Exam 22: Master Budgets and Planning

Flagstaff Company has budgeted production units for July of 7,900 units.Variable factory overhead is $1.20 per unit.Budgeted fixed factory overhead is $19,000,which includes $3,000 of factory equipment depreciation.Compute the total budgeted overhead to be reported on the factory overhead budget for the month.

Which of the following must be prepared before the direct labor budget?

In a company that employs continuous budgeting on a quarterly basis and has an accounting period that ends December 31 of each year,what period would the first revision and update to the January through December 2015 budget cover?

The Gardner Company expects sales for October of $248,000.Experience suggests that 45% of sales are for cash and 55% are on credit.The company collects 50% of its credit sales in the month of sale and 50% in the month following sale.Budgeted Accounts Receivable on September 30 is $67,000.What is the amount of cash expected to be collected in October?

Zhang Industries sells a product for $700.Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%.Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars.Assume 30% of Zhang's sales are for cash.The remaining 70% are credit sales;these customers pay in the month following the sale.Compute the budgeted cash receipts for June.

The master budgeting process typically begins with the sales budget and ends with a cash budget and:

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months: Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase.The December Accounts Payable balance is $6,500.The budgeted cash payments for materials in January are:

The master budget is a small component of the comprehensive budget.

Which of the following factors is least likely to be considered in preparing a sales budget?

If budgeted beginning inventory is $8,300,budgeted ending inventory is $9,400,and cost of goods sold is expected to be $10,260,then budgeted purchases should be $11,360. Budgeted purchases = $9,400 + $10,260 - $8,300 = $11,360

A company's history indicates that 20% of its sales are for cash and the rest are on credit.Collections on credit sales are 30% in the month of the sale,50% in the next month,and 15% the following month.Projected sales for January,February,and March are $60,000,$85,000 and $95,000,respectively.The March expected cash receipts from all current and prior credit sales is:

There are at least five benefits from budgeting.Identify two of these benefits: (1)_______________________________________ (2)_______________________________________ any two of the above five answers are acceptable solutions

The task of preparing a budget should be the sole task of the most important department in an organization.

Bengal Co.provides the following sales forecast for the next three months: The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales.Finished goods inventory on June 30 is 1,250 units.The budgeted production units for July are:

The process of planning future business actions and expressing them as a formal plan is called:

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 credit sales for June.

Oxford,Inc. ,is preparing its master budget for the quarter ended June 30.It sells a single product for $40 each.Sales are 60% cash and 40% on credit.All credit sales are collected in the month following the sale.At March 31,the balance in accounts receivable is $12,000,which represents the uncollected balance on March sales.Budgeted sales for the next four months follow: The product cost is $20 per unit,and desired ending inventory is 60% of the following month's sales in units.Inventory at March 31 is 480 units.Purchases are paid 50% in the month of purchase and 50% in the following month.At March 31,the balance in accounts payable is $11,000,which represents the unpaid purchases from March.Operating expenses are paid in the month incurred and consist of: • Commissions (10% of sales) • Shipping (3% of sales) • Office salaries ($3,000 per month) • Rent ($5,000 per month) Depreciation is $2,000 per month.Income taxes are 40%,and will be paid on July 1.There are no taxes payable at March 31.A minimum cash balance of $12,000 is required,and the beginning cash balance is $12,000.Loans are obtained at the end of any month when a cash shortage occurs.Interest is 1% per month based on the beginning of the month loan balance and is paid at each month end.If the ending cash balance exceeds the minimum,the excess will be applied to repaying any outstanding loan balance.At March 31,the loan balance is $2,000.Prepare a master budget (round all dollar amounts to the nearest whole dollar)for each of the months of April,May,and June that includes the: • Sales budget • Schedule of cash receipts • Merchandise purchases budget • Schedule of cash disbursements for purchases of merchandise • Schedule of cash disbursements for selling and administrative expenses (combined) • Cash budget,including information on the loan balance • Budgeted income statement for the quarter

The following information is available for Jergenson Company: a.The Cash Budget for March shows a bank loan of $10,000 and an ending cash balance of $48,000. b.The Sales Budget for March indicates sales of $120,000.Accounts receivable is expected to be 70% of the current-month sales. c.The Merchandise Purchases Budget indicates that $90,000 in merchandise will be purchased in March on account and ending inventory for March is predicted to be 600 units @ $35.Purchases on account are paid 100% in the month following the purchase. d.The Budgeted Income Statement shows a net income of $48,000 and $21,000 in income tax expense for the quarter ended March 31.Accrued taxes will be paid in April. e.The Balance Sheet for February shows equipment of $77,000 with accumulated depreciation of $28,000,common stock of $25,000 and retained earnings of $8,000.There are no changes budgeted in the equipment or common stock accounts. Prepare a budgeted balance sheet for March.

Calgary Industries is preparing a budgeted income statement for 2015 and has accumulated the following information.Predicted sales for the year are $730,000 and cost of goods sold is 40% of sales.The expected selling expenses are $81,000 and the expected general and administrative expenses are $90,000,which includes $23,000 of depreciation.The companies income tax rate is 30%.The budgeted net income for 2015 is:

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