Deck 13: Planning and Budgeting

Question 1

Estimates for direct labor costs are obtained from the engineering and production management,as well as from the Personnel Department.Time estimates come from engineering and production,wage rates from personnel.

Answer 1

True

Question 2

In effect,the cash budget simply restates the budgeted income statement to the cash basis.The income statement reflects accrual accounting while the cash budget emphasizes when cash is received or paid.

Answer 2

False

Question 3

ABC Company has 10,000 units on hand at the beginning of the year and plans to sell 100,000 units during the year.If the ending inventory needs to be twice the beginning inventory,ABC will need to produce 90,000 units during the year.The production will need to be 110,000 units (10,000 + 110,000 - 100,000 = 20,000)

Answer 3

False

Question 4

The Delphi technique uses highly sophisticated computerized time series analysis to reduce the subjectivity surrounding the sales forecast.The Delphi method is qualitative.

Question 5

Ethical conflicts can occur in the budgeting process because managers supply information for the budgets that are then used to evaluate their performance.There is an incentive to bias the estimates,which is a disadvantage of participatory budgeting.

Question 6

Both variable and fixed manufacturing overhead costs are included in the manufacturing overhead budget.Expense items with both types of cost behavior are identified in manufacturing overhead.

Question 7

Bottlenecks in the production process can be discovered by the budgeting process before they occur.The budget will expose capacity problems before they occur.This is one of the advantages of budgeting.

Question 8

Sensitivity analysis is more likely to be used for sales forecasts than for fixed overhead costs.Sales forecasts are the starting point of budgeting,so more effort will be spent assessing the uncertainties.

Question 9

Individual managers' beliefs and expectations are incorporated into the budgeting process using grass roots budgeting procedures.This concept is also called participative budgeting.

Question 10

A master budget consists of (a)organizational goals, (b)strategic long-range profit plan,and (c)tactical short-range profit plan.The master budget is the tactical short-range profit plan.These three are part of an overall organization plan.

Question 11

The production budget must be prepared before the direct materials,direct labor,and overhead budgets can be prepared.The production budget provides the information needed for materials,labor,and overhead budgets.

Question 12

A production budget is not needed for a service organization.This is because there are no inventories in a service organization.The focus shifts to direct (billable)labor.

Question 13

Sales projections are often the most difficult part of the budgeting process because it involves a considerable amount of subjectivity.Sales are uncertain and there are a number of ways of forecasting.

Question 14

The cash budget is normally prepared before the budgeted income statement.The cash budget can be assembled as various items are completed that feed into it;this may or may not be in conjunction with the income statement.

Question 15

The sales budget drives the rest of the budgeting process for both manufacturers and merchandisers.The sales budget sets the tone for the entire budget,or,looking at it another way - the rest of the budget supports the accomplishment of the sales budget.

Question 16

A budget is the plan,stated in financial terms,of how an organization expects to carry out its activities and meet its goals.This statement is a basic definition of a budget.

Question 17

ABC Company wants to have 10,000 units on hand at the end of the year after marketing 100,000 units during the year.If the beginning inventory is 5,000 units,ABC needs to produce 105,000 units during the year.The production will need to be 105,000 units (5,000 + 105,000 - 100,000 = 10,000)

Question 18

The production budget allows management to plan for the resources needed to meet the current sales demand and ensure that inventory levels are sufficient for future sales.This statement describes the basic function of integrating sales and inventory levels to take into account the seasonality found in all businesses.

Question 19

The use of sensitivity analysis techniques allows managers to ask "what-if" questions regarding budget assumptions and estimates.This is the definition of sensitivity analysis.

Question 20

An organization's sales staff is more likely to provide a lower sales forecast than a forecast provided by market researchers.Salespeople have an incentive to bias their forecast since they may be evaluated based on their forecast.

Question 21

In developing a master budget for a manufacturing company,which one of the following items should be done first?

A)Development of a sales budget.
B)Development of the capital budget.
C)Determination of manufacturing capacity.
D)Determination of the advertising budget.

