Exam 5: Planning and Forecasting in a Manufacturing Setting

Haygood, Inc.is a manufacturer of cast iron fire pits.Budgeted production is 20,000 units for January and 18,000 for February and 15,000 for March.The manufacturing process is highly automated but requires ¼ hour of direct labor time for each unit.The standard wage rate is $10. Required: Prepare a direct labor budget for the first quarter.

Ideal standards represent a level of performance that can be attained with reasonable effort.

Which of the following is not a use of the materials purchases budget?

Garden Gnomes Company produces various types of lawn ornaments.The company's sales budget for the first four months of the coming year is as follows.All sales are made on credit. Garden Gnomes is planning to change its credit policies in the coming year.For the first time in its history, the company is offering a 2 percent discount to customers who pay within 15 days of the invoice date.Based on industry trends, Garden Gnomes estimates that this change will result in 60 percent of credit sales being paid within the discount period; another 20 percent of sales, within the month of sale (but outside of the discount period); and another 15 percent of sales, during the month after the sale.An estimated 5 percent of sales will be uncollectible. Required: a.Prepare Garden Gnomes' cash receipts budget for the second quarter of the coming year.Omit the heading. b.How much cash will Garden Gnomes sacrifice in the second quarter by offering the new discount? c.What do you think led Garden Gnomes to offer the new discount to customers?

The predetermined overhead rate is calculated by

The key inputs for the direct materials purchases budget are the production budget and the direct materials standards for each project.

On a pro-forma balance sheet, the accounts receivable balance comes directly from

If a company gets the sales forecast wrong, which of the following budgets will also be incorrect?

In setting the direct labor quantity standard, allowances are made for

Describe the components of the cash budget and discuss why the cash budget is important to managers.

Alexa Industries has the following amounts budgeted for selling and administrative expenses for February: What amount will Alexa report on its February cash budget for selling and administrative expenses?

The final component of the operating budget is the ending inventory and cost of goods sold budget.

In the manufacturing of swimsuits, in addition to the price of fabric, the standard materials price does not include

Which of the following is a disadvantage of participative budgeting?

In setting the direct labor quantity standard, allowances are made for

Which of the following is not a step in preparing the production budget?

Many new businesses fail not because they are unprofitable, but because

The standard price of direct labor does not include which of the following items?

Which of the following is not a characteristic of a participative budget?

In a bottom-up budget approach, at each higher level of management, the budget is reviewed and may be altered to satisfy the competing needs of various units within the organization.