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

Ashland Inc. is a manufacturer of small appliances. For which of the following activities would Ashland be more likely to use a static budget than a flexible budget?

Which of the following statements is falseregarding sales forecasting?

Donnelly Manufacturing Donnelly Manufacturing sells cedar birdhouses. The company has prepared the following sales forecast for the third quarter of 2013: Inventory at June 30, 2013 was budgeted at 1,500 units. Management would like the desired quantity of finished goods inventory at the end of each month to be equal to 15% of next month's budgeted unit sales. October's sales are projected to be 24,000 units. Each completed unit of finished product requires 2.5 square feet of cedar at a cost of $3.5 per square foot. Refer to the Donnelly Manufacturing information above. The company has determined that it needs 10 percent of next month's raw material needs on hand at the end of each month. The cost of the direct material that should be purchased in August is:

Which of the following is not increased by the budgeting process?

Select Manufacturing sells a variety of office products including two-drawer file cabinets. On June 30, the company had 1,200 cabinets in inventory. The company's policy is to maintain a cabinet inventory equal to 20% of next month's sales. The company expects the following sales activity for the third quarter of the year: In addition, October's sales are projected to be 10,000 cabinets. What is the total required production for the third quarter?

The budget that forecasts how many units a manufacturing company should produce in order to meet sales projections is called a:

Which type of activity includes ensuring that the objectives and goals developed by the organization are being attained?

Which of the following would not appear on a budgeted income statement?

Vela Enterprises Inc. would like to prepare a summary cash budget for March. The following information is available: What is the cash balance at the end of March expected to be?

Crafty Cathy Products Inc. manufactures a product sold in most craft stores which requires non-soluble glue as one of the key ingredients. The company has already estimated that it needs to produce the following number of units of product for the second quarter of 2013: Each unit requires .5 ounces of glue at a cost of $.30 an ounce. The company has determined that it needs 15 percent of next month's raw material needs on hand at the end of each month. The cost of the glue that should be purchased in May is:

A budget that budgets costs for the actual number of units produced is called a:

For a manufacturing company, which two budgets should be prepared before the direct materials purchases budget is prepared?

The "Beginning cash balance" would most likely appear on which type of budget?

Which of the following statements is false regarding a company's budgeted financial statements?

The alignment of the personal goals of the managers of an organization with the goals of the organization is called:

What is the difference between a static budget and a flexible budget?

Describe the process of preparing a summary cash budget.

Sallinger Products Inc. makes and sells grill covers. On March 31, the company had 400 covers in inventory. The company's policy is to maintain a cover inventory equal to 10% of next month's projected sales. The company expects the following sales activity for the second quarter of the year: Sales for both July and August are expected to be 8,000 units each. Each completed unit of finished product requires 6 yards of a plastic material which costs $.60 per yard. The company has determined that it needs 15% of next month's raw material needs on hand at the end of each month. The company had 3,000 yards of plastic material on hand at the end of March. Required:

Leigh Manufacturing produces widgets. Prior to the start of September, the company's controller estimated September's production to be 900 units. Each unit requires two hours of direct labor at a cost of $12 per direct labor hour.

O'Malley Inc. manufacturers a unique product. Prior to the start of July, the company's controller estimated July's production to be 4,000 units. Each unit requires one hour of direct labor at a cost of $10 per direct labor hour. At the end of July, it was determined that actual production was 4,680 units and actual direct labor cost was $49,140. Required: