Exam 7: The Master Budget

A sales forecast is:

The beginning available cash balance equals the beginning cash balance + the minimum cash balance desired.

is a major part of the master budget that focuses on the income statement and its supporting schedules.

A prediction of sales under a given set of conditions

Financial planning models:

Explain the benefits of a good budgeting plan.

Angle Company's expected sales for April are $27,600. Information about other budgeted expenses is presented below. Budgeted Expenses per Month Wages \ 2,000 Advertising 1,680 Depreciation 1,440 Rent 2,560 Other 5\% of sales is a noncash expense.

The result of decisions to create the conditions that will generate a desired level of sales

Includes decisions to add or delete a product line or acquire buildings or equipment

The master budget quantifies targets for all of the following except:

Participative budgeting is the active participation of all affected employees in the formulation of the budgets.

A good budget process communicates from the top down, but not from the bottom up.

Collections of cash from customers would appear on the .

is generally prepared as the first step in preparing the operating budgets.

Is budgeting used primarily for scorekeeping, attention directing, or problem solving?

Lyle Corporation has the following information: Month Budgeted Purchases January \ 230,000 February 190,000 M arch 200,000 April 220,000 M ay 210,000 Purchases are paid for in the following manner: 10% in the month of purchase 80% in the month after purchase 10% two months after purchase Required: Prepare a schedule of cash disbursements for purchases for March through May.

The following sales budget has been prepared: Month Cash Sales Credit Sales September \ 167,000 \ 123,000 October 225,000 180,000 November 330,000 210,000 December 135,000 190,000 Collections are 50% in the month of sale, 40% in the month following the sale, and 10% two months following the sale. No uncollectible accounts are anticipated. is the estimated cash collection in December.

Bronze Corporation has the following information: Month Budgeted Sales May \ 46,000 June 50,000 July 52,000 August 48,000 The cost of goods sold percentage is 65% and the desired inventory level is 25% of next month's sales is the expected total purchases budgeted for June.

A budget that details the planned expenditures for facilities, equipment, new products, and other long- term investments

Washington Company has prepared the following sales budget: Month Cash S ales Credit Sales February \ 14,000 \ 28,000 March 12,800 29,200 April 10,800 26,400 Collections are 40% in the month of sale, 50% in the month following the sale, and 10% two months following the sale. No uncollectible accounts are anticipated. Required: Prepare a schedule of cash collections for April.