Exam 8: Budgetary Planning

A detailed plan that translates the company's objectives into financial terms,identifying the resources and expenditures that will be required over the planning horizon is a:

Cassie is a manufacturer of sketching pads.The following information is available from the company's budgets: Manufacturing overhead includes depreciation of $12,000 per month.There is no depreciation included in the selling and administrative expenses.All expenses are paid in the month they are incurred.Cash at the beginning of the period was $20,000.The company wants to maintain a minimum cash balance of $20,000.There were no loans outstanding on May 1.The line of credit with the bank allows for borrowings and repayments in $1,000 increments.If the loan is paid off by the end of the quarter,there is no interest. a.Prepare monthly cash budgets for the 2^nd quarter. b.What is the amount of cash shown on the balance sheet at the end of the quarter?

Heather Products expects the following sales of its single product: Heather desires an ending finished goods inventory to be equal to 20% of the next month's sales needs.Actual May 1 inventory will be 3,300 units. Required: Prepare a production budget for Heather for as many months as is possible.

Crystal,Inc.has prepared the following budgets for March.In March,budgeted production is 1,000 units,budgeted sales is 1,200 units,and direct materials inventory unit costs will stay constant. What is budgeted cost of goods sold for March?

Blair is a retailer of assorted baby products.The sales forecast for the coming months is: All sales are credit sales.The cash collection pattern is 20% in the month of sale,70% in the month following the sale,and the remainder in the second month following the sale.Accounts receivable on June 1 were $177,500. 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?

Meadow Company produces hand tools.A sales budget for the next four months is as follows: March 10,000 units,April 13,000,May 16,000 and June 21,000.Meadow Company's ending finished goods inventory policy is 10% of the following month's sales.What is budgeted ending finished goods inventory for May?

Pacific has forecast sales for the next three months as follows: July 4,000 units,August 6,000 units,September 7,500 units.Pacific'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 August?

Participative budgeting is more likely to motivate people to work toward the organization's goals than is a top-down approach.

Cedar Co.has forecast purchases to be $330,000 in June,$375,000 in July,$310,000 in August,and $270,000 in September.Purchases average 30% paid in cash,70% on credit.Credit purchases are paid 60% in the month of purchase,30% during the month following,and 10% the second month following the purchase.Cash disbursements in September would be:

Top-down budgeting is:

Arbor Co.has forecast sales to be $400,000 in May,$475,000 in June,$575,000 in July and $700,000 in August.Forty percent of sales are made in cash,the remainder is on credit.Credit sales are collected 60% in the month of sale,the remaining the following month.What are budgeted cash collections for July?

A short-term objective is:

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

Jillian 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 1.3 hours of unskilled labor (paid $8 per hour)and 2.2 hours of skilled labor (paid $15 per hour).How much will be paid to skilled labor during the three months July through September?

A component of the financial budget is the:

Jillian 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 1.3 hours of unskilled labor (paid $8 per hour)and 2.2 hours of skilled labor (paid $15 per hour).What will be the total labor cost for the month of August?

If a company is planning to build inventory:

________ are the specific actions managers use to achieve their goals.

Bear Corp.sells its product for $120.Forecasted sales are 1,200 units in October,1,500 in November,and 1,600 in December.Variable costs are based on sales,and consist of commissions (7% of sales),advertising (3%)and shipping (5%).Fixed costs per month are $4,000 sales salaries,$3,300 office salaries,$2,000 depreciation,$1,800 office rent,$750 insurance and $900 utilities. Required: Prepare Bear Corp's selling and administrative expense budget for the period October through December.Present monthly totals as well as a 3-month total.

Which of the following would not be an example of a cost to include in a selling and administrative expense budget?