Question 22

Which of the following is not a benefit of budgeting?

A)It reduces the need for tracking actual cost activity.
B)It sets benchmarks for evaluation performance.
C)It uncovers potential bottlenecks.
D)It formalizes a manager's planning efforts.

Question 23

The amount of materials to be purchased during the budget period is equal to budgeted:

A)total production needs plus units in the beginning materials inventory minus the units in the ending materials inventory.
B)total production needs plus units in the ending materials inventory minus the units in the beginning materials inventory.
C)units to be produced plus units in the beginning materials inventory minus the units in the ending materials inventory.
D)units to be produced plus units in the ending materials inventory minus the units in the beginning materials inventory.

Question 24

Which of the following terms is not an alternative for master budget?

A)Budget plan.
B)Static budget.
C)Profit plan.
D)Planning budget.

Question 25

In general,the first budget prepared is the:

A)production budget.
B)direct labor budget.
C)sales budget.
D)overhead budget.

Question 26

Which of the following statements is (are)true regarding the benefits associated with participative budgeting? (A)Goal congruence by divisions means top management need not be concerned with overall profitability.(B)Budget assumptions and estimates are prepared by those closest to the budgeted activity.

A)Only A is true.
B)Only B is true.
C)Both A and B are true.
D)Neither A nor B is true.

Question 27

Which of the following budgets does not require the production budget?

A)Direct materials.
B)Direct labor.
C)Manufacturing overhead.
D)Marketing and administrative expenses.

Question 28

Which of the following statements is (are)true regarding the master budget? (A)A master budget consists of (a)organizational goals, (b)strategic long-range profit plan,and (c)tactical short-range profit plan.(B)A master budget consists of only a budgeted (a)income statement, (b)balance sheet,and (c)stockholders' equity statement.

A)Only A is true.
B)Only B is true.
C)Both A and B are true.
D)Neither A nor B is true.

Question 29

A master budget:

A)drops the current month or quarter and adds a future month or quarter as the current month or quarter is completed.
B)presents a statement of expectations for a period of time but does not present a firm commitment.
C)presents the plan for only one level of activity and does not adjust to changes in the level of activity.
D)presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.

Question 30

The starting point in preparing a comprehensive budget for a manufacturing company limited by its ability to produce and not by its ability to sell is

A)a sales forecast.
B)an estimate of productive capacity.
C)an estimate of cash receipts and disbursements.
D)a projection of fixed asset acquisitions.

Question 31

Long-range planning as a management function is more important:

A)at top management levels.
B)at lower management levels.
C)at middle management levels.
D)for staff functions than line functions.

Question 32

The manufacturing overhead budget requires that costs be separated into their fixed and variable components.Another budget that has this requirement is the:

A)direct labor.
B)direct materials.
C)cost of goods sold.
D)marketing and administrative expenses.

Question 33

Which of the following statements does not reflect a difficulty in preparing the marketing and administrative budget?

A)Managers have discretion about how much money is spent.
B)Managers have discretion about the timing of when money is spent.
C)Marketing and administrative expenses are made up of fixed and variable items.
D)Marketing and administrative expenses normally have a one year time horizon.

Question 34

The statistical method of forecasting that relies heavily on regression models is called:

A)econometric models.
B)Delphi technique.
C)scattergraph method.
D)participative budgeting.

Question 35

Which one of the following budgets would be the last one prepared in the master budget preparation process?

A)Manufacturing overhead budget.
B)Cost of goods sold budget.
C)Marketing cost budget.
D)Direct labor budget.
E)Cash budget.

Question 36

A continuous (rolling)budget:

A)presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.
B)presents a statement of expectations for a period of time but does not present a firm commitment.
C)presents the plan for only one level of activity and does not adjust to changes in the level of activity.
D)drops the current month or quarter and adds a future month or quarter as the current month or quarter is completeD.

Question 37

Which of the following types of accounts would not be included on a budgeted balance sheet?

