Exam 9: Profit Planning

You have decided to throw a party next weekend for 20 friends.The friends are going to bring health food,so all you have to have available are the drinks.You estimate that,on average,each person will drink four bottles of soft drinks.Three of your friends will drink only natural soda without unneeded color - so Sulo Ginger Ale should work well for them.For the others,you decide to buy Sulo Cola.Before going online,you check the refrigerator - you already have six bottles of Sulo Ginger Ale and 14 of Sulo Cola.Since this is the end of the semester - you decide that you don't really want any of the soft drinks on hand after the party.Now,you are ordering on the Internet.

The first step in creating the master budget is the creation of the

Which of the following statements is true?

Figure 9-11. Pallen Company estimated sales of 11,000 units at $40 each,unit cost of goods sold of $22,marketing expense of $65,000 and a 10% commission on each unit sold.Administrative expense is budgeted at $50,000. Refer to Figure 9-11.What is total selling expense?

Wexler Company expects sales of $40,000 in July,$50,000 in August,and $30,000 in September.Wexler's experience is that 40 percent of sales are cash,and the remainder is on account.Accounts receivable are paid: 70 percent in the month of sale,and 25 percent in the following month.

Cash budgeting is important to which of the following?

Budgets improve _________________.

A company has had stable sales and production for several years.Next year,sales are expected to increase by at least 50%.Assuming that the company maintains its policy for desired ending inventories of finished product and direct materials purchases,what will be the likely effect on the desired ending inventory of finished product?

Figure 9-6. Toscano Company makes all its sales on account.Accounts receivable payment experience is as follows: Toscano provided information on sales as follows: Refer to Figure 9-6.What is budgeted cash to be collected on account for the month of August?

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

Depreciation expense on sales equipment appears in a separate line on which of the following budgets?

A continuous budget is a moving 12-month budget.

Trish Morrow owns and operates Yummy Bakery which sells a wide variety of cupcakes.She has compiled the following data and information in order to put together a cash budget for September and October. · Budgeted sales for September are 65,000 cupcakes and 98,000 in October.Each cupcake sells for $3.50. · On average 60 percent are cash sales and 40 percent are done on account. · The company expects to collect 75 percent of credit sales in the month of the sale and 20 percent in the month after the sale. · All necessary raw materials are purchased on account.Purchases are paid 85 percent in the month of the purchase and 15 percent in the following month.Purchases for September are estimated to be $200,000 and $290,000 in October. · Monthly expenses include: o Wages $10,000 o Rent $4,000 o Utilities $3,500 o Insurance $2,500 o Advertising $2,290 · Cash balance on September 1^st was $6,000. · The company has a policy to maintain a minimum cash balance of $5,000.If necessary the company will borrow to meet its short-term needs.All borrowing is done at the beginning of the month and all payments on principal and interest are made at the end of the next month.The annual interest rate is 7%.The company must borrow in multiples of $1,000. · August sales were 43,000 cupcakes and raw materials purchased equal $230,000. Prepare a cash budget for September and October.

Comparing actual results with budgeted results on a periodic basis provides control in a budgetary system.

Traditional organization theory uses which of the following to motivate workers?

What are the advantages of budgeting?

The direct materials purchases budget is based on the sales budget.

The selling and administrative expenses budget includes

Budgets are prepared in which of the following orders?

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 units does Connor expect to produce in February?