Deck 8: Budgeting for Planning and Control

Question 1

Operating budgets are

A) a forecast of expected operating expenses.
B) a forecast of operating expenses and related revenues.
C) a forecast of units of production.
D) concerned with the income-generating activities of a firm.

Answer 1

D

Question 2

Which of the following statement is correct regarding a continuous budget?

A) The budget is prepared for a one-year period that corresponds to the company's fiscal year.
B) A continuous budget is a monthly budget.
C) As a month/period expires in the budget, an additional month/period in the future is added so the company always has a 12-month budget on hand.
D) None of these

Answer 2

C

Question 3

Which of the following is the most common starting point in the information gathering process for budgeting?

A) the personnel forecast
B) the sales forecast
C) the production forecast
D) the projected income statement

Answer 3

B

Question 4

Which of the following factors is NOT an advantage of preparing operating budgets?

A) It provides resource information that can be used to improve decision making.
B) It improves communication and coordination.
C) It aids in the use of resources and employees by setting a benchmark that can be used for the subsequent evaluation of performance.
D) It saves time and resources.

Question 5

Amy Company produces and sells bikes.It expects to sell 15,000 bikes in March 2011 and had 1,200 bikes in finished goods inventory at the end of February 2011.Amy Company would like to complete operations in March with at least 1,500 completed bikes in inventory.The bikes sell for $100 each.

- How many bikes would be produced in March 2011?

A) 15,300 bikes
B) 15,000 bikes
C) 14,700 bikes
D) 13,800 bikes

Question 6

Which of the following is NOT an advantage of budgeting?

A) It forces managers to plan.
B) It provides resource information that can be used to improve decision making.
C) It aids in the use of resources and employees by setting a benchmark that can be used for the subsequent evaluation of performance.
D) It provides organizational independence.

Question 7

_______________ is the process of setting standards, receiving feedback on actual performance, and taking corrective action whenever actual performance deviates significantly from planned performance.

A) Monitoring
B) Control
C) Eye balling
D) Comparing

Question 8

Which of the following is an operating budget?

A) budgeted statement of cash flows
B) capital expenditures budget
C) budgeted income statement
D) cash budget

Question 9

The _______________ has the responsibility to review the budget, provide policy guidelines and budgetary goals, resolve differences that may arise as the budget is prepared, approve the final budget, and monitor the actual performance of the organization as the year unfolds.

A) president
B) budget director
C) controller
D) budget committee

Question 10

A _______________ is a moving twelve-month budget.

A) continuous budget
B) flexible budget
C) zero-based budget
D) both a and b

Question 11

Which of the following is NOT a component of the master budget?

A) Sales Budget
B) Capital Budget
C) Cost of Goods Sold Budget
D) Budget to Actual Variance Analysis

Question 12

_______________ are comprehensive financial plans made up of various individual departmental and activity budgets.

A) Master budgets
B) Operating budgets
C) Financial budgets
D) Continuous budgets

Question 13

_______________ are concerned with the inflows and outflows of cash and with financial position.

A) Master budgets
B) Operating budgets
C) Financial budgets
D) Continuous budgets

Question 14

Amy Company produces and sells bikes.It expects to sell 15,000 bikes in March 2011 and had 1,200 bikes in finished goods inventory at the end of February 2011.Amy Company would like to complete operations in March with at least 1,500 completed bikes in inventory.The bikes sell for $100 each.

-What would be the total sales for March 2011?

A) $1,650,000
B) $1,380,000
C) $1,470,000
D) $1,500,000

Question 15

The budget committee

A) has the responsibility to review the budget.
B) resolves differences that may arise as the budget is prepared.
C) prepares financial statements for the auditor.
D) both a and b

Question 16

_______________ are the quantitative expressions of plans stated in either physical or financial terms or both.

A) Budgets
B) Financial statements
C) Cost of goods sold statements
D) Cost of goods manufactured statements

Question 17

Control can be defined as

A) the process of setting standards, receiving feedback on actual performance, and taking corrective action whenever actual performance deviates significantly from plan.
B) a quantification of plans, stated in either physical or financial terms, or both.
C) identification of corporate objectives.
D) a comprehensive financial plan.

Question 18

Which of the following is NOT a responsibility of the budget committee?