A)Cash.
B)Assets.
C)Liabilities.
D)Stockholders' equity.
E)Revenues.

Question 38

The forecasting method in which individual forecasts of group members are submitted anonymously and evaluated by the group as a whole is called:

A)trend analysis.
B)econometric models.
C)Delphi technique.
D)regression analysis.

Question 39

Cash disbursements would not include payments for:

A)dividends.
B)income taxes.
C)accounts receivable.
D)capital budget expenditures.

Question 40

The number of units required for production is equal to:

A)budgeted sales plus units in the beginning inventory minus the units in the ending inventory.
B)budgeted sales plus units in the ending inventory minus the units in the beginning inventory.
C)budgeted sales plus the units in the ending inventory.
D)budgeted sales minus the units in the beginning inventory.

Question 41

Assume the Task Company charges 1 1/2% on any balance that is not collected in the month following the month of sale.This charge will also change the collection percentages to 15% cash sales,80% of the balance collected in the month following the sale,16% the second month,and 3% the third month.This stricter credit policy will reduce the estimated sales budgets by 7% each month.What is the amount of cash to be collected in July?

A)$39,199.
B)$35,312.
C)$38,193.
D)$36,242.

Question 42

Hawle Manufacturing Company is in the process of preparing its 2012 budget and is anticipating the following changes: 30% increase in the number of units sold.20% increase in the direct material unit cost.15% increase in the direct labor cost per unit.10% increase in the manufacturing overhead cost per unit.14% increase in the marketing price.7% increase in the administrative expenses.Hawle does not keep any units in inventory.The composition of the cost of finished products during 2012 for materials,direct labor,and factory overhead,respectively,was in the ratio of 3 to 2 to 1.The condensed income statement for 2012 is as follows: What are estimated net sales for 2012,assuming the sales return/gross sales relationship remains constant?

A)$646,893.
B)$585,000.
C)$571,500.
D)$567,450.

Question 43

The Waverly Company has budgeted sales for the year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units.The finished goods inventory at the start of the year is 3,000 units.Scheduled production for the second quarter is (in units):

A)17,500 units.
B)16,500 units.
C)15,000 units.
D)13,000 units.

Question 44

The Tobler Company had budgeted production for the year as follows: Four pounds of raw materials are required for each unit produced.Raw materials on hand at the start of the year total 4,000 lbs.The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in materials.Budgeted purchases of raw materials in the second quarter would be (in lbs. ):

A)48,000 lbs.
B)46,400 lbs.
C)49,600 lbs.
D)54,400 lbs.

Question 45

The Sun Company manufactures a special line of graphic tubing items.The company estimates it will sell 75,000 units of this item in 2012.The beginning finished goods inventory contains 20,000 units.The target for each year's ending inventory is 10,000 units.Each unit requires five feet of plastic tubing.The tubing inventory currently includes 70,000 feet of the required tubing.Materials on hand are targeted to equal three months' production.Any shortage in materials will be made up by the immediate purchase of materials.Sales take place evenly throughout the year.What are the materials requirements (in feet)for 2012?

A)313,750.
B)336,250.
C)363,750.
D)386,250.

Question 46

Sensitivity analysis can best be used in the budgeting process to:

A)explore the uncertainty surrounding their estimates.
B)remove the subjective nature from the budgeting process.
C)answer "what-if" questions regarding key projections.
D)consider alternatives and options in the budgeting process.

Question 47

The Task Company is to begin operations in April.It has budgeted April sales of $30,000,May sales of $34,000,June sales of $40,000,July sales of $42,000,and August sales of $38,000.Note that 10% of each month's sales will represent cash sales;75% of the balance will be collected in the month following the sale,17% the second month,6% the third month,and the balance is bad debts.What is the amount of cash to be collected in the month of August?

A)$40,106.
B)$40,340.
C)$38,036.
D)$44,140.

Question 48

Which of the following budgets is not required in a wholesale organization?

A)Cash.
B)Sales.
C)Production.
D)Cost of goods solD.

