Exam 9: Profit Planning

Figure 9-4. Bickford Company plans to sell 135,000 units in November and 180,000 units in December.Bickford's policy is that 10 percent of the following month's sales must be in ending inventory.On November 1,there were 14,000 units in inventory. It takes 30 minutes of direct labor time to make one unit.Direct labor wages average $17 per hour.Variable overhead is applied at the rate of $5 per direct labor hour.Fixed overhead is budgeted at $56,500 per month. Refer to Figure 9-4.What is the direct labor cost budgeted for November?

Watson Corporation manufactures boxes.The estimated numbers of boxes sold for the first three months of 2011 are as follows: Finished goods inventory at the end of December was 600 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.Watson Corporation expects to sell the boxes for $5 each.April 2011 sales are projected at 4,500 boxes.How many boxes should be produced in February?

_________________ are used to ensure that budgeted costs can be realistically compared with costs for actual levels of activity.

The __________________ shows the expected cost of all production costs other than direct materials and direct labor.

Ideally,managers are held accountable for controllable costs.

The ending finished goods inventory budget supplies information needed for the

Rodriquez Company budgeted the following sales in units: Rodriquez's policy is to have 20% of the following month's sales in inventory.On January 1,inventory equaled 7,500 units.February production in units is

The selling and administrative expenses budget is part of the operating budgets.

Figure 9-9. Yummy Jams Company produces a line of jams.Yummy's estimated production of jars of jam for the fourth quarter of the year is as follows: Each jar requires half a pound of berries.Yummy prefers to buy the freshest berries,so its policy is to have just 3 percent of the following month's production needs in ending inventory.On October 1,the company had 1,125 pounds of berries in inventory.Yummy's pays $0.60 per pound of berries.It buys all berries on account and typically pays 40 percent of a month's purchases in that month,and the remaining 60 percent the following month. Refer to Figure 9-9.What is the dollar cost of purchases for October?

____ occurs when a manager deliberately underestimates revenues or overestimates costs.

Suppose that a company has the following accounts receivable collection pattern: All sales are on credit.If credit sales for January and February are $200,000 and $100,000 respectively,the cash collection for February is

If the initial cash budget indicates a cash deficiency,the company must go out of business.

You decide You are the senior accountant at Cannon Manufacturing and have been asked by the budget director to prepare the production budget for the upcoming quarter.The budget director stated that they chose you to prepare this budget because it is an important part of the overall operating budget and financial budget.Explain what the production budget calculates and how the production budget would affect other operating budgets and the financial budget.

In a (n)____,as one month expires,an additional month in the future is added to the budget so that the company always has a 12-month plan on hand.

Dickson Company has the following projected account balances for September 30 of the current year: Required:

Rivers Company purchases merchandise on account.In general,Rivers pays 50 percent in the month of purchase and 50 percent in the following month.All payments in the month of purchase qualify for a 2 percent cash discount.First quarter budgeted purchases are:

A strategic plan identifies strategies for future activities and operations,generally covering at least five years.

__________________ is looking ahead to see what actions should be taken to realize particular goals.

Shorter Company developed the following data for the month of June.

Jones Corporation has the following budgeted sales for the selected four-month period: Required: