Exam 8: Budgeting and Planning

Which of the following statements is true about the strategic plan?

Butler Corp. has forecast sales for the next three months as follows: July 14,000 units, August 16,000 units, September 17,500 units, October 18,000 units. Butler's policy is to have an ending inventory of 20% of the next month's sales needs on hand. July 1 inventory is projected to be 2,500 units. Manufacturing overhead is budgeted to be $18,000 (depreciation $2,000, supervision $7,000, factory lease $1,500, maintenance $4,000, training $3,500) plus $5 per unit produced ($3 indirect materials, $2 utilities). a. Prepare a production budget for Butler for as many months as is possible. b. Prepare a manufacturing overhead budget for the three months July through September. Be sure to include a total for the quarter as well.

Skybird has forecast sales for the next three months as follows: July 4,000 units, August 6,000 units, September 7,500 units. Skybird'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. Monthly costs are budgeted as follows: What is budgeted manufacturing overhead cost for July?

Skylark has forecast production for the next three months as follows: July 4,900 units, August 6,600 units, September 7,500 units. Monthly manufacturing overhead is budgeted to be $17,000 plus $6 per unit produced. What is budgeted manufacturing overhead for August?

One advantage of participative budgeting is managers can build in budgetary slack

The basic form of the cash budget is:

If a company produces and sells goods to order, the sales budget and production budget are identical

Portia is a retailer of scrapbooking products. The sales forecast for the coming months is: Portia's sales are all credit. The collection pattern is 60% in the month of sale, 35% the following month and the remainder in the second month following the sale. Accounts receivable on April 1 were $122,500. a. Prepare a cash receipts schedule for the period June through August (by month). b. What will the Accounts Receivable balance be on August 31?

Clare purchases a single product for $15 and sells it for $30. Forecasted sales for the next three months are July 4,000 units, August 6,000 units, September 7,500 units. Clare'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. What are budgeted purchases in units for August?

If a company is planning to build inventory:

Atlantic, Inc. has prepared the following budgets for March. In March, budgeted production equals budgeted sales of 1,000 units, and raw materials inventory will stay constant. What is budgeted cost of goods sold for March?

The number of units included in the production budget:

Top-down budgeting is:

Mango Place has forecast its sales for the coming months as follows: The standard unit sells for $200, the deluxe unit sells for $350. Required: Prepare a sales budget for each of the three months April through June as well as the total for the quarter. Present the budget for each product as well as total sales.

In 2014, a design service firm served 12 clients (approximately one per month). The average client project lasted 20 (business) days and the clients were served evenly throughout the year. The firm expects 100% growth in the number of clients served in 2015. a. Prepare a sales forecast based on this information for 2015. b. In December of 2014, an influential journalist wrote an article about the type of approach this design firm used, generating 30 new potential client inquiries for the firm. Historically, 50% of the inquiries result in new projects within a six-month period. (Assume the projects begin evenly throughout the period.) Prepare a sales forecast based on this information for 2015. c. To capitalize on the publicity generated by the article, the firm invests in a robust marketing strategy in June. Based on its projections, the marketing efforts will result in an additional 50% growth in clients for the six-month period July through December. Prepare a sales forecast based on this information for 2015.

Grover has forecast sales to be $125,000 in February, $135,000 in March, $150,000 in April, and $140,000 in May. The average cost of goods sold is 70% of sales. All sales are made on credit and sales are collected 60% in the month of sale, and 40% the month following. What are budgeted cash receipts in April?

Skylark has forecast production for the next three months as follows: July 4,900 units, August 6,600 units, September 7,500 units. Monthly manufacturing overhead is budgeted to be $17,000 plus $6 per unit produced. What is budgeted manufacturing overhead for July?

Budgeted manufacturing overhead includes indirect manufacturing costs, but not selling or administrative costs

Orchard has forecast sales to be $250,000 in February, $270,000 in March, $300,000 in April, and $280,000 in May. The average cost of goods sold is 70% of sales. All sales are made on credit and sales are collected 60% in the month of sale, and 40% the month following. What is the budgeted Accounts Receivable balance on May 31?

Marlow Company produces hand tools. A production budget for the next four months is as follows: March 10,300 units, April 13,300, May 16,500, and June 21,800. Marlow Company's ending finished goods inventory policy is 10% of the following month's sales. Meadow plans to sell 16,000 units in May. How many units will be sold in April?