Exam 7: Master Budgets and Performance Planning

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 August sales are anticipated to be:

The ________ shows expected cash inflows and outflows during the budget period.

A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

A budget is best described as:

The budget process rarely coincides with the accounting period.

A manufacturing budget shows dollar amounts estimated to be spent to purchase additional plant assets and amounts expected to be received from plant asset disposals.

Dado, Inc. is preparing its budget for the second quarter. The following unit sales are forecasted: Prepare a merchandise purchases budget for the total units to be purchased in each of the months of April, May, and June, as well as the total unit purchases for the entire quarter.

Ruiz Co.'s budget includes the following credit sales for the current year: September, $145,000; October, $136,000; November, $120,000; December, $157,000. Credit sales are collected as follows: 15% in the month of sale, 50% in the first month after sale, and 35% in the second month after sale. How much cash can the company expect to collect in December as a result of current and past credit sales?

Briefly describe the process by which budgets are developed and administered.

Why is the sales budget usually prepared first?

Use the following data to determine the company's cash payments for August and September:

Cahuilla Corporation predicts the following sales in units for the coming four months: Each month's ending Finished Goods Inventory should be 40% of the next month's sales. March 31 finished goods inventory is 96 units. A finished unit requires five pounds of direct material B at a cost of $2.00 per pound. The March 31 Raw Materials Inventory has 200 pounds of B. Each month's ending Raw Materials Inventory should be 30% of the following month's production needs. The budgeted production for May is:

The sales budget for Modesto Corp. shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of Product B is 3,000 units. Total budgeted sales of both products for the year would be:

Widmer Corp. requires a minimum $10,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). If the ending cash balance exceeds the minimum, the excess will be applied to repaying any outstanding loan balance. The cash balance on July 1 is $10,400. Cash receipts other than for loans received for July, August, and September are forecasted as $24,000, $32,000, and $40,000, respectively. Payments other than for loan or interest payments for the same period are planned at $28,000, $30,000, and $32,000, respectively at July 1, there are no outstanding loans. Required: Prepare a cash budget for July, August, and September.

Alliance Company budgets production of 24,000 units in January and 28,000 units in the February. Each finished unit requires 4 pounds of raw material K that costs $2.50 per pound. Each month's ending raw materials inventory should equal 40% of the following month's budgeted materials. The January 1 inventory for this material is 38,400 pounds. What is the budgeted materials cost for January?

Employees who will have performance evaluated according to the budget standards should not be involved in preparing the budget.

Long-term liability balances for the budgeted balance sheet are obtained from:

A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is called a(n):

The master budget of a merchandising company includes a:

Chocolate Co. reports the following information from its sales budget: Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is: