Exam 9: Profit Planning

Figure 9-3. Zion Company manufactures sneakers.Production of their new sneaker for the coming three months is budgeted as follows: Each sneaker requires 1.5 hours of direct labor time.Direct labor wages average $13 per hour.Monthly overhead averages $8 per direct labor hour plus fixed overhead of $4,300. Refer to Figure 9-3.What is the direct labor cost budgeted for September?

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 budgeted overhead for November?

Which of the following is an advantage of budgeting?

A company has provided a sales budget for the next four months.It bases its production budget on the sales budget,and has a policy that each month's ending inventory of finished product must be equal to 25% of the following month's sales needs.The direct materials purchases budget is based on the production budget.The company's policy for each month's ending inventory of raw materials is that they must be equal to 10% of the following month's production needs for raw materials.Given this information,the company can prepare direct materials purchases budgets for how many months?

The alignment of managerial and organizational goals is often referred to as _______________.

Figure 9-10. Connor Company produces speaker systems for cars.Estimated sales (in units)in January are 40,000; in February 37,000; and in March 34,000.Each unit is priced at $60.Connor wants to have 35 percent of the following month's sales in ending inventory.That requirement was met on January 1. Each speaker system requires 3 boxes and 15 yards of wire.Boxes cost $4 each and wire is $0.60 per yard.Connor wants to have 20 percent of the following month's production needs in ending raw materials inventory.On January 1,Connor had 24,000 boxes and 100,000 yards of wire in inventory. Refer to Figure 9-10.How many boxes does Connor expect to purchase in January?

Myopic behavior is one of the advantages of participative budgeting.

The master budget is composed of operating budgets and financial budgets.

The budget director is the person responsible for directing and coordinating the organization's overall budgeting process.

Miller Corporation has the following sales budget for the first four months of the current year: Historically,the following trend has been established regarding cash collection of sales: 65 percent in month of sale 25 percent in month following sale 8 percent in second month following sale 2 percent uncollectible The company allows a 2 percent cash discount for payments made by customers during the month of the sale.November and December sales were $400,000 and $240,000,respectively.All sales are on account. Required: Prepare a schedule of budgeted cash collections from sales for January,February,and March.

Which of the following statements is true?

A company anticipates selling $200,000 of goods,of which $15,000 will probably be uncollectible.Which of the following statements is true?

A company expects the following sales for the coming year: Budgeted sales revenue for the year is

The production budget is prepared in units and in dollars.

The ________________ plots a direction for an organization's future activities and operations; it generally covers at least five years.

Monetary incentives include salary increases,bonuses,and promotions.

Required:

The basic structure of a ______________ includes cash receipts,cash disbursements,any excess or deficiency of cash,and financing.

The first budget to be prepared is the sales budget.

Budgets should be based on ideal standards to encourage everyone to reach for the highest level of performance.