Exam 23: Budgetary Planning

Comma Manufacturing budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels are planned for the fiscal year of July 1 2016 to June 30 2017: $\quad \quad \quad \quad \quad \quad \quad{ \text { June 30, } 2017 } \quad \text { June 30, 2016 }$ $\text { Raw Materials } \quad 3,000 \text { kilos } \quad \quad2,000 \text { kilos }$ Three kilos of raw materials are needed to produce each unit of finished product. If Comma Manufacturing plans to produce 560000 units during the 2016-2017 fiscal year how many kilos of materials will the company need to purchase for its production during the year?

The manufacturing overhead budget shows the expected manufacturing overhead costs.

Petal Co. reported the following information for 2016: $\quad\quad\quad\quad\quad\quad\quad\quad\text { October } \quad \text { November }\quad \text { December }$ $\text { Budgeted sales } \quad \$ 930,000 \quad \$ 870,000 \quad \quad\$ 1,080,000$ All sales are on credit. $\bullet$ Customer amounts on account are collected 50% in the month of sale and 50% in the following month. How much is the November 30 2016 budgeted Accounts Receivable?

On January 1 Kale Company has a beginning cash balance of $42000. During the year the company expects cash disbursements of $340000 and cash receipts of $290000. If Kale requires an ending cash balance of $40000 the company must borrow

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

A critical factor in budgeting for a service firm is to

Which one of the following budgets would be prepared for a manufacturer but not for a merchandiser?

The two major differences between the master budgets of a merchandiser and a manufacturer are that the merchandiser will have a ______________________ budget and will not have __________________ budgets.

Which one of the following is a problem resulting from a service company being overstaffed?

Garver Industries has budgeted the following unit sales: 2017 Units January 10,000 February 8,000 March 9,000 April 11,000 May 15,000 The finished goods units on hand on December 31 2016 was 2000 units. Each unit requires 3 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 8640 pounds of raw materials on hand at December 31 2016. Instructions For the first quarter of 2017 prepare (1) a production budget and (2) a direct materials budget.

Haft Construction Company determines that 54000 pounds of direct materials are needed for production in July. There are 3200 pounds of direct materials on hand at July 1 and the desired ending inventory is 2800 pounds. If the cost per unit of direct materials is $3 what is the budgeted total cost of direct materials purchases?

The direct materials budget is derived from the direct materials units required for production plus desired ending direct materials units less beginning direct materials units.

The starting point in preparing a master budget is the preparation of the

Which of the following statements about budget acceptance in an organization is true?

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

Bear Inc. estimates its sales at 200000 units in the first quarter and that sales will increase by 20000 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. Production in units for the third quarter should be budgeted at

Minor Landscaping Company is preparing its budget for the first quarter of 2017. The next step in the budgeting process is to prepare a cash receipts schedule and a cash payments schedule. To that end the following information has been collected. Clients usually pay 60% of their fee in the month that service is provided 30% the month after and 10% the second month after receiving service. Actual service revenue for 2016 and expected service revenues for 2017 are: November 2016 $120000; December 2016 $110000; January 2017 $140000; February 2017 $160000; March 2017 $170000. Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the following month. Actual purchases for 2016 and expected purchases for 2017 are: December 2016 $21000; January 2017 $20000; February 2017 $22000; March 2017 $27000. Instructions (a) Prepare the following schedules for each month in the first quarter of 2017 and for the quarter in total: (1) Expected collections from clients. (2) Expected payments for landscaping supplies. (b) Determine the following balances at March 31 2017: (1) Accounts receivable. (2) Accounts payable.

Which of the following would not appear as a fixed expense on a selling and administrative expense budget?

Burr Inc.'s direct materials budget shows total cost of direct materials purchases for April $400000 May $480000 and June $560000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for June are