Exam 12: Fixed and Rolling Budgets for Planning and Decision Making

In 2008,Truman Products sold 900 000 units at $9 each.Sales volume is expected to increase by 10 per cent in 2009 while the price of each unit is expected to decrease by 15 per cent.The expected sales revenue for 2009 is:

The budget that forecasts how many units a manufacturing company should produce in order to meet sales projections is called a:

Carson Products Inc.manufactures LEDs (light emitting diodes)for use in vehicles.At 30 September,the company had 5000 LED units in inventory.The company's policy is to maintain a LED ending inventory equal to 25 per cent of next month's sales.In addition,each LED manufactured requires 2 minutes of assembly and inspecting time at a cost of $.30 per minute. The company expects the following sales activity for the fourth quarter of the year: October 90000 units November 100000 units December 80000 units What is the projected direct labour cost for November?

Donnelly Manufacturing Donnelly Manufacturing sells cedar birdhouses. The company has prepared the following forecast for the third quarter of 2009: July 5000 units August 6000 units September 10000 units Inventory at 30 June 2009 was budgeted at 1000 units. Management would like the desired quantity of finished goods inventory at the end of each month to be equal to 20 per cent of next month’s budgeted unit sales. October’s sales are projected to be 12 000 units. Each completed unit of finished product requires 3 square feet of cedar at a cost of $1.50 per square foot. -The company has determined that it needs 10 per cent of next month's raw material needs on hand at the end of each month. The cost of the direct material that should be purchased in August is:

For a manufacturing company,which of the following budgets does not have to be prepared before a budgeted income statement is prepared?

Which of the following statements is false regarding the process of preparing a sales forecast?

Which of the following statements regarding budgets is true?

Ashland Inc.is a manufacturer of small appliances.For which of the following activities would Ashland be more likely to use a static budget than a flexible budget?

Robusto Coffee Traders Inc.sells pre-packaged coffees to a variety of businesses throughout the East Coast.Robusto purchases the coffee in bulk from a wholesale distributor and packages the coffee themselves to sell to customers.The company expects to sell 500 000 and 600 000 half-kilo packages of coffee during 2008 and 2009 respectively.The company had 18 000 half-kilo packages on hand at the beginning of 2008,and the company has a policy of maintaining an ending inventory equal to 10 per cent of the packages needed for next year's expected sales. How many packages of coffee should the company plan to purchase in 2008?

Milton Inc.has prepared the following first quarter sales forecast: January 250000 units February 375000 units March 315000 units Each unit sells for $1.50. The sales budget for the first quarter is:

Diamonde Products Inc.would like to prepare a summary cash budget for the second quarter of 2009.The following information regarding operating activities from the cash receipts and cash disbursements budgets are available: Cash receipts \ 10000 \ 16000 \ 250000 Cash disbursements 8000 18000 160000 The following information is also available: ?The cash balance on 31 March 2009 was $\$ 3000$ . ?Equipment costing $\$ 6000$ will be purchased in May. A down payment of $\$ 2000$ will be made in May and payments of $\$ 2000$ will be made in each subsequent month thereafter until the equipment is paid in full. ?Dividends in the amount of $\$ 1000$ will be paid in June. What is the cash balance at the end of June expected to be?

On a production budget,what is the basic formula for computing the required production for a certain period of time?

Which of the following budgets would be prepared by both manufacturing companies and merchandising companies?

How might rolling forecasts help organisations beyond the annual budget?

If a company has prepared a sales budget,is it still necessary for them to prepare a cash receipts budget? Why or why not?

Enloe Manufacturing has prepared a production budget for June.Management has determined that the total required production for June is 680 000 units when an ending inventory of 50 000 units is desired and the beginning inventory is 30 000 units. Based on the above information,what were June's budgeted sales?

Blooming Blossoms Ltd.sells flower seeds to retailers throughout the country.Each pack of seeds sells for $.25.The company's accountant has prepared the following sales forecast (in packs)for the second quarter of the current year: April 35 D00 packs May 40 a0d packs June 30 D00 packs Historically,the cash collection of sales has been as follows: 25 per cent in the month of sale,60 per cent in the month following sale,and 15 per cent in the second month following sale. Required: Compute projected cash receipts for the month of June.

In December of 2008,Jones Inc.was formed as a corporation.The company plans to start its operations in early January of 2009.They have the following purchases budgeted for the first quarter of 2009: January \ 600000 February 500000 March 300000 Jones has worked out agreements with its various suppliers to pay for one-quarter of a month's purchases each month,beginning in the month of purchase,until the purchases are paid in full.No purchases were made prior to January. What are total cash disbursements expected for the first quarter of 2009?

Taylor Inc.sells and installs residential water heaters.Its customers pay for their water heaters over four months by paying in equal,monthly instalments.The sales price of an installed water heater is $600.Taylor sold and installed the following number of water heaters in the first six months of 2009: January 80 units February 100 units March 70 units April 84 units May 90 units June 75 units Cash receipts for June are expected to be:

Blooming Products Inc.sells flower bulbs to local nurseries.Each bag of bulbs sells for $2.The company's accountant has prepared the following sales forecast (in bags)for the fourth quarter of 2009: October 5000 bags November 9000 bags December 8000 bags Historically,the cash collection of sales has been as follows: 50 per cent in the month of sale,40 per cent in the month following sale,and 10 per cent in the second month following sale. Cash receipts for December are expected to be: