Exam 20: Master Budgets and Performance Planning

Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August.The direct labor requirement per unit is 0.50 hours.Labor is paid at the rate of $21 per hour.The total cost of direct labor budgeted for the month of August is:

The production budget is derived from the sales budget and the company's desired inventory levels.

Describe at least five benefits of budgeting.

Justin Company's budget includes the following credit sales for the current year: September,$25,000; October,$36,000; November,$30,000; December,$32,000.Credit sales are collected 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 Justin expect to collect in November as a result of current and past credit sales?

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%.Compute the total budgeted sales dollars for the month ended June 30.

A company's history indicates that 20% of its sales are for cash and the rest are on credit.Collections on credit sales are 20% in the month of the sale,50% in the next month,25% the following month,and 5% is uncollectible.Projected sales for December,January,and February are $60,000,$85,000 and $95,000,respectively.The February expected cash receipts from current and prior credit sales is:

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:

Oxford,Inc.,is preparing its master budget for the quarter ended June 30.It sells a single product for $40 each.Sales are 60% cash and 40% on credit.All credit sales are collected in the month following the sale.At March 31,the balance in accounts receivable is $12,000,which represents the uncollected balance on March sales.Budgeted unit sales for the next four months follows: The product cost is $20 per unit,and desired ending inventory is 60% of the following month's sales in units.Inventory at March 31 is 480 units.Purchases are paid 50% in the month of purchase and 50% in the following month.At March 31,the balance in accounts payable is $11,000,which represents the unpaid purchases from March.Operating expenses are paid in the month incurred and consist of: · Commissions (10% of sales) · Shipping (3% of sales) · Office salaries ($3,000 per month) · Rent ($5,000 per month) Depreciation is $2,000 per month.Income taxes are 40%,and will be paid on July 1.There are no taxes payable at March 31.A minimum cash balance of $12,000 is required,and the beginning cash balance is $12,000.Loans are obtained at the end of any month when a cash shortage occurs.Interest is 1% per month based on the beginning of the month loan balance and is paid at each month end.If the ending cash balance exceeds the minimum,the excess will be applied to repaying any outstanding loan balance.At March 31,the loan balance is $2,000.Prepare a master budget (round all dollar amounts to the nearest whole dollar)for each of the months of April,May,and June that includes the: · Sales budget · Schedule of cash receipts · Merchandise purchases budget · Schedule of cash payments for purchases of merchandise · Schedule of cash payments for selling and administrative expenses (combined) · Cash budget,including information on the loan balance · Budgeted income statement for the quarter

A budget can be an effective means of communicating management's plans to employees.

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 August sales are anticipated to be:

Snap,Inc.,provides the following data for the next three months: Desired ending inventory: Raw Materials = 30% of next month's production needs Pounds of raw material required for each finished Unit = 5 lbs. Calculate the amount of purchases of raw materials in pounds for April and May.

To determine the production budget for an accounting period,consideration is given to all of the following except:

Zhang Industries budgets production of 300 units in June and 310 units in July.Each finished unit requires 4 pounds 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 cost of purchases for raw material K for June.

On its December 31,2017,balance sheet,Calgary Industries reports equipment of $370,000 and accumulated depreciation of $74,000.During 2018,the company plans to purchase additional equipment costing $80,000 and expects depreciation expense of $30,000.Additionally,it plans to dispose of equipment that originally cost $42,000 and had accumulated depreciation of $5,600.The balances for equipment and accumulated depreciation,respectively,on the December 31,2018 budgeted balance sheet are:

Ruiz Co.'s budget includes the following credit sales for the current year: September,$145,000; October,$136,000; November,$120,000; December,$157,000.Credit sales are collected as follows: 15% in the month of sale,50% in the first month after sale,and 35% in the second month after sale.How much cash can the company expect to collect in December as a result of current and past credit sales?

A plan that shows the expected cash inflows and cash outflows during the budget period,including receipts from loans needed to maintain a minimum cash balance and repayments of such loans,is called a(n):

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.Webster's preliminary cash balance before loan activity for April is expected to be:

Zhang Industries sells a product for $700 per unit.Unit sales for May were 400,and each month's unit sales are expected to grow by 3%.Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales.Compute the budgeted selling expense for the manager for the month ended June 30.

Continuous budgeting is the practice of revising the budgets as time passes.

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 payments for purchases,$268,000. -Budgeted cash payments for salaries,$35,000. -Other budgeted cash expenses,$57,000. -Cash repayment of bank loan,$32,000. -Budgeted depreciation expense,$34,000.