A) prepare actual financial statements
B) provide policy guidelines
C) provide budgeting goals
D) resolve differences that may arise as the budget is prepared

Question 19

_______________ are concerned with the income-generating activities of a firm.

A) Master budgets
B) Operating budgets
C) Financial budgets
D) Continuous budgets

Question 20

The _______________ is responsible for directing and coordinating the overall budgeting process.

A) budget committee
B) president
C) budget director
D) treasurer

Question 21

Figure 8-2 Oriental Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 are as follows:
Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January 2011 sales is projected at 16,000 lamps.

-Refer to Figure 8-2.Oriental Lamp Company manufactures lamps. How many lamps should be produced in October?

A) 10,000 lamps
B) 14,000 lamps
C) 9,500 lamps
D) 10,500 lamps

Question 22

Jordan Manufacturing Company expects to incur the following per unit costs for 1,000 units of production:

-What is the total amount of direct labor included in the direct labor budget?

A) $6,000
B) $28,500
C) $6
D) $7,500

Question 23

Figure 8-2 Oriental Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 are as follows:
Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January 2011 sales is projected at 16,000 lamps.

-
Refer to Figure 8-2.In going from the sales budget to the production budget, adjustments to the sales budget need to be made for

A) finished goods inventories.
B) cash receipts.
C) factory overhead costs.
D) selling expenses.

Question 24

Figure 8-3 Bug Company manufactures buggies.Manufacturing a buggy takes 20 units of wood and 1 unit of steel.Scheduled production of buggies for the next two months is 500 and 600 units, respectively.Beginning inventory is 4,000 units of wood and 30 units of steel.The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months.

-Refer to Figure 8-3.How many units of steel are expected in the material inventory at the end of the second month?

A) 30 units
B) 45 units
C) 40 units
D) 35 units

Question 25

Gerald Company manufactures books.Manufacturing a book takes 10 units of A1 and 1 unit of A2.Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively.Beginning inventory is 4,000 units of A1 and 30 units of A2.The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months.

- Based on this information, the number of units of A1 that needs to be purchased by Gerald during the first month is

A) 9,500 units.
B) 10,000 units.
C) 1,000 units.
D) 10,500 units.

Question 26

Ben Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000 units; June, 28,000 units.Sales totaled 16,000 units in March.The March finished goods inventory was 4,000 units.End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales.

-The planned ending inventory of finished goods for May is

A) 5,600 units.
B) 4,000 units.
C) 5,000 units.
D) 3,200 units.

Question 27

Figure 8-2 Oriental Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 are as follows:
Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January 2011 sales is projected at 16,000 lamps.

-
Refer to Figure 8-2.What is the expected sales revenue for December?

A) $250,000
B) $350,000
C) $325,000
D) $100,000

Question 28

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months of 2011 are as follows: Finished goods inventory at the end of December was 900 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.General Corporation expects to sell the boxes for $5 each.April 2011 sales is projected at 4,500 boxes.

-
How many boxes should be produced in February?

A) 4,140 boxes
B) 4,200 boxes
C) 4,260 boxes
D) 3,900 boxes

Question 29

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months of 2011 are: Finished goods inventory at the end of December was 900 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.General Corporation expects to sell the boxes for $5 each.April 2011 sales is projected at 4,500 boxes.

-
What is the expected sales revenue for March?

A) $15,000
B) $21,000
C) $19,500
D) $4,500

Question 30

Gerald Company manufactures books.Manufacturing a book takes 10 units of A1 and 1 unit of A2.Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively.Beginning inventory is 4,000 units of A1 and 30 units of A2.The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months.

-How many units of A2 are expected in the raw material inventory at the end of the second month?

A) 30 units
B) 45 units
C) 40 units
D) 35 units

Question 31

Figure 8-1 Canceco Company produces and sells pillows.It expects to sell 10,000 pillows in the year 2012 and had 1,000 pillows in finished goods inventory at the end of 2011.Canceco would like to complete operations in the year 2012 with at least 1,250 completed pillows in inventory.There is no ending work-in-process inventory.The pillows sell for $5 each.

-
Refer to Figure 8-1.How many pillows would be produced in the year 2012?

