Exam 22: Master Budgets and Planning

Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August.The direct materials requirement per unit is 2 ounces.The company has determined that it wants to have safety stock of direct materials on hand at the end of each month to complete 20% of the units budgeted in the following month.There was 3,160 ounces of direct material in inventory at the start of July.The total cost of direct materials purchases for the July direct materials budget,assuming the materials cost $1.15 per ounce,is:

If budgeted beginning inventory is $8,300,budgeted ending inventory is $9,400,and budgeted cost of goods sold is $10,260,budgeted purchases should be:

Frankie's 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:

Groundworks Company budgeted the following credit sales during the current year: September,$90,000;October,$123,000;November,$105,000;December,$111,000.Experience has shown that cash from credit sales is received as follows: 10% in the month of sale,50% in the first month after sale,35% in the second month after sale,and 5% is uncollectible.How much cash should Groundworks Company expect to collect in November from all current and past credit sales?

Western Company is preparing a cash budget for June.The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during June.Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000.As of May 31,the company owes $15,000 to the bank.To maintain the $10,000 required balance,during June the company must:

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 not collected.Compute the amount of cash received from total sales for May.

Which of the following budgets is not completed before a cash budget is prepared?

Addams,Inc. ,is preparing its master budget for the second quarter.The following sales and production data have been forecasted: Finished goods inventory on March 31: 120 units Raw materials inventory on March 31: 450 pounds Desired ending inventory each month: Finished goods: 30% of next month's sales Raw materials: 25% of next month's production needs Number of pounds of raw material required per finished unit: 4 lbs. How many pounds of raw materials should be purchased in April?

Junior Snacks reports the following information from its sales budget: All sales are on credit and are expected to be collected 40% in the month of sale and 60% in the month following sale.The total amount of cash expected to be received from customers in November is:

Masterson Company's budgeted production calls for 56,000 liters in April and 52,000 liters in May of a key raw material that costs $1.85 per liter.Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials.The January 1 inventory for this material is 16,800 liters.What is the budgeted cost of materials purchases for April?

The manufacturing budgets include the sales budget and the budgeted income statement.

All of the following are necessary for budgets to be effective except:

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 most useful budget figures are developed:

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 B is 3,000 units.Budgeted purchases of Product A for the year would be:

A rolling budget is a specific budget application relevant only to a merchandising company.

A cash budget shows the expected cash receipts and cash expenditures during the budget period.

The production budget for Greski Company revealed the following production volume for the months of July-September.Each unit produced requires 2.5 hours of direct labor.The direct labor rate is predicted to be $16 per hour in all months.Prepare a direct labor budget for Greski Company for July-September.

In preparing financial budgets:

The merchandise purchases budget is the starting point for preparing the master budget.