Question 49

Hawle Manufacturing Company is in the process of preparing its 2012 budget and is anticipating the following changes: 30% increase in the number of units sold.20% increase in the direct material unit cost.15% increase in the direct labor cost per unit.10% increase in the manufacturing overhead cost per unit.14% increase in the marketing price.7% increase in the administrative expenses.Hawle does not keep any units in inventory.The composition of the cost of finished products during 2012 for materials,direct labor,and factory overhead,respectively,was in the ratio of 3 to 2 to 1.The condensed income statement for 2012 is as follows: What is the estimated cost of goods sold for 2012 assuming the number of units sold does not change?

A)$464,100
B)$402,900
C)$397,800
D)$357,000

Question 50

TRS is a large securities dealer.Last year,the company made 120,000 trades with an average commission of $120.Because of the general economic climate,TRS expects trade volume to decline by 20%.Fortunately,the average commission per trade is likely to increase by 10% because trades are expected to be large in the coming year.What are the estimated commission's revenues for TRS in the coming year?

A)$11,520,000.
B)$12,672,000.
C)$15,552,000.
D)$15,840,000.

Question 51

The Sledge Hammer Company manufactures a line of high quality tools.The company sold 1,000,000 hammers at a price of $4 per unit last year.The company estimates that this volume represents a 20% share of the current hammers market.The market is expected to increase by 5%.Marketing specialists have determined that,as a result of a new advertising campaign and packaging,the company will increase its share of this larger market to 24%.Due to changes in prices,the new price for the hammer will be $4.30 per unit.This new price is expected to be in line with the competition and have no effect on the volume estimates.What are the estimated sales revenues in the coming year?

A)$5,040,000.
B)$5,160,000.
C)$5,418,000.
D)$5,689,000.

Question 52

Davis Corporation had the following transactions in its first year of operations: What is the cash balance at year end?

A)$150,000.
B)$170,000.
C)$210,000.
D)$280,000.

Question 53

The Sun Company manufactures a special line of graphic tubing items.The company estimates it will sell 75,000 units of this item in 2012.The beginning finished goods inventory contains 20,000 units.The target for each year's ending inventory is 10,000 units.Each unit requires five feet of plastic tubing.The tubing inventory currently includes 70,000 feet of the required tubing.Materials on hand are targeted to equal three months' production.Any shortage in materials will be made up by the immediate purchase of materials.Sales take place evenly throughout the year.What is the production budget (in units)for 2012?

A)60,000.
B)65,000.
C)75,000.
D)85,000.

Question 54

The Tobler Company had budgeted production for the year as follows: Four pounds of raw materials are required for each unit produced.Raw materials on hand at the start of the year total 4,000 lbs.The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in materials.Budgeted purchases of raw materials in the third quarter would be (in lbs. ):

A)63,200 lbs.
B)62,400 lbs.
C)56,800 lbs.
D)50,400 lbs.

Question 55

TLC Credit,Inc.has $35.0 million in consumer loans with an average interest rate of 12.0%.The bank also has $30.0 million in home equity loans with an average interest rate of 8.0%.Finally,the bank owns $5.0 million in corporate securities with an average interest rate of 6%.Next year,consumer loans will increase to $40.0 million because of a rate decrease to 10.0%,while home equity loans will increase to $32.0 million at an average interest rate of 6.5%.Unfortunately,the investment in corporate securities will decrease by 20% and the average interest rate will be only 9.0%.What is TLC's estimated change in revenues next year?

A)$460,000 decrease.
B)$460,000 increase.
C)$700,000 increase.
D)$700,000 decrease.

Question 56

Kaufman Industries has just completed its sales forecasts and its marketing department estimates that the company will sell 36,000 units during the upcoming year.In the past,management has maintained inventories of finished goods at approximately three months' sales.However,the estimated inventory at the start of the year of the budget period is only 6,000 units.Sales occur evenly throughout the year.What is the estimated production level (units)for the first month of the upcoming budget year?

