Exam 8: Budgeting and Planning

Dane Inc. has forecast purchases on account to be $465,000 in March, 555,000 in April, $630,000 in May, and $735,000 in June. Seventy percent of purchases are paid for in the month of purchase, the remaining 30% are paid in the following month. What are budgeted cash payments for April?

The direct labor budget is based on budgeted sales levels

Which of the following budgets do not provide information needed for the budgeted balance sheet?

Participative budgeting is an approach to budgeting that:

Which of the following is not a component of the master budget?

_____________ are the specific goals that managers want to achieve over a 5- to 10-year horizon.

Jackson Inc. produces leather handbags. The production budget for the next four months is: July 5,000 units, August 7,000, September 7,500, October 8,000. Each handbag requires 0.5 square meters of leather. Jackson Inc.'s leather inventory policy is 30% of next month's production needs. On July 1 leather inventory was expected to be 1,000 square meters. What will leather purchases be in July?

The production budget must be prepared before the sales budget can be prepared

Which of the following is not a component of the cash budget?

The purpose of the cash budget is to:

Operating budgets focus on the financial resources needed to support operations

Which of the following is the forward-looking phase of the planning and control cycle?

Audrey has forecast sales to be $205,000 in February, $270,000 in March, $290,000 in April, and $310,000 in May. The average cost of goods sold is 60% of sales. All sales are made on credit and sales are collected 50% in the month of sale, 30% the month following and the remainder two months after the sale. What is the budgeted Accounts Receivable balance on May 31?

Which of the following budgets would not exist for a merchandising firm?

Sugar Co. has forecast sales for the next three months as follows: July 4,000 units, August 6,000 units, September 7,500 units, and October 8,000 units. Sugar's policy is to have an ending inventory of 40% of the next month's sales needs on hand. July 1 inventory is projected to be 1,500 units. Manufacturing overhead is budgeted to be $17,000 plus $5 per unit produced. a. Prepare a production budget for Sugar for as many months as is possible. b. Prepare a manufacturing overhead budget for the three months July - September. Be sure to include a total for the quarter as well.

The formula for budgeted raw materials purchases is:

From a managerial perspective, which budget is most likely to motivate people to succeed in executing it?

Jackson Inc. produces leather handbags. The production budget for the next four months is: July 5,000 units, August 7,000, September 7,500, October 8,000. Each handbag requires 0.5 square meters of leather. Jackson Inc.'s leather inventory policy is 30% of next month's production needs. On July 1 leather inventory was expected to be 1,000 square meters. What will leather purchases be in August?

Lea Company produces hand tools. Budgeted sales for March are 10,000 units. Beginning finished goods inventory in March is budgeted to be 1,300 units, and ending finished goods inventory is budgeted to be 1,400 units. How many units will be produced in March?

Which of the following terms is generally not used to describe the forward-oriented nature of the budgeting process?