Exam 7: Master Budgets and Performance Planning

Kyoto, Inc. predicts the following sales in units for the coming four months: Sales in units 240 280 300 240 Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material B. The March 31 raw materials inventory has 200 pounds of B. Each month's ending inventory of raw materials should be 30% of the following month's production needs. -Kyoto's budgeted production for May is:

The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called:

The process of planning future business actions and expressing them as a formal plan is called:

Julia's Candy Co. reports the following information from its sales account and sales budget: Sales May \ 105,000 June 93,000 Expected July \ 90,000 Sales: August 110,000 September 120,000 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. -If Julia's pays sales commission of 10% each month, in addition to monthly fixed costs of $4,000, what are selling expenses for the third quarter?

A plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period is called a:

Part of the cash budget is based on information drawn from the capital expenditures budget.

The budget process is usually administered by a _____________________.

David, Inc.is preparing its master budget for the second quarter.The following sales and production data have been forecasted: Unit sales 400 500 520 480 540 Finished goods inventory on March 31: 120 units Raw materials inventory on March 31: 450 pounds Desired ending inventory each month: Finished goods:30% of next month's sales Raw materials:25% of next month's production needs Number of pounds of raw material required per finished unit: 4 lb. Number of direct labor hours to produce each unit: 3 hours Labor rate per hour: $10 (a)How many units should be produced during April and May? (b)How many pounds of raw materials should be purchased in April? (c)What is the budgeted labor cost for April?

Ecology Co.sells a biodegradable product called Dissol and has predicted the following sales for the first four months of the current year: Jan. Feb. March April Sales in units 1,700 1,900 2,100 1,600 Ending inventory for each month should be 20% of the next month's sales, and the December 31 inventory is consistent with that policy.How many units should be purchased in February?

A cash budget is a plan that includes the expected cash receipts and cash expenditures during each of the periods that it covers.

A Company forecasts sales of $91,500 for the quarter ended December 31.Its gross profit rate is 18% of sales, and its September 30 inventory is $25,000.If the December 31 inventory is targeted at $7,500, budgeted purchases for the fourth quarter should be:

A plan that lists the types and amounts of general and administrative expenses expected during the budget period is referred to as a:

Blaircraft Company manufactures a product that requires five pounds of raw material for each unit produced.For the next year, beginning inventory of raw materials is 8,000 pounds.The raw materials inventory at the end of each quarter should be 15% of the next quarter's raw materials needed for production.Given the projected production in units below, what is the quantity of raw materials that needs to be purchased for the third quarter? Quarter 1 2 3 4 Expected production 7,00 5,00 8,00 6,00 Urits 0 0 0 0

Julia's Candy Co. reports the following information from its sales account and sales budget: Sales May \ 105,000 June 93,000 Expected July \ 90,000 Sales: August 110,000 September 120,000 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. -Based on the information from Julia's, the total amount of cash expected to be received from customers in July is:

Lara Company has budgeted the following credit sales during the current year: September, $25,000; October, $36,000; November, $30,000; December, $32,000.Experience has shown that payment for the credit sales is received as follows: 20% in the month of sale, 60% in the first month after sale, and 20% in the second month after sale.What will be the balance in Accounts Receivable at the end of November assuming the payment patterns have been as described?

Nano, Inc.is preparing its budget for the second quarter.The following sales data have been forecasted: Unit sales 640 720 780 620 660 Additional information follows: Inventory on March 31: 192 units Desired ending inventory each month: 30\% of next month's sales How many units should be purchased in April, May, and June? How many units should be purchased in the second quarter in total?

In preparing a budget for the last three months of the current year, Urban 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 32,500 units, respectively.How many units must be ordered in November?

Bentels Co.desires a December 31 ending inventory of 2,840 units.Budgeted sales for December are 4,000 units.The November 30 inventory was 1,800 units.Budgeted purchases are:

What are rolling budgets? Why are rolling budgets prepared?

Lingstat Company is trying to decide how many units of merchandise to order each month.The company's policy is to have 15% of the next month's sales in inventory at the end of each month.Projected sales for August, September, and October are 5,000 units, 6,000 units, and 4,000 units, respectively.How many units must be purchased in September?