Exam 8: Budgeting for Planning and Control Key

The following forecasted sales pertain to Rapid City: Rapid City has a selling price of $5 per unit and expects to maintain ending inventories equal to 25 percent of next month's sales. What is the budgeted beginning balance in units for finished goods inventory on August 1?

A static budget is one developed for a single level of activity.

Figure 8-7 Macheski Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below: The June 30th balance sheet follows: Actual sales for June and budgeted sales for July, August, and September are given below: Sales are 20 percent for cash and 80 percent on credit. All credit sales are collected in the month following the sale. There are no bad debts. The gross margin percentage is 40 percent of sales. The desired ending inventory is equal to 25 percent of the following month's sales. One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month. The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000. Refer to Figure 8-7. What is the balance of the accounts payable at the end of July?

Laramie, Inc., has an operating environment with considerable uncertainty. The company prepares the budget for several different volume levels. Laramie had the following budgeted data: What is the difference in total budgeted costs between the volume range of 4,000 and 5,000 units?

Figure 8-8 Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Rammazzotti Inc., had the following budgeted data: The following actually occurred: Refer to Figure 8-8. The static budget variance for rent is

Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: What is the machining cost for production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?

Alana Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2. Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months. How many units of A1 does Alana Company expect to use in production during the second month?

Figure 8-8 Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Rammazzotti Inc., had the following budgeted data: The following actually occurred: Refer to Figure 8-8. The budgeted cost for direct labor for 2014 was

Figure 8-7 Macheski Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below: The June 30th balance sheet follows: Actual sales for June and budgeted sales for July, August, and September are given below: Sales are 20 percent for cash and 80 percent on credit. All credit sales are collected in the month following the sale. There are no bad debts. The gross margin percentage is 40 percent of sales. The desired ending inventory is equal to 25 percent of the following month's sales. One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month. The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000. Refer to Figure 8-7. What is the balance of the cash account at the end of July?

The budgeted income statement depends partly on information in the budgets in the master budget.

Which of the following is NOT a responsibility of the budget committee?

The accounts receivable aging schedule aids in determining the timing of cash __________ .

Foremost Corporation manufactures boxes. The estimated number of boxes sold for the first three months of 2014 are as follows: Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal to 20 percent of the next month's sales. General Corporation expects to sell the boxes for $5 each. April 2014 sales is projected at 4,500 boxes. How many boxes should be produced in February?

Harlan manufactures picture frames. Sales for July are expected to be 10,000 units of various sizes. Historically, the average frame requires five foot of framing, one square foot of glass, and one square foot of backing. Beginning inventory includes 7,000 feet of framing, 1,500 square feet of glass, and 2,500 square feet of backing. Current prices are $0.90 per foot of framing, $4.50 per square foot of glass, and $1.50 per square foot of backing. Ending inventory should be 150 percent of beginning inventory. Purchases are paid for in the month acquired. Required:

A flexible budget is sometimes referred to as a variable budget

The budgets that are concerned with the income-generating activities of a firm are called the:

The quantitative expressions of plans stated in either physical or financial terms are called __________ .

Alana Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2. Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months. How many units of A2 are expected in the raw material inventory at the end of the second month?

Figure 8-5 The following forecasted sales pertain to Spyware Corporation: Collection pattern: 65 percent in month of sale 35 percent in month following sale Spyware Corporation has a selling price of $2.50 per unit and expects to maintain ending inventories equal to 25 percent of the next month's sales. Refer to Figure 8-5. How many dollars are expected to be collected in September?

The comprehensive financial plans made up of departmental and activity budgets are the __________ .