Deck 21: Planning and Budgeting

Question 1

The first budget prepared is generally the Sales Budget.

Answer 1

True

Question 2

The first budget prepared is generally the Production Budget.

Answer 2

False

Question 3

Which of the following is the correct order for presenting the following sections on the Budgeted Statement of Cash Flows?
I. Cash Flows from Investing
II. Cash Flows from Operations
III. Cash Flows from Financing

A) I, II, III
B) I, III, II
C) II, III, I
D) II, I, III
E) III, I, II

Answer 3

II, I, III

Question 4

Teton Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Teton anticipates the following sales volumes:
Teton's policy is to maintain ending inventories at 5% of what is expected for the next month.
What is the budgeted level of production in July for both styles?

A) 2,210 Daytripper backpacks and 885 Excursion backpacks
B) 1,990 Daytripper backpacks and 1,215 Excursion backpacks
C) 2,000 Daytripper backpacks and 1,200 Excursion backpacks
D) 2,010 Daytripper backpacks and 1,185 Excursion backpacks
E) None of the above

Question 5

Teton Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Teton anticipates the following production volumes:
Each Daytripper backpack requires 1 yard of 800 denier polyester fabric and each Excursion backpack requires 2 yards of 1200 denier polyester fabric. Teton's policy is to maintain ending inventories of each type of fabric at 10% of expected production needs for the next month.
What is the budgeted level of material purchases in July for both types?

A) 2,020 yards of 800 denier polyester and 2,340 yards of 1200 denier polyester
B) 1,980 yards of 800 denier polyester and 2,460 yards of 1200 denier polyester
C) 2,020 yards of 800 denier polyester and 1,140 yards of 1200 denier polyester
D) 2,000 yards of 800 denier polyester and 2,400 yards of 1200 denier polyester
E) None of the above

Question 6

Teton Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Teton anticipates the following production volumes:
Each Daytripper backpack requires 1 hour of direct labor and each Excursion backpack requires 2.5 hours of direct labor.
If the total budgeted labor for August is 5,000 hours, how much indirect labor did Teton budget?

A) None
B) 1,550 hours
C) 550 hours
D) 1,900 hours
E) None of the above

Question 7

Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the following data:
Beginning-of-period balances:
Estimates for end-of-period balances:
Budgeted activity levels for the period:
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. Forest Trails has planned to purchase new equipment worth $25,000, and to sell equipment for $8,000 (Original purchase price $15,000, accumulated depreciation $10,000) to help finance the purchase.
What is budgeted amount of Cost of Goods Sold for the period?

A) $144,800
B) $153,800
C) $143,800
D) $155,800
E) None of the above

Question 8

Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the following data:
Beginning-of-period balances:
Estimates for end-of-period balances:
Budgeted activity levels for the period:
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. Forest Trails has planned to purchase new equipment worth $25,000, and to sell equipment for $8,000 (Original purchase price $15,000, accumulated depreciation $10,000) to help finance the purchase.
What is budgeted amount of cash received from customers for the period?

A) $259,000
B) $236,500
C) $250,000
D) $263,500
E) None of the above

Question 9

Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the following data:
Beginning-of-period balances:
Estimates for end-of-period balances:
Budgeted activity levels for the period:
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. Forest Trails has planned to purchase new equipment worth $25,000, and to sell equipment for $8,000 (Original purchase price $15,000, accumulated depreciation $10,000) to help finance the purchase.
What is the budgeted level of Cash Flow from Operating Activities?

A) $58,700 positive cash flow
B) $72,000 positive cash flow
C) $63,200 positive cash flow
D) $73,200 positive cash flow
E) None of the above

Question 10

What is the role of the budget director?

Question 11

What is a Master Budget?

Question 12

What is a Safety Stock?