A) 10,000 pillows
B) 11,000 pillows
C) 11,250 pillows
D) 10,250 pillows

Question 32

The following forecasted sales pertain to Norah Company: The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of the next month's sales.
How many units are expected to be produced in April?

A) 21,000 units
B) 19,000 units
C) 25,000 units
D) 20,000 units

Question 33

The following forecasted sales pertain to Reject City: Reject City has a selling price of $5 per unit and expects to maintain ending inventories equal to 25 percent of next month's sales.
How many units are expected to be produced in June?

A) 36,000 units
B) 50,000 units
C) 82,000 units
D) 42,000 units

Question 34

Figure 8-1 Canceco Company produces and sells pillows.It expects to sell 10,000 pillows in the year 2012 and had 1,000 pillows in finished goods inventory at the end of 2011.Canceco would like to complete operations in the year 2012 with at least 1,250 completed pillows in inventory.There is no ending work-in-process inventory.The pillows sell for $5 each.

-
Refer to Figure 8-1.What would be the total sales for the year 2012?

A) $50,000
B) $55,000
C) $56,250
D) $51,250

Question 35

Figure 8-3 Bug Company manufactures buggies.Manufacturing a buggy takes 20 units of wood and 1 unit of steel.Scheduled production of buggies for the next two months is 500 and 600 units, respectively.Beginning inventory is 4,000 units of wood and 30 units of steel.The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months.

-Refer to Figure 8-3.What is the number of units of wood that need to be purchased by Bug Company during the first month?

A) 1,000 units
B) 9,500 units
C) 500 units
D) 10,000 units

Question 36

Figure 8-2 Oriental Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 are as follows:
Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January 2011 sales is projected at 16,000 lamps.

-
Refer to Figure 8-2.How many lamps should be produced in November?

A) 11,000 lamps
B) 10,500 lamps
C) 14,000 lamps
D) 13,750 lamps

Question 37

Gerald Company manufactures books.Manufacturing a book takes 10 units of A1 and 1 unit of A2.Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively.Beginning inventory is 4,000 units of A1 and 30 units of A2.The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months.

-How many units of A1 does Gerald Company expect to use in production during the second month?

A) 12,000 units
B) 12,500 units
C) 10,000 units
D) 10,750 units

Question 38

Figure 8-3 Bug Company manufactures buggies.Manufacturing a buggy takes 20 units of wood and 1 unit of steel.Scheduled production of buggies for the next two months is 500 and 600 units, respectively.Beginning inventory is 4,000 units of wood and 30 units of steel.The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months.

-
Refer to Figure 8-3.How many units of wood are expected to be used in production during the second month?

A) 12,500 units
B) 10,000 units
C) 15,000 units
D) 12,000 units

Question 39

Ben Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000 units; June, 28,000 units.Sales totaled 16,000 units in March.The March finished goods inventory was 4,000 units.End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales.

-The planned production for Ben Company for April is

A) 19,200 units.
B) 20,800 units.
C) 21,200 units.
D) 24,800 units.

Question 40

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months of 2011 are as follows: Finished goods inventory at the end of December was 900 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.General Corporation expects to sell the boxes for $5 each.April 2011 sales is projected at 4,500 boxes.

-
How many boxes should be produced in January?

A) 3,060 boxes
B) 2,940 boxes
C) 3,000 boxes
D) 3,840 boxes

Question 41

Van Gogh Inc.is constructing its marketing budget.
Commissions are $3 per unit sold.Salesperson salaries are $100,000 per quarter.Depreciation is $25,000 per quarter.Travel is $10,000 per quarter.Advertising is $50,000 in the first quarter; $40,000 in the second quarter; $60,000 in the third quarter; and $55,000 in the fourth quarter.What is the budgeted marketing expense for the third quarter?

A) $795,000
B) $735,000
C) $360,000
D) $345,000

Question 42

What is the formula used to compute the units to be produced?

A) Units produced = Units sold
B) Units produced = Units sold + Units in beginning inventory + Units in ending inventory
C) Units produced = Units sold + Units in beginning inventory - Units in ending inventory
D) Units Produced = Units sold - Units in beginning inventory + Units in ending inventory

Question 43

Denver Corporation has the following sales forecast for the next quarter: July, 4,000 units; August, 4,800 units; September, 5,600 units
Sales totaled 3,200 units in June.The June ending finished goods inventory was 800 units.End-of-month finished goods inventory levels are planned to be equal to 30 percent of next month's planned sales.

