Exam 8: Budgeting for Planning and Control

Shiller Corporation has the following sales forecasts for the selected three-month period in 2018: Month Sales July \ 24,000 August 14,000 September 16,000 All sales are on account. Seventy percent of sales are collected in the month of the sale, and the remainder are collected in the following month. Accounts receivable balance (July 1, 2018) \2 0,000 Cash balance (July 1, 2018) 10,000 Minimum cash balance is $10,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). How much cash would be collected in September from sales?

Controllable costs are those that a manager

Roaming Vehicles Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months. How many units of steel are expected in the material inventory at the end of the second month?

When budgets are used to evaluate performance, which factor might NOT have a significant behavioral effect?

A flexible budget is sometimes referred to as a variable budget.

Discus Productions needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10 percent of total sales each month. Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale. Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000. Accounts receivable on March 31 were $60,000. Discus Productions would expect to have an accounts receivable balance on June 30 of

Roaming Vehicles Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months. How many units of wood are expected to be used in production during the second month?

Activity-based budgets also focus on __________ processes.

Magenta Corporation has the following sales forecasts for the selected three-month period for the current year: Month Sales July \ 30,000 August 15,000 September 12,000 All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder are collected in the following month. Accounts receivable balance (July 1) \2 8,000 Cash balance (July 1) 17,000 Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank (assume no interest charges). What is the cash balance at the end of July, assuming that cash is received only from customers and that $53,000 is paid out during July?

In a for-profit service firm, the sales budget is also the production budget.

Macheski Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below: The June 30th balance sheet follows: Cash \ 25,000 Accounts payable \ 45,000 Accounts receivable 110,000 Capital stock 300,000 Inventory 54,000 Retained earnings 94,000 Buil ding and equipment (net) 250,000 Actual sales for June and budgeted sales for July, August, and September are given below: June \ 137,500 July 360,000 August 400,000 September 320,000 Sales are 20 percent for cash and 80 percent on credit. All credit sales are collected in the month following the sale. There are no bad debts. The gross margin percentage is 40 percent of sales. The desired ending inventory is equal to 25 percent of the following month's sales. One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month. The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000. What is the balance of the retained earnings account at the end of July?

Which of the following is NOT a responsibility of the budget committee?

The budgets that are concerned with the income-generating activities of a firm are called the:

Moriah Manufacturing Company expects to incur the following per unit costs for 1,000 units of production: Direct materials 3@\ 5=\ 15 Direct labor 1 hr @6=\ 6 Variable overhead 75\% of direct 1 labor costs Fixed overhead 50\% of direct 1 abor costs What is the total amount of direct labor included in the direct labor budget?

Which of the following budgets is developed for a single level of activity?

Wheeling Company produces and sells bikes. It expects to sell 20,000 bikes in the month of April and had 1,200 bikes in finished goods inventory at the end of March. Wheeling Company would like to complete operations in the month of April with at least 1,500 completed bikes in inventory. The bikes sell for $100 each. How many bikes would be produced in the month of April?

Participative budgeting has which of the following potential problems?

Volume variances examine differences between the __________ budget and the __________ budget.

Which of the following budgets provides budgeted costs for actual level of activity?

Colorado Corporation has the following sales forecast for the next quarter: July, 4,000 units; August, 4,800 units; September, 5,600 units Sales totaled 3,200 units in June. The June ending finished goods inventory was 800 units. End-of-month finished goods inventory levels are planned to be equal to 30 percent of next month's planned sales. The planned production for Colorado Corporation for July is