Exam 7: Master Budgets and Performance Planning

The production budget for Greski Company revealed the following production volume for the months of July-September. Each unit produced requires 2.5 hours of direct labor. The direct labor rate is predicted to be $16 per hour in all months. Prepare a direct labor budget for Greski Company for July-September.

A plan that states the number of units to be produced in a future period, based on the projected unit sales and inventory considerations, is the:

Managers must ensure that activities of employees and departments, contribute to meeting the company's overall goals.

Zhang Industries sells a product for $700. Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%. Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars. Assume 30% of Zhang's sales are for cash. The remaining 70% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.

Memphis Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected. Compute the amount of cash received from credit sales during the month of May.

Which of the following budgets is not a budget that a manufacturer would include in its master budget?

Use the following data to determine the company's cash disbursements for August and September:

Budgets are normally more effective when all levels of management are involved in the budgeting process.

A department store has budgeted cost of goods sold for March of $60,000 for its women's shorts. Management wants to have $12,000 of shorts in inventory at the end of the month to prepare for the summer season. Beginning inventory in March was $8,000. What dollar amount of shorts should be purchased to meet the above plans?

Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August. The direct materials requirement per unit is 2 ounces (oz.). The company has determined that it wants to have safety stock of direct materials on hand at the end of each month to complete 20% of the units budgeted in the following month. There was 3,160 ounces of direct material in inventory at the start of July. The total cost of direct materials purchases for the July direct materials budget, assuming the materials cost $1.15 per ounce, is:

Memphis Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected. Compute the amount of cash received from total sales during the month of May.

The manufacturing budgets include the sales budget and the budgeted income statement.

The sequence of the budgets within the master budget are dictated by GAAP.

Cahuilla Corporation predicts the following sales in units for the coming four months: Each month's ending Finished Goods Inventory should be 40% of the next month's sales. March 31 Finished Goods inventory is 96 units. A finished unit requires five pounds of direct material B at a cost of $2.00 per pound. The March 31 Raw Materials Inventory has 200 pounds of B. Each month's ending Raw Materials Inventory should be 30% of the following month's production needs. The budgeted cost of direct material B during May should be:

What is a cash budget? How can management use a cash budget?

Use the following information to determine the ending cash balance to be reported on the month ended June 30 cash budget. Beginning cash balance on June 1, $73,000. Cash receipts from sales, $413,000. Budgeted cash disbursements for purchases, $268,000. Budgeted cash disbursements for salaries, $35,000. Other budgeted cash expenses, $57,000. Cash repayment of bank loan, $32,000. Budgeted depreciation expense, $34,000.

A capital expenditures budget shows dollar amounts estimated to be spent to purchase additional plant assets and amounts expected to be received from plant asset disposals.

A formal statement of future plans, usually expressed in monetary terms, is a:

Frankie's Chocolate Co. reports the following information from its sales budget: Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:

Continuous budgeting is the practice of revising the entire set of budgets for the periods remaining and adding new budgets to replace those for the periods that have elapsed.