-
The planned production for Denver Corporation for July is

A) 3,360 units.
B) 4,640 units.
C) 1,440 units.
D) 5,440 units.

Question 44

Which of the following is a financial budget?

A) capital expenditures budget
B) sales budget
C) budgeted income statement
D) overhead budget

Question 45

Judy's Company has a sales budget for next month of $150,000.Cost of goods sold is expected to be 40 percent of sales.All goods are purchased in the month used and paid for in the month following purchase.The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired.Beginning accounts payable is $38,000.

-The cost of goods sold for next month is expected to be

A) $40,000.
B) $60,000.
C) $90,000.
D) $89,000.

Question 46

Which of the following is NOT a component of the Cash Budget?

A) Sales forecast
B) Cash Disbursements
C) Financing
D) Cash excess or deficiency

Question 47

Olson Company has a sales budget for next month of $50,000.Cost of goods sold is expected to be 60 percent of sales.All goods are purchased in the month used and paid for in the month following their purchase.The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired.Beginning accounts payable is $13,000.

-The cost of goods sold for next month is expected to be

A) $29,500.
B) $30,500.
C) $50,000.
D) $30,000.

Question 48

In a merchandising organization, the merchandise purchases budget replaces what budget from a manufacturing firm?

A) the administrative expense budget
B) the pro-forma income statement
C) the production budget
D) the cost of goods sold budget

Question 49

Denver Corporation has the following sales forecast for the next quarter: July, 4,000 units; August, 4,800 units; September, 5,600 units
Sales totaled 3,200 units in June.The June ending finished goods inventory was 800 units.End-of-month finished goods inventory levels are planned to be equal to 30 percent of the next month's planned sales.

-
The planned ending inventory of finished goods for August is

A) 1,200 units.
B) 1,680 units.
C) 1,460 units.
D) 3,200 units.

Question 50

Jordan Manufacturing Company expects to incur the following per unit costs for 1,000 units of production:

-What is the total amount of overhead included in the overhead budget?

A) $4,500
B) $3,000
C) $11,250
D) $7,500

Question 51

Michael Corporation has the following sales forecasts for the first three months of 2006: Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month.
Minimum cash balance is $20,000.Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).How much cash would be collected in March from sales?

A) $32,000
B) $58,400
C) $48,000
D) $34,400

Question 52

Olson Company has a sales budget for next month of $50,000.Cost of goods sold is expected to be 60 percent of sales.All goods are purchased in the month used and paid for in the month following their purchase.The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired.Beginning accounts payable is $13,000.

-How much merchandise inventory will Olson Company need to purchase next month?

A) $29,000
B) $29,500
C) $30,000
D) $30,500

Question 53

The following forecasted sales pertain to Norah Company: The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of the next month's sales.
What is the budgeted beginning balance in units for finished goods inventory on June 1?

A) 2,500 units
B) 2,000 units
C) 4,000 units
D) 3,000 units

Question 54

Michael Corporation has the following sales forecasts for the first three months of 2006: Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month.
What is the cash balance at the end of January, assuming that cash is received only from customers and that $48,000 is paid out during January?

A) $19,400
B) $23,400
C) $20,600
D) $21,000

Question 55

The following forecasted sales pertain to Reject City: Reject City has a selling price of $5 per unit and expects to maintain ending inventories equal to 25 percent of next month's sales.
What is the budgeted beginning balance in units for finished goods inventory on August 1?

A) 8,000 units
B) 6,000 units
C) 10,000 units
D) 6,400 units

Question 56

Figure 8-4 CD Productions needs to know its anticipated cash inflows for the next quarter by month.Cash sales are 10 percent of total sales each month.Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale.Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000.Accounts receivable on March 31 were $60,000.

-
Refer to Figure 8-4.The expected cash collections of CD Productions for June are

A) $48,000.
B) $98,000.
C) $68,000.
D) $89,000.

