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. -The budgeted purchases of pounds of raw material B during May should be:

Miles Company is preparing a cash budget for February.The company has $30,000 cash at the beginning of February and anticipates $75,000 in cash receipts and $96,250 in cash disbursements during February.Miles Company has an agreement with its bank to maintain a cash balance of $10,000.What amount, if any, must the company borrow during February to maintain a $10,000 cash balance?

A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:

What is a capital expenditures budget?

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: 15% in the month of sale, 60% in the first month after sale, 20% in the second month after sale, and 5% is uncollectible.How much cash can Lara Company expect to collect in November as a result of current and past credit sales?

The master budget is a small component of the comprehensive budget.

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

Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31.Its gross profit rate is 20% of sales, and its September 30 inventory is $32,500.If the December 31 inventory is targeted at $41,500, budgeted purchases for the fourth quarter should be:

Clic, Inc.provides the following data for the next four months: Unit sales 500 580 530 600 Ending Raw Materials Inventory 663 lbs Ending Finished Goods Inventory 174 units Desired ending inventory: Raw materials = 30% of next month's production needs Finished goods = 20% of next month's sales Pounds of raw material required for each finished Unit = 5 lbs. Direct labor hours per unit = 0.5 hrs Direct labor rate = $12/hour Required: a.Calculate the budgeted production for April and May. b.Calculate the amount of purchases of raw materials in pounds for April and May. c.Calculate the cost of direct labor for May.

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. -If each unit of Kyoto's product takes two hours to produce and the labor rate is expected to be $10 per hour, what is the budgeted labor cost for May?

The responsibility for coordinating the preparation of a master budget should be assigned to the chief executive officer.

Rich Company's experience shows that 20% of its sales are for cash and 80% are on credit.An analysis of credit sales shows that 50% are collected in the month following the sale, 45% are collected in the second month, and 5% prove to be uncollectible.Calculate items (1)through (10)below: August September October November Sales \ 500,000 \ 525,000 \ 535,000 \ 560,000 October November Receipts from cash sales (1) (6) Collections from August credit sales (2) (7) Collections from September credit (3) (8) sales Collections from October credit sales (4) (9) Total cash collections during the (5) (10) month

Tannwin Co.sells a new product called Accountomatic 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 prior December 31 inventory is consistent with that policy.How many units should be purchased in the first quarter of the year?

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 the second quarter is:

A sporting goods store purchased $7,000 worth of ski boots in October.The store had $3,000 of ski boots in inventory at the beginning of October and expects to have $2,000 of ski boots in inventory at the end of October to cover part of anticipated November sales.What is the budgeted cost of goods sold for October?

What is activity-based budgeting?

The ______________________________ shows the budgeted costs for direct materials, direct labor, and overhead based on the budgeted production volume from the production budget.

The process of evaluating performance can be improved by using budgets.

A manufacturing budget should include a list of equipment to be scrapped and additional equipment to be purchased if the proposed production budget is carried out.

Big Company manufactures keyboards.Management wishes to develop budgets for the upcoming quarter based on the following data: Sales in units 800 units Selling price per unit \ 60 Inventory at beginning of the quarter (FG) 80 units Desired ending inventory (FG) 130 units Direct materials per unit: 4 ounces plastic Plastic inventory at beginning of quarter 136 ounces Desired ending inventory of plastic 84 ounces Plastic cost \ .18 per ounce Compute the budgeted quantity of plastic that needs to be purchased for the next quarter.