Exam 22: Budgeting

The budget process involves all of the following except

Budgets are prepared in the Accounting Department and monitored by various department managers.

Cardinal Company has finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months are: January, 200,000 units; February, 180,000 units; March, 210,000 units; and April, 230,000 units. Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month's sales.​ -The budgeted units of production for January would be

Laurie Inc.'s static budget for 10,000 units of production includes $60,000 for direct materials, $44,000 for direct labor, fixed utilities costs of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production 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 have been provided: ​ -Which of the following would not be used in preparing a cash budget for October?

Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of Product B is 3,000 units. -Budgeted production of Product A for the year would be

Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: *Of the manufacturing costs, three-fourths is paid for in the month they are incurred; one-fourth is paid in the following month.**Insurance expense is $1,000 a month; however, the insurance is paid four times yearly in the first month of the quarter (i.e., January, April, July, and October).***Property tax is paid once a year in November.​ -The cash payments expected for Finch Company in the month of April are

In preparing flexible budgets, the first step is to identify the fixed and variable components of the various costs and expenses being budgeted.

A budget procedure that provides for the maintenance at all times of a 12-month projection into the future is called master budgeting.

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 have been provided: ​ -The amount of cash excess or deficiency (after considering the minimum cash balance required) for March is a(n)

Most companies prepare a master budget on a yearly basis.

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 have been provided: ​ -Carillon's Department Stores is planning its staffing for the upcoming holiday season. From past history, the store determines that it needs one additional sales clerk for each $15,000 in daily sales. The average daily sales is anticipated to increase by $135,000 from Black Friday until Christmas Eve, or 27 shopping days. Each additional sales clerk will work a six-hour shift and will be paid $16 per hour. The amount to budget for additional sales clerks for the holiday season is

As of January 1 of the current year, Grayson Company had accounts receivable of $40,000. The sales for January, February, and March were $120,000, $140,000, and $150,000, respectively. Of each month's sales, 20% are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. The total cash collected (both from accounts receivable and for cash sales) in the month of January is

The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) the desired ending inventory.

Kid's World Industries has projected sales of 67,000 machines for the current year. The estimated January 1 inventory is 6,000 units, and the desired December 31 inventory is 15,000 units. What is the budgeted production (in units) for the year?

Magnolia, Inc., manufactures bedding sets. The budgeted production is for 55,000 comforters this year. Each comforter requires 7 yards of material. The estimated January 1 beginning inventory is 31,000 yards with the desired ending balance of 30,000 yards of material. If the material costs $4 per yard, determine the materials budget for the year.

Consulting the persons affected by a budget when it is prepared can provide an effective means of motivation and cooperation.