2016?

A sales budget should be prepared before the production budget.