Exam 7: The Master Budget

is considered a long- range planning decision.

The first step in preparing the master budget is generally the preparation of the budgeted income statement.

All of the following are financial budgets except:

Hull Company has budgeted sales of 7,000 units, target ending finished goods inventory of 1,000 units, and a beginning finished goods inventory of 300 units. should be produced.

Includes the operating budget and the financial budget

Ruby Corporation has the following sales budget for the last six months of 20X0: July \ 100,000 Octob er \ 90,000 August 80,000 N ovemb er 100,000 September 110,000 D ecember 94,000 Historically, the cash collection of sales has been as follows: 65% of sales collected in month of sale 25% of sales collected in month following sale 8% of sales collected in second month following sale 2% of sales are uncollectible Is the expected cash collection in October.

The following sales budget has been prepared: Month Cash Sales Credit S ales September \ 100,000 \ 200,000 October 125,000 180,000 November 130,000 210,000 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 expected balance of Accounts Receivable as of December 31.

Managers want a very large cash balance possible at all times.

Dubuque Corporation has the following information: Month Budgeted Purchases August \ 35,000 September 38,000 October 43,500 November 36,500 December 46,000 Purchases are paid for in the following manner: 40% in the month of purchase 50% in the month after purchase 10% two months after purchase Is the estimated cash disbursement in December from October purchases.

The financial budget process results in the:

The Carey Company has the following information: Month Budgeted Sales March \ 150,000 April 153,000 May 151,000 June 254,500 July 252,500 In addition, the gross profit rate is 40% and the desired ending inventory level is 20% of next month's sales. Required: Prepare a purchases budget for April through June.