Exam 11: Operational Budgets

To prepare a cash budget, managers plan

TFS Ltd, a retail company selling hotel furniture, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: TFS' budgeted profit before taxes for the next financial year will be

Production and inventory budgets form the basis for developing the revenue budget.

The Phillips Company's budgeted annual indirect labor cost is: $7,200 + $0.75 per direct labor hour. Operating budgets for the current month are based on 30,000 hours of budgeted direct labor hours. Budgeted indirect labor cost is

Kelita Ltd, projects sales for its first three months of operation as follows: Inventory on 1^st October is $40,000. Subsequent beginning inventories should be 40% of that month's cost of goods sold. Goods are priced at 140% of their cost. 50% of purchases are paid for in the month of purchase; the balance is paid in the following month. It is expected that 50% of credit sales will be collected in the month following sale, 30% in the second month following the sale, and the balance the third month. A 5% discount is given if payment is received in the month following sale. What are the anticipated cash receipts for October?

A master budget is a comprehensive plan for an upcoming financial period.

A budget that reflects a range of operations is called a

TFS Ltd, a retail company selling hotel furniture, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: TFS' budgeted gross profit for the next fiscal year will be

Cost-volume-profit analysis is a simplified version of a flexible budget.

On a budgeted income statement, the gross margin is determined by

An operating budget is the component of a master budget that contains management's plans for revenues, production, and operating costs.

ATR's budgeted product costs for the third quarter of 2010 were based on an expected volume of 1,500 units. The budgeted unit costs appear below: ATR's total budgeted product cost for the third quarter of 2010 was

The actual preparation of a budget usually begins with the

Budgeting provides a means for defining managers' decision rights (responsibility and financial decision making authority).

TFS Ltd, a retail company selling hotel furniture, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: Which of the following amounts will be subtracted from gross profit on TFS' budgeted income statement?

To prepare a budgeted income statement, managers draw data from the revenue budget, the cost of goods sold budget, and the cash budget.

In a production budget, beginning inventory plus budgeted production equals sales plus targeted ending inventory.

Intentionally understating revenues and / or overstating costs during a budgeting process is called

Managers often use short-term loans or prearranged lines of credit to balance the cash budget.

ATR's budgeted product costs for the third quarter of 2010 were based on an expected volume of 1,500 units. The budgeted unit costs appear below: If ATR had a budgeted volume of 2,000 units, the total budgeted product cost for the third quarter of 2010 would have been