Exam 20: Master Budgets and Performance Planning

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 purchases cost for the first quarter?

________ is a budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities.

The ________ shows expected cash inflows and outflows during the budget period.

Zhang Industries sells a product for $700.Unit sales for May were 400 and each month's 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 in dollars.Assume 30% of Zhang's sales are for cash.The remaining 70% are credit sales; these customers pay in the month following the sale.Compute the budgeted cash receipts for June.

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

Match the definitions 1 through 9 with the correct term or phrase (a)through (i). -A plan that shows the expected sales units and the dollars from these sales.

A sporting goods store budgeted August purchases of ski jackets at $140,000.The store had ski jackets costing $12,000 in its inventory at the beginning of August; and to cover part of anticipated September sales,they expect to have $25,000 of ski jackets in inventory at the end of the month of August.What is the budgeted cost of goods sold for August?

In preparing a budget for the last three months of the current year,Cozy Company is planning the units of merchandise it must order each month.The company's policy is to have 15% of the next month's sales in its inventory at the end of each month.Projected sales for October,November,and December are 27,000 units,29,500 units,and 31,000 units,respectively.How many units must be ordered in November?

Managers must ensure that activities of employees and departments contribute to meeting the company's overall goals.

Match the definitions 1 through 9 with the correct term or phrase (a)through (i). -A quantity of inventory that provides protection against lost sales caused by unfulfilled demand from customers or delays in shipments from suppliers.

Webster Corporation's monthly projected general and administrative expenses include $5,000 administrative salaries,$2,400 of other cash administrative expenses,$1,350 of depreciation expense on the administrative equipment,and 0.5% monthly interest on an outstanding bank loan of $10,000.Compute the total budgeted general and administrative expenses budget per month.

Zhang Industries is preparing a cash budget for June.The company has $25,000 cash at the beginning of June and anticipates $95,000 in cash receipts and $111,290 in cash payments during June.The company has no loans outstanding on June 1.Compute the amount the company must borrow,if any,to maintain a $20,000 cash balance.

All of the following are necessary for budgets to be effective except:

In a company that employs continuous budgeting on a quarterly basis and has an accounting period that ends December 31 of each year,what period would the first revision and update to the January through December 2017 budget cover?

The usual starting point for preparing a master budget is forecasting or estimating:

Which of the following statements about budgeting is false?

Part of the cash budget is based on information taken from the capital expenditures budget.

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 cost for January?

Match the definitions 1 through 9 with the correct term or phrase (a)through (i). -A plan that shows the expected cash inflows and cash outflows during the budget period.

The sales budget is derived from the production budget.