Exam 23: Master Budgets and Planning

Rich Company's experience shows that 20% of its sales are for cash and 80% are on credit. An analysis of credit sales shows that 50% are collected in the month following the sale, 45% are collected in the second month, and 5% prove to be uncollectible. Calculate items (1) through (10) below:

Financial budgets include all the following except the:

Peru, Inc. is preparing its master budget for the first quarter of its calendar year. The following forecasted data relate to the first quarter: Prepare a budgeted income statement for this first quarter.

A department store has budgeted cost of goods sold for August of $60,000 for its women's coats. Management wants to have $12,000 of coats in inventory at the end of the month to prepare for the winter season. Beginning inventory in August was $8,000. What dollar amount of coats should be purchased to meet the above plans?

The process of evaluating performance can be improved by using budgets.

Grafton budgets production of 300 units in June and 310 units in July. Each unit requires 1.5 hours of direct labor. The direct labor rate if $14 per hour. The indirect labor rate is $21.00 per hour. Compute the budgeted direct labor cost for July.

The budget process is usually administered by a ____________________.

Budgets are normally more effective when all levels of management are involved in the budgeting process.

In preparing a budget for the last three months of the current year, Urban Company is planning the units of merchandise it must order each month. The company's policy is to have 15% of the next month's sales in its inventory at the end of each month. Projected sales for October, November, and December are 27,000 units, 29,500 units, and 32,500 units, respectively. How many units must be ordered in November?

Budget preparation is best determined in a top-down managerial approach.

The production budget for Sergei Company revealed the following production volume for the months of July - September. Each unit produced requires 2 hours of direct labor. The direct labor rate is currently $16 per hour but is predicted to be $16.75 per hour in September. Prepare a direct labor budget for Sergei Company for July - September.

Which of the following budgets is part of the manufacturing budget?

A rolling budget is a specific budget application relevant only to a merchandising company.

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected. Compute the amount of cash received from total sales for June.

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are collected in the second month. Compute the amount of accounts receivable reported on the company's budgeted balance sheet for June 30.

Guidance for preparing a master budget is usually the responsibility of:

A plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period is called a:

What are rolling budgets? Why are rolling budgets prepared?

What is a cash budget? How can management use a cash budget?

A department store has budgeted sales of 12,000 men's suits in September. Management wants to have 6,000 suits in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4,000 suits. What is the dollar amount of the purchase of suits? Each suit has a cost of $75.