Exam 21: Budgeting

Tara Company's budget shows the following credit sales for the current year: September, $25,000; October, $36,000; November, $30,000; December, $32,000. Experience has shown that payment for credit sales is received as follows: 15% in the month of sale, 60% in the first month after sale, 20% in the second month after sale, and 5% is uncollectible. How much cash will Tara Company expect to collect in November as a result of current and past credit sales?

When preparing the cash budget, all the following should be considered except

Planning for capital expenditures is necessary for all of the following reasons except

At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct materials of $165,000, and fixed factory overhead of $15,000 for 9,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?

Fashion Jeans, Inc. sells two lines of jeans; Simple Life and Fancy Life. Simple Life sells for $85, and Fancy Life sells for $100. The company sells all of its jeans on credit and estimates that 60% is collected in the month of the sale, 35% is collected in the following month, and the rest is considered to be uncollectible. The estimated sales for Simple are: January, 20,000 jeans; February, 27,500 jeans; and March, 25,000 jeans. The estimated sales for Fancy are: January, 18,000 jeans; February, 19,000; and March, 20,500 jeans. What are the expected cash receipts for the month of March?

Chelsa Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $23,000. At 8,000 units of production, a flexible budget would show

A company is preparing its cash budget. Its cash balance on January 1 is $290,000 and it has a minimum cash requirement of $340,000. The following data has been provided: -What is the amount of cash excess or deficiency after considering the minimum cash balance required) for February?

The sales budget is derived from the production budget.

Once a static budget has been determined, it is changed regularly as the underlying activity changes.

Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem?

-What is the budgeted unit of production for January?

Match the phrase that follows with the term a-e) it describes. -shows expected results at only one activity level

The cash budget summarizes future plans for acquisition of fixed assets.

Budgeted production of Product A for the year would be

What is a cash budget? How does management use a cash budget?

Why is the sales budget usually prepared first?

Flanders Industries collects 35% of its sales on account in the month of the sale, and 65% in the month following the sale. Sales on account are budgeted to be $175,000 for May and $225,000 for June. What are the budgeted cash receipts from sales on account for June?

Purple Co.'s production budget for Product X for the year ended December 31 is as follows: In Purple's production operations, Materials A, B, and C are required to make Product X. The quantities of direct materials expected to be used for each unit of product are as follows: Prepare a direct materials purchases budget for Product X, assuming that there are no beginning or ending inventories for direct materials all units purchased are used in production).

If the expected sales volume for the current period is 8,000 units, the desired ending inventory is 1,400 units, and the beginning inventory is 1,200 units, the number of units set forth in the production budget, representing total production for the current period, is

Miller and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $24,000. A flexible budget for 12,000 units of production would show