Exam 9: How Are Operating Budgets Created

Sugar Pine Inc.collects 30% of its sales in the month of sale and the other 70% in the following month.The following shows budgeted sales for January through March. What is the amount of cash receipts budgeted for February?

(Multiple Choice)

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Question 61

All of the following appear on the manufacturing overhead budget except:

(Multiple Choice)

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Question 62

Sales personnel who are paid a bonus for exceeding budgeted sales have an incentive to underestimate sales when establishing the sales budget.

(True/False)

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Question 63

Exhibit 9-2 Bowline Inc.is a distributor which sells one product for $60 per unit.Bowline pays $33 to buy the product.In addition,fixed costs total $42,000 per month.Bowline wishes to maintain an inventory at the end of each month equal to 25% of the next month's projected sales.Purchases are paid in the month after purchase. Bowline makes all sales on credit and collects 30% in the month of sale and 70% in the month after sale.Budgeted monthly sales in units for the first five months of 2013 are as follows: -Refer to Exhibit 9-2.What will budgeted net income be for March?

(Multiple Choice)

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Question 64

A direct labor budget is regarded as the starting point for the master budget.

(True/False)

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Question 65

Exhibit 9-2 Bowline Inc.is a distributor which sells one product for $60 per unit.Bowline pays $33 to buy the product.In addition,fixed costs total $42,000 per month.Bowline wishes to maintain an inventory at the end of each month equal to 25% of the next month's projected sales.Purchases are paid in the month after purchase. Bowline makes all sales on credit and collects 30% in the month of sale and 70% in the month after sale.Budgeted monthly sales in units for the first five months of 2013 are as follows: -Refer to Exhibit 9-2.What will accounts receivable be at the end of February?

(Multiple Choice)

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Question 66

Exhibit 9-1 Sporting Inc.is a distributor which sells one product for $100 per unit.Sporting pays $60 to buy the product.In addition,fixed costs total $60,000 per month.Sporting wishes to maintain an inventory at the end of each month equal to 30% of the next month's projected sales.Purchases are paid in the month after purchase. Sporting makes all sales on credit and collects 40% in the month of sale and 60% in the month after sale.Budgeted monthly sales in units for the first five months of 2013 are as follows: -Refer to Exhibit 9-1.What will accounts receivable be at the end of February?

(Multiple Choice)

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Question 67

The first line that appears on the direct materials purchases budget is:

(Multiple Choice)

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Question 68

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Sugar Pine Inc.collects 30% of its sales in the month of sale and the other 70% in the following month.The following shows budgeted sales for January through March. What is the amount of cash receipts budgeted for February?

All of the following appear on the manufacturing overhead budget except:

Sales personnel who are paid a bonus for exceeding budgeted sales have an incentive to underestimate sales when establishing the sales budget.

A direct labor budget is regarded as the starting point for the master budget.

The first line that appears on the direct materials purchases budget is:

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