Exam 20: Budgetary Planning

Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable?

A sales forecast

A critical factor in budgeting for a service firm is to determine the amount of products to purchase.

Lark Corp.'s direct materials budget shows total cost of direct materials purchases for January $250,000, February $300,000 and March $350,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are

A budget period should be

The following information is taken from the production budget for the first quarter: Beginning inventory in units 1,200 Sales budgeted for the quarter 426,000 Capacity in units of production facility 472,000 How many finished goods units should be produced during the quarter if the company desires 3,200 units available to start the next quarter?

Instead of a production budget, a merchandiser will prepare a

The projection of financial position at the end of the budget period is found on the

Budgeting is usually most closely associated with which management function?

The direct materials budget shows: Desired ending direct materials 48,000 pounds Total materials required 69,000 pounds Direct materials purchases 63,200 pounds The total direct materials needed for production is

The production budget shows that expected unit sales are 48,000. The total required units are 54,000. What are the required production units?

Correy Inc. reported the following information for 2016: October November December Budgeted sales \ 460,000 \ 440,000 \ 540,000 Budgeted purchases \ 240,000 \ 256,000 \ 288,000 All sales are on credit. -Customer amounts on account are collected 50% in the month of sale and 50% in the following month. -Cost of goods sold is 35% of sales. -Correy purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month. -Accounts payable is used only for inventory acquisitions. How much cash will Correy receive during November?

The direct materials budget contains both quantity and cost data.

An unrealistic budget is more likely to result when it

Which one of the following items would never appear on a cash budget?

Bear, Inc. estimates its sales at 200,000 units in the first quarter and that sales will increase by 20,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $35. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Cash collections for the third quarter are budgeted at

Long-range planning

Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?

The total direct labor hours required in preparing a direct labor budget are calculated using the