Exam 7: Master Budgets and Performance Planning

Diego, Inc., sells two products, Baubles and Charms. The sales forecast in units for the first quarter of the coming year is: Cash sales are 30% of each product's monthly sales. The remaining sales are credit sales which are collected as follows: 70% in the month of sale, 20% the next month, and 10% in the following month. Unit sale prices are $30 and $20 for Baubles and Charms, respectively. Determine the company's cash receipts for March from its current and past sales.

A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a(n):

Southland Company is preparing a cash budget for August. The company has $17,000 cash at the beginning of August and anticipates $120,800 in cash receipts and $134,500 in cash disbursements during August. Southland Company wants to maintain a minimum cash balance of $10,000. The preliminary cash balance at the end of August before any loan activity is:

Which of the following is not a result of following a well-designed budgeting process?

The master budget process usually ends with:

A plan showing the planned sales units and the revenue to be derived from these sales, and is the usual starting point in the budgeting process, is called the:

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a:

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

The merchandise purchases budget depends on information provided by the sales budget.

A capital expenditures budget is prepared before the operating budgets.

Personnel who will have performance evaluated according to the budget standards should not be consulted and involved in preparing the budget.

In preparing a budget for the last three months of the current year, Country Cozy Company is planning the units of merchandise it must order each month. The company's policy is to have 15% of the next month's sales in its inventory at the end of each month. Projected sales for October, November, and December are 27,000 units, 29,500 units, and 31,000 units, respectively. How many units must be ordered in November?

All of the following are necessary for budgets to be effective except: