Exam 7: Master Budgets and Performance Planning

Webster Corporation is preparing a master budget for the first quarter. The company budgets production of 2,680 units in January, 2,600 units in February and 2,740 units in March. Each unit requires 0.6 hours of direct labor. The direct labor rate is $12 per hour. Compute the budgeted direct labor cost for the first quarter budget.

Managers must ensure that activities of employees and departments contribute to meeting the company's overall goals.

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

Webster Corporation's budgeted sales for February are $325,000. Webster pays sales representatives a commission of 6% of sales dollars. The company pays a sales manager a monthly salary of $4,400 and expects advertising expense of $2,000 per month. Compute the total budgeted selling expenses for February.

Continuous budgeting is the practice of revising the budgets as time passes.

Which of the following accounts would appear on a budgeted balance sheet?

The master budgeting process typically begins with the sales budget and ends with a cash budget and:

Walter Enterprises expects its September sales to be 20% higher than its August sales of $150,000. Purchases were $100,000 in August and are expected to be $120,000 in September. All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month. Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month. The beginning cash balance on September 1 is $7,500. The ending cash balance on September 30 would be:

A July sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit. Management forecasts 2% growth in sales each month. Total July sales are anticipated to be:

Memphis 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.

Southland Company is preparing a cash budget for August. The company has $17,000 cash at the beginning of August and anticipates $120,800 in cash receipts and $134,500 in cash payments during August. Southland Company wants to maintain a minimum cash balance of $10,000. The preliminary cash balance at the end of August before any loan activity is:

Use the following information to prepare the June cash budget for Springer Company. It should show expected cash receipts and cash payments for the month and the cash balance expected on June 30. a. Beginning cash balance on June 1 is $52,000. b. Cash receipts from sales are expected to be $1,625,000. c. Cash payments for direct materials and direct labor are expected to be $246,500 and $573,100, respectively. d. Budgeted cash payments for variable overhead is $340,000. e. Budgeted depreciation, the only fixed overhead estimated for June: $24,000. f. Cash selling and administrative expenses budgeted for June are $282,000. g. Bank loan interest due in June: $8,000. i. Loan payment of $50,000 should be made if the preliminary cash balance is greater than $200,000.

A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 50% in the next month, 25% the following month, and 5% is uncollectible. Projected sales for December, January, and February are $60,000, $85,000 and $95,000, respectively. The February expected cash receipts from current and prior credit sales is:

Zhang Industries sells a product for $700. Unit sales for May were 400 and each month's sales are expected to grow by 3%. Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars. Assume 30% of Zhang's sales are for cash. The remaining 70% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.

The usual starting point for preparing a master budget is forecasting or estimating:

Garcia Corporation's April sales forecast projects that 5,000 units will sell at a price of $10.50 per unit. The desired ending inventory is 30% higher than the beginning inventory of 1,000 units. Budgeted purchases in April would be:

Use the following information to determine the ending cash balance to be reported on the month ended June 30 cash budget. • Beginning cash balance on June 1, $73,000. • Cash receipts from sales, $413,000. • Budgeted cash payments for purchases, $268,000. • Budgeted cash payments for salaries, $35,000. • Other budgeted cash expenses, $57,000. • Cash repayment of bank loan, $32,000. • Budgeted depreciation expense, $34,000.

Memphis Company's May sales budget calls for sales of $900,000. The store expects to begin May with $50,000 of inventory and to end the month with $55,000 of inventory. Gross margin is typically 45% of sales. Compute the budgeted cost of merchandise purchases for May.

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a:

Zhang Industries sells a product for $700. Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%. Compute the total budgeted sales dollars for the month ended June 30.