Exam 20: Master Budgets and Performance Planning

Western Company is preparing a cash budget for June.The company has $12,000 in cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash payments during June.Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000.As of May 31,the company has no loans outstanding.To maintain the $10,000 required balance,during June the company must:

What is a capital expenditures budget?

Which of the following is not a result of following a well-designed budgeting process?

When preparing the cash budget,all of the following should be considered except:

Cameroon Corp.manufactures and sells electric staplers for $16 each.If 10,000 units were sold in December,and management forecasts 4% growth in sales each month,the number of units of electric stapler sales budgeted for February should be:

A sporting goods manufacturer budgets production of 45,000 pairs of ski boots in the first quarter and 30,000 pairs in the second quarter of the upcoming year.Each pair of boots requires 2 kilograms (kg)of a key raw material.The company aims to end each quarter with ending raw materials inventory equal to 20% of the following quarter's material needs.Beginning inventory for this material is 18,000 kg and the cost per kg is $8.What is the budgeted materials needed in kg.in the first quarter?

The budgeted balance sheet and income statement are normally completed after preparation of operating and capital expenditure budgets.

What is a production budget?

The merchandise purchases budget depends on information from the sales budget.

Ratchet Manufacturing anticipates total sales for August,September,and October of $200,000,$210,000,and $220,500 respectively.Cash sales are normally 25% of total sales and the remaining sales are on credit.All credit sales are collected in the first month after the sale.Compute the amount of accounts receivable to be reported on the company's budgeted balance sheet for August.

Calgary Industries is preparing a budgeted income statement for 2018.Predicted sales for the year are $730,000 and cost of goods sold is 40% of sales.The expected selling expenses are $81,000 and the expected general and administrative expenses are $90,000,which includes $23,000 of depreciation.The company's income tax rate is 30%.The budgeted net income for 2018 is:

Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August.The direct materials requirement per unit is 2 ounces (oz.).The company has determined that it wants to have safety stock of direct materials on hand at the end of each month to complete 20% of the units of budgeted production in the following month.There was 3,160 ounces of direct material in inventory at the start of July.The total cost of direct materials purchases for the July direct materials budget,assuming the materials cost $1.15 per ounce,is:

Memphis Company anticipates total sales for April,May,and June of $800,000,$900,000,and $950,000 respectively.Cash sales are normally 25% of total sales.Of the credit sales,30% are collected in the same month as the sale,65% are collected during the first month after the sale,and the remaining 5% are not collected. -Compute the amount of cash received from credit sales during the month of June.

The sales budget for Modesto Corp.shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12,respectively.The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units.The beginning inventory of Product B is 2,500 units.The desired ending inventory of Product B is 3,000 units.Budgeted purchases of Product B for the year would be:

Lafayette 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 the following items (1)through (10).

The financial statement effects of the budgeting process are summarized on the cash budget and the capital expenditures budget.

Widmer Corp.requires a minimum $10,000 cash balance.If necessary,loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly).If the ending cash balance exceeds the minimum,the excess will be applied to repaying any outstanding loan balance.The cash balance on July 1 is $10,400.Cash receipts other than for loans received for July,August,and September are forecasted as $24,000,$32,000,and $40,000,respectively.Payments other than for loan or interest payments for the same period are planned at $28,000,$30,000,and $32,000,respectively at July 1,there are no outstanding loans. Required: Prepare a cash budget for July,August,and September.

A managerial accounting report that presents predicted amounts of the company's assets,liabilities,and equity as of the end of the budget period is called a(n):

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a: