Exam 19: Introduction to Managerial Accounting and the Master Budget

Hatfield Company has the following budgeted credit sales for the last four months of the year -September, $13 000; October, $19 000; November $20 000; December, $24 000. Experience has shown that payment for the credit sales is received as follows: 10% in the month of sale, 60% in the first month after sale, 20% in the second month after sale, and 10% uncollectible. How much cash can Hatfield Company expect to collect in November as a result of credit sales?

Financial reporting is typically much more detailed than managerial accounting.

Bartholomew Manufacturing Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Cost of sales is budgeted at 40% of Sales. Variable and fixed expenses are as follows: Variable: Miscellaneous expenses : 20% of Sales Fixed: Salary expense: $11 000 per month Rent expense: $5 000 per month Depreciation expense: $1 200 per month Miscellaneous expenses/fixed portion: $3 300 per month How much is the operating net profit/(loss)for March?

Advance Engineering makes payments on its inventory purchases as follows-30% in the month of purchase, 50% in the following month, and 20% in the second month following purchase. Budgeted inventory purchases for June, July, and August are $50 000, $43 000 and $56 000, respectively. At what amount are cash payments for inventory in August budgeted?

Advertising and marketing costs are included in manufacturing overhead.

For a manufacturing business, which of the following would be included in manufacturing overhead?

Indirect materials costs like lubricants and cleaning fluids are included in manufacturing overhead.

Which of the following is NOT an objective of management accounting?

Budgets are compared to actual results in order to incorporate better informed business strategies into their future planning decisions.

Budgets provide benchmarks that help managers evaluate performance.

The following information was obtained from Sizzler Company: • Advertising costs: $7 900 • Indirect labour: $9 000 • Direct labour: $31 000 • Indirect materials: $7 200 • Direct materials: $47 000 • Factory electricity and gas: $3 000 • Factory repair and maintenance: $700 • Factory cleaning costs: $1 900 • Manufacturing equipment depreciation: $1 600 • Delivery vehicle depreciation: $790 • Administrative wages and salaries: $19 000 How much were Sizzler's inventoriable product costs?

In preparing an operating budget, the sales budget is prepared first. Which of the following is prepared next?

During the past century, many developed economies have shifted their focus from a service economy to a manufacturing economy.

Which of the following is a philosophy of providing customers with superior products and services?

The wages and benefits of the factory manager are included in manufacturing overhead.

Factory rent, taxes and insurance are included in manufacturing overhead.

Accounting, legal and administrative costs are inventoriable product costs.

The master budget includes three components-the operating budget, the capital expenditures budget and the financial budget.

Management is accountable to communities in which of the following ways?

The following information was obtained from Sizzler Company: • Advertising costs: $7 900 • Indirect labour: $9 000 • Direct labour: $31 000 • Indirect materials: $7 200 • Direct materials: $47 000 • Factory electricity and gas: $3 000 • Factory repair and maintenance: $700 • Factory cleaning costs: $1 900 • Manufacturing equipment depreciation: $1 600 • Delivery vehicle depreciation: $790 • Administrative wages and salaries: $19 000 How much was Sizzler's factory overhead?