A)12,000.
B)9,000.
C)6,000.
D)3,000.

Question 57

The Waverly Company has budgeted sales for the year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units.The finished goods inventory at the start of the year is 3,000 units.Scheduled production for the third quarter is (in units)

A)17,500 units.
B)18,500 units.
C)18,000 units.
D)16,500 units.

Question 58

Which of the following budgets is not required in a service organization?

A)Cash.
B)Sales.
C)Labor.
D)Cost of goods solD.

Question 59

The following budgeted information is provided: One pound of material is required for each finished unit.The inventory of materials at the end of each month should equal 20% of the following month's production needs.At the beginning of Month 1,there was 3,200 lbs.of materials on hand.Purchases of raw materials for Month 1 would be (in pounds):

A)25,000.
B)23,400.
C)17,200.
D)22,000.

Question 60

The Task Company is to begin operations in April.It has budgeted April sales of $30,000,May sales of $34,000,June sales of $40,000,July sales of $42,000,and August sales of $38,000.Note that 10% of each month's sales will represent cash sales;75% of the balance will be collected in the month following the sale,17% the second month,6% the third month,and the balance is bad debts.What is the amount of cash to be collected in the month of July?

A)$34,022.
B)$38,022.
C)$42,000.
D)$37,580.

Question 61

T.Jackson Retail seeks your assistance to develop cash and other budget information for May,June,and July.At April 30,the company had cash of $5,500,accounts receivable of $437,000,inventories of $309,400,and accounts payable of $133,055.The budget is to be based on the following assumptions: SALES:
Each month's sales are billed on the last day of the month.Customers are allowed a 3% discount if payment is made within 10 days after the billing date.Receivables are recorded in the accounts at their gross amounts (not net of discounts).55% of the billings are collected within the discount period;30% are collected by the end of the month;9% are collected by the end of the second month;and 6% turn out to be uncollectible.PURCHASES:
60% of all purchases of merchandise and the marketing,general,and administrative expenses are paid in the month purchased and the remainder in the following month.The number of units in each month's ending inventory is equal to 125% of the next month's units of sales.The cost of each unit of inventory is $30.Marketing,general,and administrative expenses,of which $3,000 is depreciation,are equal to 15% of the current month's sales.Actual and projected sales are as shown below: What are the budgeted merchandise purchases (in dollars)for May?

A)$338,250.
B)$355,500.
C)$357,000.
D)$375,750.

Question 62

The Sport Company is preparing a cash budget for the month of July.The following information on accounts receivable collections is available from Sport's past collection experience: The remaining 4% are not collected and are written off as bad debts.Credit sales to date are as follows: What are the estimated collections in July?

A)$125,250.
B)$131,250.
C)$133,250.
D)$137,250.

Question 63

Selana Company's total costs of operating five sales offices last year were $500,000,of which $70,000 represented fixed costs.Selana has determined that total costs are significantly influenced by the number of sales offices operated.Last year's costs and number of sales offices can be used as the basis for predicting annual costs.What would be the budgeted cost for the coming year if Selana were to operate seven sales offices? (CPA adapted)

A)$700,000.
B)$672,000.
C)$602,000.
D)$586,000.

Question 64

Pardee Company makes 30% of its sales for cash and 70% on account.60% of the account sales are collected in the month of sale,25% in the month following sale,and 12% in the second month following sale.The remainder is uncollectible.The following information has been gathered for the current year: Total cash receipts in Month 4 will be:

A)$38,000.
B)$47,900.
C)$27,230.
D)$36,230.

Question 65

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared?

A)Sales budget,cash budget,direct materials budget,direct labor budget.
B)Production budget,sales budget,direct materials budget,direct labor budget.
C)Sales budget,cash budget,production budget,direct materials budget.
D)Marketing and administrative expense budget,budgeted income statement,cash budget,budgeted balance sheet.

