Exam 23: Budgetary Planning

Hyde Corp.'s cash budget showed total available cash less cash disbursements. What does this amount equal?

At January 1 2016 Deer Corp. has beginning inventory of 2000 surfboards. Deer estimates it will sell 10000 units during the first quarter of 2016 with a 12% increase in sales each quarter. Deer's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2016?

Financial budgets must be completed before the operating budgets can be prepared.

A _________________ is a formal written statement of management's plans expressed in financial terms.

The financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than

Jent Company reported the following information for 2013: October November December Budgeted sales \ 320,000 \ 340,000 \ 360,000 Budgeted purchases \ 120,000 \ 128,000 \ 144,000 $\bullet$ All sales are on credit. $\bullet$ Customer amounts on account are collected 40% in the month of sale and 60% in the following month. Instructions Compute the amount of cash Jent will receive during November.

Which of the following does not appear as a separate section on the cash budget?

The budgeted income statement indicates the expected profitability of operations for the next year.

The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first.

If the required direct materials purchases are 24000 pounds the direct materials required for production is three times the direct materials purchases and the beginning direct materials are three and a half times the direct materials purchases what are the desired ending direct materials in pounds?

Dolce Co. estimates its sales at 180000 units in the first quarter and that sales will increase by 18000 units each quarter over the year. They have and desire a 25% ending inventory of finished goods. Each unit sells for $25. 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

What is a budget? (b) How does a budget contribute to good management?

Tall Oak Inc. produces rulers from plastic resin. Tall Oak has estimated production and sales of rulers in units for the next 2 months as: May June Estimated production 42,000 48,000 Estimated sales 50,000 36,000 Each ruler requires 0.25 pounds of resin. The cost of resin is $4.50 per pound. Tall Oak wants to have 20% of the next month's materials requirements on hand at the end of each month. Instructions Prepare a direct materials purchases budget for the month of May.

The beginning cash balance is $15000. Sales are forecasted at $800000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $475000. Accounts Receivable from previous accounting periods totaling $9000 will be collected in the current year. The company is required to make a $15000 loan payment and an annual interest payment on the last day of every year. The loan balance as of the beginning of the year is $90000 and the annual interest rate is 10%. Instructions Compute the excess of cash receipts over cash disbursements.

Strand Company is planning to sell 400 buckets and produce 380 buckets during March. Each bucket requires 500 grams of plastic and one-half hour of direct labor. Plastic costs $10 per 500 grams and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Strand has 300 kilos of plastic in beginning inventory and wants to have 200 kilos in ending inventory. How much is the total amount of budgeted direct labor for March?

Budget development for the coming year usually starts

Why are budgets useful in the planning process?

The following facts are known: $\bullet$ The total pounds needed for production are 2 times the units to be produced. $\bullet$ The desired ending direct materials inventory is 20% of the total pounds needed for production. $\bullet$ The beginning direct materials inventory is equal in number to 10% of the units to be produced. $\bullet$ Cost per pound is $5. $\bullet$ Total cost of the direct materials purchases is $1035000. Instructions Prepare a direct materials budget for the period.

A budget is a primary means of ________________ agreed upon objectives throughout the business organization.

Cruises Inc. has budgeted sales revenues as follows: June July August Credit sales \ 135,000 \ 125,000 \ 90,000 Cash sales 90,000 255,000 195,000 Total sales \ 225.000 \ 380,000 \ 285,000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are: June \ 300,000 July 240,000 August 105,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $48000 each month (b) dividends of $103000 will be paid in July and (c) purchase of equipment in August for $30000 cash. The company wishes to maintain a minimum cash balance of $50000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50000. Assume that borrowed money in this case is for one month. Instructions Prepare a cash budget for the months of July and August. Prepare separate schedules for expected collections from customers and expected payments for purchases of inventory.