Question 57

Denver Corporation has the following sales forecast for the next quarter: July, 4,000 units; August, 4,800 units; September, 5,600 units
Sales totaled 3,200 units in June.The June ending finished goods inventory was 800 units.End-of-month finished goods inventory levels are planned to be equal to 30 percent of the next month's planned sales.Records showed that each unit is budgeted at 2 pounds of materials costing $3 per pound.Direct labor was budgeted at .5 direct labor hours per unit at a wage of $20 per hour.Budgeted variable overhead is $1.50 per direct labor hour.Fixed overhead is budgeted at $250,000 for the year, and 50,000 units are expected to be produced.

-
After preparing a finished goods inventory budget for August, what is the total ending inventory cost?

A) $26,100 units.
B) $31,755 units.
C) $69,600 units.
D) $36,540 units.

Question 58

Judy's Company has a sales budget for next month of $150,000.Cost of goods sold is expected to be 40 percent of sales.All goods are purchased in the month used and paid for in the month following purchase.The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired.Beginning accounts payable is $38,000.

- How much merchandise inventory will Judy's need to purchase next month?

A) $61,000
B) $60,000
C) $65,000
D) $59,000

Question 59

Which of the following is a financial budget?

A) cost of goods sold budget
B) budgeted balance sheet
C) marketing expense budget
D) production budget

Question 60

Denver Corporation has the following sales forecast for the next quarter: July, 4,000 units; August, 4,800 units; September, 5,600 units
Sales totaled 3,200 units in June.The June ending finished goods inventory was 800 units.End-of-month finished goods inventory levels are planned to be equal to 30 percent of the next month's planned sales.Records showed that each unit is budgeted at 2 pounds of materials costing $3 per pound.Direct labor was budgeted at .5 direct labor hours per unit at a wage of $20 per hour.Budgeted variable overhead is $1.50 per direct labor hour.Fixed overhead is budgeted at $250,000 for the year, and 50,000 units are expected to be produced.

-
The beginning finished inventory is valued at $31,320.
After preparing a finished goods inventory budget for August, what is the cost of goods sold for August?

A) $104,400
B) $109,620
C) $67,860
D) $140,940

Question 61

Figure 8-4 CD Productions needs to know its anticipated cash inflows for the next quarter by month.Cash sales are 10 percent of total sales each month.Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale.Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000.Accounts receivable on March 31 were $60,000.

-
Refer to Figure 8-4.CD Productions would expect to have an accounts receivable balance on June 30 of

A) $37,800.
B) $42,000.
C) $32,000.
D) $28,800.

Question 62

Figure 8-7 Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget.Data for the July master budget are given below:
The June 30th balance sheet follows:
Actual sales for June and budgeted sales for July, August, and September are given below:
Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000.

-
Refer to Figure 8-7.What is the balance of the accounts payable at the end of July?

A) $55,500
B) $93,000
C) $120,000
D) $166,500

Question 63

Sandy Corporation has a sales budget for next month of $50,000.Cost of goods sold is expected to be 60 percent of sales.All goods are purchased in the month used and paid for in the month following their purchase.The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired.Beginning accounts payable is $13,000. The ending accounts payable for Sandy Corporation should be

A) $30,500.
B) $30,000.
C) $13,000.
D) $29,500.

Question 64

Figure 8-6 The following forecasted sales pertain to Tigers, Inc.
Collection pattern:
60 percent in month of sale
40 percent in month following the sale
The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month's sales.

-
Refer to Figure 8-6.How much is Accounts Receivable as of October 31?

A) $420,000
B) $460,000
C) $240,000
D) none of the above

Question 65

Freedom Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month.Cash sales are 20 percent of total sales each month.Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale.Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000. Accounts receivable on December 31 were $45,000.

-
The expected cash collections of Freedom Manufacturing Company for March are

A) $90,000.
B) $69,600.
C) $64,500.
D) $114,600.

Question 66

Figure 8-6 The following forecasted sales pertain to Tigers, Inc.
Collection pattern:
60 percent in month of sale
40 percent in month following the sale
The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month's sales.

-
Refer to Figure 8-6.How many dollars are expected to be collected in October?

A) $420,000
B) $460,000
C) $240,000
D) $510,000

Question 67

Kara Corporation has the following sales forecasts for the selected three-month period in 2011: Seventy percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
Minimum cash balance is $10,000.Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).

-
How much cash would be collected in September from sales?