Question 66

The major objectives of any budget system are to: (CIA adapted)

A)define responsibility centers,provide a framework for performance evaluation,and promote communication and coordination among organization segments.
B)define responsibility centers,facilitate the fixing of blame for missed budget predictions,and ensure goal congruence between superiors and subordinates.
C)foster the planning of operations,provide a framework for performance evaluation,and promote communication and coordination among organization segments.
D)foster the planning of operations,facilitate the fixing of blame for missed budget predictions,and ensure goal congruence between superiors and subordinates.

Question 67

A company is formulating its plans for the coming year,including the preparation of its cash budget.Historically,the company's sales are 30% cash.The remaining sales are on credit with the following collection pattern: Sales for the first 5 months of the coming year are forecast as follows: For the month of April,the total cash receipts from sales and collections on account would be: (CIA adapted)

A)$3,729,968.
B)$3,781,600.
C)$4,025,200.
D)$4,408,000.

Question 68

Rizzo Corporation had 17,000 units of brake calipers on hand at the end of 2012.The company's inventory policy was to maintain an ending inventory equal to 15% of the current year's sales.During 2012,Rizzo sold 210,000 units of calipers.How many units did Rizzo purchase in 2012?

A)224,500.
B)210,000.
C)196,150.
D)194,700.

Question 69

The Smart Company is preparing its cash budget for the month of June.The following information is available concerning its accounts receivable: What are the estimated cash receipts from accounts receivable collections in June?

A)$221,250.
B)$227,250.
C)$229,250.
D)$239,250.

Question 70

The Richburn Manufacturing Company increased its merchandise inventory by $17,000 over the year.The company also granted its customers more liberal credit terms which increased the accounts receivable by $37,500.Sales were $975,000 and the accounts payable decreased by $27,500.The gross profit on sales is 45%.Marketing and administrative expenses were $145,000;this included depreciation expense of $4,000.What were the cash disbursements for the year?

A)$721,750.
B)$706,500.
C)$689,500.
D)$599,750.

Question 71

A company is preparing its cash budget for the coming month.All sales are on account.Given the following: What is the expected cash balance of the company at the end of the coming month? (CIA adapted)

A)$15,000.
B)$40,000.
C)$45,000.
D)$70,000.

Question 72

The master budget process usually begins with the: (CMA adapted)

A)production budget.
B)operating budget.
C)financial budget.
D)sales budget.

Question 73

T.Jackson Retail seeks your assistance to develop cash and other budget information for May,June,and July.At April 30,the company had cash of $5,500,accounts receivable of $437,000,inventories of $309,400,and accounts payable of $133,055.The budget is to be based on the following assumptions: SALES:
Each month's sales are billed on the last day of the month.Customers are allowed a 3% discount if payment is made within 10 days after the billing date.Receivables are recorded in the accounts at their gross amounts (not net of discounts).55% of the billings are collected within the discount period;30% are collected by the end of the month;9% are collected by the end of the second month;and 6% turn out to be uncollectible.PURCHASES:
60% of all purchases of merchandise and the marketing,general,and administrative expenses are paid in the month purchased and the remainder in the following month.The number of units in each month's ending inventory is equal to 125% of the next month's units of sales.The cost of each unit of inventory is $30.Marketing,general,and administrative expenses,of which $3,000 is depreciation,are equal to 15% of the current month's sales.Actual and projected sales are as shown below: What are the budgeted cash disbursements during the month of June?

A)$407,520.
B)$419,400.
C)$421,950.
D)$434,280.

Question 74

T.Jackson Retail seeks your assistance to develop cash and other budget information for May,June,and July.At April 30,the company had cash of $5,500,accounts receivable of $437,000,inventories of $309,400,and accounts payable of $133,055.The budget is to be based on the following assumptions: SALES:
Each month's sales are billed on the last day of the month.Customers are allowed a 3% discount if payment is made within 10 days after the billing date.Receivables are recorded in the accounts at their gross amounts (not net of discounts).55% of the billings are collected within the discount period;30% are collected by the end of the month;9% are collected by the end of the second month;and 6% turn out to be uncollectible.PURCHASES:
60% of all purchases of merchandise and the marketing,general,and administrative expenses are paid in the month purchased and the remainder in the following month.The number of units in each month's ending inventory is equal to 125% of the next month's units of sales.The cost of each unit of inventory is $30.Marketing,general,and administrative expenses,of which $3,000 is depreciation,are equal to 15% of the current month's sales.Actual and projected sales are as shown below: What are the budgeted number of inventory units that need to be purchased in July?

