Exam 5: Planning and Forecasting in a Manufacturing Setting

In setting the direct labor quantity standard, allowances are made for such items as rest time and machine down-time, based on estimates made by

The first component of the master budget is the

Staci Pearce is preparing a direct labor budget.Her sales budget shows total sales units of 15,000 and sales dollars of $45,000.The direct materials purchases budget shows materials to be purchased of 25,000 units and budgeted purchases cost of $18,750.The production budget indicates a total of 25,000 units to be produced.Standard direct labor hours per unit is .50 and the standard average wage rate is $10.What is budgeted direct labor cost?

Which of the following budgets uses information from the selling and administrative expense budget?

Sedona Gear Company, a rapidly growing distributor of camping equipment, is formulating its plans for the coming year.Cody Mosbay, the firm's marketing director, has completed the following sales forecast. Patti Bodkin, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection.She has gathered the following information. $\bullet$ All sales are made on credit. $\bullet$ Sedona's excellent record in accounts receivable collection is expected to continue, with 65 percent of billings collected in the month after sale and the remaining 35 percent collected in the second month after the sale. $\bullet$ Cost of goods sold, Sedona's largest expense, is estimated to equal 45 percent of sales dollars.Seventy percent of inventory is purchased one month prior to sale and 30 percent during the month of sale.For example, in April, 30 percent of April cost of goods sold is purchased and 70 percent of May cost of goods sold is purchased. $\bullet$ All purchases are made on account.Historically, 70 percent of accounts payable have been paid during the month of purchase, and the remaining 30 percent in the month following purchase. Required: a.Prepare the cash receipts budget for the second quarter.Omit the heading. b.Prepare the purchases budget for the second quarter.Omit the heading. c.Prepare the cash payments budget for the second quarter.Omit the heading.

ABC Corporation allocates overhead based on direct labor cost.Assume ABC expects to incur a total of $1,025,000 in overhead costs and $820,000 in direct labor costs.Actual overhead costs incurred totaled $1,050,000 and actual direct labor costs totaled $800,100.ABC's predetermined overhead rate is closest to

A collection of smaller budgets that leads to pro-forma financial statements is referred to as the

Starfish Industries' sales budget for the first quarter of the upcoming year shows budgeted sales of $325,000, $350,000, and $310,000 in January, February, and March, respectively.All sales are made on credit.The cash receipts budget for March shows total cash receipts equal to $306,840.Starfish grants a discount to customers who pay within 10 days of the invoice.Starfish collects 60% of sales within the discount period, 20% in the month of sale but outside the discount period, 20% in the month following sale.What is the discount offered by Starfish, and what is the Accounts Receivable balance that will be reported in the March 31 pro-forma balance sheet?

Kandy Harts manufactures custom T-shirts.Each T-shirt can be imprinted front and back with photos, company logos or other information.Each T-shirt requires 2 ounces of ink, 15 minutes of direct labor (processing, folding, packaging), and a plastic bag for packaging.The following information is available regarding costs: Kandy applied overhead at a rate of $9.40 per direct labor hour, and fringe benefits for workers are an additional 20% of wages.What is the standard price and standard quantity for direct labor?

In the manufacturing of swimsuits, in addition to the price of fabric, the standard materials price includes all of the following items except

Total budgeted manufacturing overhead flows to the

The most popular way to begin the budgeting process is the incremental approach.

Which of the following is not a criticism of ideal standards?

You have recently accepted a position as a manager with Athletic Academy.At a recent managers meeting, the controller asked for input on how to make the budgeting process more effective.Specifically, the controller indicated that the employees did not seem to be committed to the budget during the previous period.Unfortunately, none of the managers reached their targeted sales projections for the previous period. Required: Explain to the other managers what method the company apparently used in the previous period and why the method created the lack of commitment.Also discuss flaws if the alternative approach to budgeting is used.

The standard price of direct labor includes all of the following except

Development of the operating budget begins with the

The two common approaches to budgeting are the top-down budget approach and the bottom-up approach.Both methods have advantages and disadvantages both from a practical standpoint and behavioral issues.List two advantages related to each method and two disadvantages that create problems with each approach.

Which of the following budget approaches will produce a more accurate budget?

Because people talk about wage rates rather than wage prices, we refer to standard direct labor prices as direct labor rates, expressed as

Starfish Industries' sales budget for the first quarter of the upcoming year shows budgeted sales of $325,000, $350,000, and $310,000 in January, February, and March, respectively.All sales are made on credit.The cash receipts budget for March shows total cash receipts equal to $296,780.Starfish grants a discount to customers who pay within 10 days of the invoice.Starfish collects 60% of sales within the discount period, 20% in the month of sale but outside the discount period, 15% in the month following sale and the remainder is uncollectible.What is the discount offered by Starfish, and what are the cash collections in March associated with March sales?