Exam 7: Budgeting

The budgeted cash receipts for December are?

Reference: 07-11 The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable Cost Per Unit Sold Monthly Fixed Cost Sales commissions \ 0.70 Shipping \ 1.10 Advertising \ 0.20 \ 14,000 Executive salaries - \ 34,000 Depreciation on office equipment - \ 11,000 Other \ 0.25 \ 19,000 All expenses other than depreciation are paid in cash in the month they are incurred. -If the company has budgeted to sell 25,000 units of Product SW in July, then the total budgeted selling and administrative expenses for July will be:

Reference: 07-09 Noel Enterprises has budgeted sales in units for the next five months as follows: January 6,800 units February 5,400 units March 7,200 units April 4,600 units May 3,800 units Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year. -The total number of units to be produced in February is:

Budgeted sales in Allen Company over the next four months are given below: September October November December Budgeted sales \ 100,000 \ 160,000 \ 180,000 \ 120,000 Twenty-five percent of the company's sales are for cash and 75% are on credit. Collections for sales on credit follow a stable pattern as follows: 50% of a month's sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder are uncollectible. Given these data, cash collections in December should be?

The production budget includes detailed information as to the number of units of direct materials and the number of direct labour hours required for each budget period for a manufacturing business.

Reference: 07-09 Noel Enterprises has budgeted sales in units for the next five months as follows: January 6,800 units February 5,400 units March 7,200 units April 4,600 units May 3,800 units Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year. -The opening inventory in units for April is?

Reference: 07-02 Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below. Expected Sales January \ 10,000 February 24,000 March 16,000 April 25,000 The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred. -In a budget of cash receipts for March, the total cash receipts would be:

Modesto Company produces and sells Product AlphaB. company requires that 20% of the next month's sales be on hand at the end of each month. Budgeted sales of Product AlphaB over the next four months are: June July August September Budgeted sales in units 30,000 40,000 60,000 50,000 Budgeted production units for August will be:

Which one of the following is the last schedule to be prepared in a normal budget preparation process?

Reference: 07-07 Barley Enterprises has budgeted unit sales for the next four months as follows: October 4,800 units November 5,800 units December 6,400 units January 5,200 units The ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on September 30 was below this level and contained only 600 units. -The desired ending inventory in units for December is:

Reference: 07-14 A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lower case letters (a, b, c, etc.); these lower case letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands. Carney Company Cash Budget Quarters 1 2 3 4 Cash balance, beginning \ 16 \ \ 13 \ 10 Add collections from customers a 70 67 80 Total cash available ? ? 80 90 Less disbursements: Purchase of inventory 31 40 35 Operating expenses 35 22 ? 15 Equipment purchases 10 14 19 0 Dividends 0 6 0 5 Total disbursements 66 ? 55 Excess (deficiency) of cash available over disbursements 7 17 (2) 35 Financing: Borrowings - 12 - Repayments (including interest) - - (21) Total financing ? ? 12 (21) Cash balance, ending ? \ 10 \ 14 -The cash disbursed for purchases during the second quarter (item c in thousands)is:

In the merchandise purchases budget, the required purchases (in units)for a period can be determined by subtracting the beginning merchandise inventory (in units)from the budgeted sales (in units).

The Stacy Company makes and sells a single product, Product R. Budgeted sales for April are $300,000. Gross margin is budgeted at 30% of sales dollars. If the net income for April is budgeted at $40,000, the budgeted selling and administrative expenses are:

Reference: 07-06 Pardise Company plans the following beginning and ending inventory levels (in units) for July: July 1 July 30 Raw material 40,000 50,000 Work in process 10,000 10,000 Finished goods 80,000 50,000 Two units of raw material are needed to produce each unit of finished product. -If Pardise Company plans to sell 480,000 units during July, the number of units it would have to manufacture during July would be:

Reference: 07-12 The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. Variable factory overhead is paid in the month incurred. -If the budgeted production for July is 6,000 units, then the total budgeted factory overhead for July is:

The beginning cash balance is not included on the cash budget since the cash budget deals exclusively with cash flows rather than with balance sheet amounts.

Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs. For example, if the sales manager accepts a rush order that will result in higher than normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager. This type of accounting system is known as:

In a budgeted balance sheet, the merchandise inventory on February 28 would be:

In zero-based budgeting, the preparers are required to justify all expenditures, not just changes in the budget from the previous year.

Which of the following is not one of the positive attributes of responsibility accounting