Exam 9: The Use of Budgets in Planning and Decision Making

Merrell Enterprises had the following purchases budgeted for the last six months of 2013: Merrell pays one-half of a month's purchases in the month of purchase and the remainder in the following month. What are expected total cash disbursements for the last quarter of 2013?

In a summary cash budget, the total cash available is calculated by:

Colorado Springs Ltd. produces and sells bottled water. The company's controller has the following information available from the static budget of one of the product lines for the month of April: Actual production during April was 18,000 units and actual direct materials cost was $6,300. If the company prepares a flexible budget for April, the projected direct materials cost would be:

Prior to the start of 2013, Bellamy Inc. estimated budgeted sales at 60,000 units. During 2013, 68,000 units were produced out of which 65,000 units were sold. How many units should Bellamy's 2013 flexible sales budget be based upon?

Which type(s) of activities are flexible budgets most useful for?

Becham Inc. had the following purchases budgeted for the last quarter of 2013: Becham pays one-half of a month's purchases in the month of purchase and the remainder in the following month. What are expected cash disbursements for the month of December?

Hillman Products produces and sells limited edition decorative mugs. The company's controller has the following information available from the static budget of one of the product lines for the month of April: Actual production during April was 5,400 units. Required: Prepare a flexible budget for the month of April.

In December of 2012, Jones Inc. was formed as a corporation. The company plans to start its operations in early January of 2013. They have the following purchases budgeted for the first quarter of 2013: Jones has worked out agreements with its various suppliers to pay for one-fourth of a month's purchases each month, beginning in the month of purchase, until the purchases are paid in full. No purchases were made prior to January. What are expected total cash disbursements for the first quarter of 2013?

Homestyle Interiors sells a variety of home furnishings including entertainment centers. On March 31, the company had 144 centers in inventory. The company's policy is to maintain a entertainment center inventory equal to 9% of next month's expected sales. The company expects the following sales activity for the second quarter of the year: What is the projected production for May?

A budget that is established at the beginning of the period and not adjusted for different levels of actual sales activity is called a:

In 2012, Wingen Inc. sold 325,000 units at $8 each. Sales volume is expected to increase by 15 percent in 2013 while the price of each unit is expected to decrease by 15 percent. The expected sales revenue for 2013 is:

Cash received by borrowing from line of credit will be shown:

Carteret Inc. Carteret Inc. manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced: Each unit requires 30 feet of cotton rope cord which costs $.50 per foot. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month. In addition, each hammock requires 45 minutes of direct labor for assembly and inspection at a cost of $.25 per minute. The company currently applies manufacturing overhead to production at the rate of $8 per direct labor hour. Refer to the Carteret Inc. information above. The total cost of direct labor and manufacturing overhead for the month of May is:

Boylan Inc. has projected the following sales information for the first quarter of 2013: Credit sales are collected over a two-month period, with 55 percent collected in the month of sale and 45 percent collected in the month following sale. Total cash collections for March are:

Sunshine Inc. manufactures kiddie pools. On March 31, the company had 750 pools in inventory. Each pool sells for $25.00. The company's policy is to maintain a pool inventory equal to 15% of next month's sales. The company expects the following sales activity for the second quarter of the year: In addition, July's sales are expected to be 20,000 units. Required:

Cicero Manufacturing Inc. sells gloves at local ski resorts during the winter months. Each pair of gloves sells for $15. The following sales forecast (in units) has been prepared for October 2012 through March 2013: Historically, the cash collection of sales has been as follows: 60 percent in the month of sale, 35 percent in the month following sale, and 4 percent in the second month following sale. The remaining 1 percent is uncollectible. Cash receipts for January are expected to be:

Ingalls Mercantile Inc. sells bolts of fabric to retailers for $80 per bolt. The company's accountant has prepared the following sales forecast (in bolts) for the first quarter of 2013: Historically, the cash collection of sales has been as follows: 60 percent in the month of sale, 30 percent in the month following sale, and 9 percent in the second month following sale. Cash receipts for March are expected to be:

Carteret Inc. Carteret Inc. manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced: Each unit requires 30 feet of cotton rope cord which costs $.50 per foot. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month. In addition, each hammock requires 45 minutes of direct labor for assembly and inspection at a cost of $.25 per minute. The company currently applies manufacturing overhead to production at the rate of $8 per direct labor hour. Refer to the Carteret Inc. information above. The cost of the rope cord that should be purchased in May is:

Global Products produces and sells limited edition decorative plates. The company's controller has the following information available from the static budget of one of the product lines for the month of April: Actual production during April was 1,900 units and actual direct materials cost was $4,940. If the company prepares a flexible budget for April, the projected direct materials cost would be:

Which of the following budgets is often more of a focus for a service company than a manufacturing company?