A) $15,400
B) $17,000
C) $16,000
D) $20,000

Question 68

Figure 8-7 Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget.Data for the July master budget are given below:
The June 30th balance sheet follows:
Actual sales for June and budgeted sales for July, August, and September are given below:
Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000.

-
Refer to Figure 8-7.What is the balance of the retained earnings account at the end of July?

A) $94,000
B) $188,000
C) $360,000
D) $398,000

Question 69

When budgets are used for control,

A) budgeted amounts from different years are compared.
B) actual amounts from different years are compared.
C) budgeted amounts are compared to actual amounts.
D) none of these.

Question 70

A budget that is developed around one particular level of activity is

A) a static budget.
B) a continuous budget.
C) an incremental budget.
D) none of these.

Question 71

Freedom Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month.Cash sales are 20 percent of total sales each month.Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale.Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000. Accounts receivable on December 31 were $45,000.

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Freedom Manufacturing Company would expect to have an accounts receivable balance on March 31 of

A) $45,000.
B) $55,500.
C) $39,600.
D) $90,000.

Question 72

Figure 8-7 Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget.Data for the July master budget are given below:
The June 30th balance sheet follows:
Actual sales for June and budgeted sales for July, August, and September are given below:
Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000.

-Refer to Figure 8-7.What are the total assets at the end of July?

A) $439,000
B) $446,500
C) $515,500
D) $654,500

Question 73

Figure 8-7 Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget.Data for the July master budget are given below:
The June 30th balance sheet follows:
Actual sales for June and budgeted sales for July, August, and September are given below:
Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000.

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Refer to Figure 8-7.What is the balance of the cash account at the end of July?

A) $8,500
B) $15,500
C) $63,500
D) $114,000

Question 74

Figure 8-7 Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget.Data for the July master budget are given below:
The June 30th balance sheet follows:
Actual sales for June and budgeted sales for July, August, and September are given below:
Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000.

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Refer to Figure 8-7.What is the balance of the inventory account at the end of July?

A) $54,000
B) $60,000
C) $124,000
D) $216,000

Question 75

Figure 8-7 Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget.Data for the July master budget are given below:
The June 30th balance sheet follows:
Actual sales for June and budgeted sales for July, August, and September are given below:
Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000.

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Refer to Figure 8-7.What is the balance of the accounts receivable at the end of July?

A) $110,000
B) $288,000
C) $360,000
D) $398,000

Question 76

Figure 8-5 The following forecasted sales pertain to Cordon Corporation:
Collection pattern:
65 percent in month of sale
35 percent in month following sale
Cordon Corporation has a selling price of $2.50 per unit and expects to maintain ending inventories equal to 25 percent of the next month's sales.

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Refer to Figure 8-5.How many dollars are expected to be collected in September?

A) $7,000
B) $40,000
C) $33,000
D) $21,000

Question 77

Figure 8-5 The following forecasted sales pertain to Cordon Corporation:
Collection pattern:
65 percent in month of sale
35 percent in month following sale
Cordon Corporation has a selling price of $2.50 per unit and expects to maintain ending inventories equal to 25 percent of the next month's sales.

-Refer to Figure 8-5.How many dollars are expected to be collected in December?

A) $30,500
B) $37,000
C) $26,500
D) $23,500

Question 78

Kara Corporation has the following sales forecasts for the selected three-month period in 2011: Seventy percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
Minimum cash balance is $10,000.Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).

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What is the cash balance at the end of July, assuming that cash is received only from customers and that $40,000 is paid out during April?

A) $20,000
B) $16,800
C) $6,800
D) $10,800

Question 79

Figure 8-7 Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget.Data for the July master budget are given below:
The June 30th balance sheet follows:
Actual sales for June and budgeted sales for July, August, and September are given below:
Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000.

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Refer to Figure 8-7.What is the balance of the building and equipment (net) account at the end of July?

A) $243,000
B) $250,000
C) $257,000
D) $300,000

Question 80

Sasha Company has a sales budget for next month of $150,000.Cost of goods sold is expected to be 40 percent of sales.All goods are purchased in the month used and paid for in the month following purchase.The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired.Beginning accounts payable is $38,000. For Sasha Company, the ending accounts payable should be

A) $39,000.
B) $61,000.
C) $89,000.
D) $91,000.