Exam 20: Master Budgets and Performance Planning

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 May.

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

A quantity of inventory that provides protection against lost sales caused by unfulfilled demands from customers is called:

The sales budget comes from a careful analysis of forecasted economic and market conditions,business capacity,and advertising plans.

Match the definitions 1 through 9 with the correct term or phrase (a)through (i). -A plan that shows the units and dollars of merchandise to be purchased during the budget period.

Budgets are long-term financial plans that generally cover more than a one-year period.

Alliance Company budgets production of 24,000 units in January and 28,000 units in the February.Each finished unit requires 4 pounds of raw material K that costs $2.50 per pound.Each month's ending raw materials inventory should equal 40% of the following month's budgeted materials.The January 1 inventory for this material is 38,400 pounds.What is the budgeted materials needed in pounds for January?

Why is the sales budget usually prepared first?

The production budget for Greski Company shows the following production volume for the months of July-September.Each unit produced requires 2.5 hours of direct labor.The direct labor rate is predicted to be $16 per hour in all months.Prepare a direct labor budget for Greski Company for July-September.

Traditional budgeting is generally better than activity-based budgeting when attempting to reduce costs by eliminating non-value-added activities.

Chocolate Co.reports the following information from its sales budget: 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.The total amount of cash expected to be received from customers in September is:

Cahuilla Corporation predicts the following sales in units for the coming four months: Each month's ending Finished Goods Inventory 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 B.Each month's ending Raw Materials Inventory should be 30% of the following month's production needs. -The budgeted production for May is:

Which of the following budgets is not a budget that a manufacturer would include in its master budget?

Budgets that are periodically revised and have new periods added to replace those that have lapsed are called:

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 total sales during the month of May.

Match the definitions 1 through 9 with the correct term or phrase (a)through (i). -A formal,comprehensive plan for a company's future that includes several individual budgets that are linked with each other to form a coordinated plan.

Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 5% of the next month's sales.It estimates that May's ending inventory will consist of 14,000 units.June and July sales are estimated to be 280,000 and 290,000 units,respectively.Trago assigns variable overhead at a rate of $1.80 per unit of production.Fixed overhead equals $400,000 per month.Compute the total budgeted overhead for June.

Charm Enterprises' production budget shows the following units to be produced for the coming three months: A finished unit requires four ounces of a key direct material.The March 31 Raw Materials Inventory has 4,032 ounces (oz.)of the material.Each month's ending Raw Materials Inventory should be 35% of the following month's production needs.Materials purchases in May should be?

A ________ is a continuously revised budget that adds future months or quarters to replace months or quarters that have lapsed.

Preparing a budget should be the sole task of the most important department in an organization.