Exam 20: Master Budgets and Performance Planning

Match the definitions 1 through 9 with the correct term or phrase (a)through (i). -A plan that plans the predicted operating expenses not included in the selling expenses or manufacturing budgets.

Match the definitions 1 through 9 with the correct term or phrase (a)through (i). -A formal statement of a company's future plans,usually expressed in monetary terms.

A July sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit.Management forecasts 2% growth in sales each month.Total July sales are anticipated to be:

A company's history indicates that 20% of its sales are for cash and the rest are on credit.Collections on credit sales are 30% in the month of the sale,50% in the next month,and 15% the following month.Projected sales for January,February,and March are $60,000,$85,000 and $95,000,respectively.The March expected cash receipts from current and prior credit sales is:

Use the following information to prepare a budgeted balance sheet for Grover Company for the month of June. a.The budgeted net income for the month of June is $236,000. b.The beginning cash balance is $62,000; total budgeted cash receipts are $1,660,000; total budgeted cash payments are $1,580,000. c.Budgeted sales for June are $1,700,000.Collections are 40% in the month of sale and 60% in the month following. d.The projected inventory balance is 10% of the following month's sales.Sales for July are projected to be $1,750,000. e.Budgeted purchases for June are $900,000 to be paid 80% in the month of purchase and 20% in the month following. f.The equipment account balance is $1,400,000 on May 31.No equipment purchases or disposals will be made during June.On May 31,the accumulated depreciation is $276,000.Depreciation expense for June is estimated to be $24,000. g.An outstanding loan balance of $800,000 is expected at the end of June. h.Accrued income taxes payable for June 30 are expected to be $71,000.Salaries payable for June 30 are expected to be $50,000. i.The only other balance sheet accounts are: Common Stock,with a balance of $800,000 on May 31,and Retained Earnings with a balance of $300,000 on May 31.No additional common stock will be issued and no dividends will be paid during June.

Garcia Corporation's April sales forecast projects that 5,000 units will sell at a price of $10.50 per unit.The desired ending inventory is 30% higher than the beginning inventory of 1,000 units.Budgeted purchases in April would be:

Ratchet Manufacturing's August sales budget calls for sales of 8,000 units.Each month's unit sales are expected to grow by 5%.The product selling price is $25 per unit.The expected total sales dollars for September's sales budget are:

Webster Corporation is preparing its cash budget for April.The March 31 cash balance is $36,400.Cash receipts are expected to be $641,000 and cash payments for purchases are expected to be $608,500.Other cash expenses expected are $27,000 selling and $33,500 general and administrative.The company desires a minimum cash balance at the end of each month of $30,000.If necessary,the company borrows enough cash to meet the minimum using a short-term note.The amount Webster must borrow during April 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 production budget cannot be prepared until the direct materials and direct labor budgets are prepared.

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?

Operating budgets include all the following budgets except the:

Briefly describe the process by which budgets are developed and administered.

Larger,more complex organizations usually require a longer time to prepare their budgets than smaller organizations because of the considerable effort to coordinate the different units within the business.

Zhang Industries budgets production of 300 units in June and 310 units in July.Each finished unit requires 4 pounds (lbs.)of raw material K,which costs $5 per pound.Each month's ending inventory of raw materials should be 30% of the following month's budgeted production.The June 1 raw materials inventory has 360 pounds of raw material K.Compute the budgeted purchases for raw material K in pounds for June.

In preparing financial budgets:

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

Cahuilla Corporation predicts the following sales in units for the coming four months: Each month's ending Finished Goods Inventory in units 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 direct material 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:

The following information is available for Jergenson Company: a.The Cash Budget for March shows a bank loan of $10,000 and an ending cash balance of $48,000. b.The Sales Budget for March indicates sales of $120,000.Accounts receivable is expected to be 70% of March sales. c.The Merchandise Purchases Budget indicates that $90,000 in merchandise will be purchased in March on account.Ending inventory for March is predicted to be 600 units at a cost of $35 per unit.Purchases on account are paid 100% in the month following the purchase. d.The Budgeted Income Statement shows depreciation expense of $4,000,net income of $44,000 and $21,000 in income tax expense for the quarter ended March 31.Accrued taxes will be paid in April. e.The Balance Sheet for February 28 shows equipment of $77,000 with accumulated depreciation of $28,000,common stock of $25,000 and retained earnings of $8,000.There are no changes budgeted in the equipment or common stock accounts for March Prepare a budgeted balance sheet as of March 31.

What is activity-based budgeting?