A)11,750.
B)15,000.
C)12,250.
D)12,000.

Question 75

The Jack Company is preparing its cash budget for the month of June.The following information is available concerning its inventories: What are the estimated cash disbursements for inventories in June?

A)$264,000.
B)$320,250.
C)$335,250.
D)$341,250.

Question 76

Pardee Company makes 30% of its sales for cash and 70% on account.60% of the account sales are collected in the month of sale,25% in the month following sale,and 12% in the second month following sale.The remainder is uncollectible.The following information has been gathered for Pardee's first year of operations: Total cash receipts in Month 3 will be:

A)$52,200.
B)$53,290.
C)$50,000.
D)$51,510.

Question 77

A company has the following annual budget data: What are total budgeted production costs for the year? (CIA adapted)

A)$2,100,000.
B)$2,180,000.
C)$2,240,000.
D)$2,320,000.

Question 78

T.Jackson Retail seeks your assistance to develop cash and other budget information for May,June,and July.At April 30,the company had cash of $5,500,accounts receivable of $437,000,inventories of $309,400,and accounts payable of $133,055.The budget is to be based on the following assumptions: SALES:
Each month's sales are billed on the last day of the month.Customers are allowed a 3% discount if payment is made within 10 days after the billing date.Receivables are recorded in the accounts at their gross amounts (not net of discounts).55% of the billings are collected within the discount period;30% are collected by the end of the month;9% are collected by the end of the second month;and 6% turn out to be uncollectible.PURCHASES:
60% of all purchases of merchandise and the marketing,general,and administrative expenses are paid in the month purchased and the remainder in the following month.The number of units in each month's ending inventory is equal to 125% of the next month's units of sales.The cost of each unit of inventory is $30.Marketing,general,and administrative expenses,of which $3,000 is depreciation,are equal to 15% of the current month's sales.Actual and projected sales are as shown below: What are the budgeted cash collections during the month of May?

A)$445,894.
B)$453,880.
C)$472,114.
D)$474,934.

Question 79

T.Jackson Retail seeks your assistance to develop cash and other budget information for May,June,and July.At April 30,the company had cash of $5,500,accounts receivable of $437,000,inventories of $309,400,and accounts payable of $133,055.The budget is to be based on the following assumptions: SALES:
Each month's sales are billed on the last day of the month.Customers are allowed a 3% discount if payment is made within 10 days after the billing date.Receivables are recorded in the accounts at their gross amounts (not net of discounts).55% of the billings are collected within the discount period;30% are collected by the end of the month;9% are collected by the end of the second month;and 6% turn out to be uncollectible.PURCHASES:
60% of all purchases of merchandise and the marketing,general,and administrative expenses are paid in the month purchased and the remainder in the following month.The number of units in each month's ending inventory is equal to 125% of the next month's units of sales.The cost of each unit of inventory is $30.Marketing,general,and administrative expenses,of which $3,000 is depreciation,are equal to 15% of the current month's sales.Actual and projected sales are as shown below: What are the budgeted merchandise purchases (in dollars)for June?

A)$319,500.
B)$342,000.
C)$364,500.
D)$375,000.

Question 80

Brown Company has developed the following sales projections for the calendar year: Normal cash collection experience has been that 50% of sales is collected during the month of sale and 45% in the month following the sale.The remaining 5% of sales are never collected.Brown's budgeted cash collections for the third calendar quarter are: (CMA adapted)

A)$450,000.
B)$440,000.
C)$414,000.
D)$360,000.