Exam 9: Financial Planning and Analysis: the Master Budget

Elon & Company had 3,000 units in finished-goods inventory on December 31. The following data are available for the upcoming year: The number of units the company expects to sell in January is:

Hsu plans to sell 40,000 units of product no. 75 in June, and each of these units requires five square feet of raw material. Pertinent data follow. If the company purchases 201,000 square feet of raw material during the month, the estimated raw-material inventory on June 30 would be:

The planning component of the FP&A system is called the sales budget.

Parson Corporation, a wholesaler, provided the following information: Customers pay 60% of their balances in the month of sale, 30% in the month following sale, and 10% in the second month following sale. The company pays all invoices in the month following purchase and takes advantage of a 3% discount on all amounts due. Cash payments for operating expenses in May will be $119,500; Parson's cash balance on May 1 was $127,800. Required: A. Expected cash collections during May. B. Expected cash disbursements during May. C. Expected cash balance on May 31.

Which of the following budgets is prepared at the end of the budget-construction cycle?

Markham Corporation has experienced a number of out-of-stock situations with respect to its finished-goods inventories. Inventory at the end of May, for example, was only 50 units-an all-time low. Management desires to implement a policy whereby finished-goods inventory is 70% of the following month's sales. Budgeted sales for June, July, and August are expected to be 5,000 units, 5,600 units, and 5,500 units, respectively. Required: Determine the number of units that Markham must produce in June and July.

Nevis' production data for a new deluxe product were taken from the most recent quarterly production budget: In addition, Nevis produces 5,000 units a month of its standard product. It takes two direct labor hours to produce each standard unit and 2.25 direct labor hours to produce each deluxe unit. Nevis' cost per labor hour is $15. - Direct labor cost for September would be budgeted at:

A budget serves as a benchmark against which:

Houseman, Inc. anticipates sales of 50,000 units, 48,000 units, 51,000 units and 50,000 units in July, August, September and October, respectively. Company policy is to maintain an ending finished-goods inventory equal to 40% of the following month's sales. -On the basis of this information, how many units would the company plan to produce in September?

Rainbow, Inc. began operations on January 1 of the current year with a $12,000 cash balance. Forty percent of sales are collected in the month of sale; 60% are collected in the month following sale. Similarly, 20% of purchases are paid in the month of purchase, and 80% are paid in the month following purchase. The following data apply to January and February: If operating expenses are paid in the month incurred and include monthly depreciation charges of $2,500, determine the change in Rainbow's cash balance during February.

Marvel Woodcraft makes furniture. Marvel's expected sales are 20,000 bookcases for the quarter. The company begins the quarter with inventory of 3,000 bookcases and wants to have enough finished bookcases on hand at the end of the quarter to provide for 15% of the next quarter's expected sales of 24,000 bookcases. -Based on this information, how many bookcases need to be produced during the quarter?

Gallonte Inc. began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 30% are collected in the month of sale; 60% are collected in the first month after sale; and 10% are collected in the second month after sale. - If sales for April, May, and June were $60,000, $80,000, and $70,000, respectively, what were the firm's budgeted collections for June?

Use the following information to answer the following Questions Morgan Company's budgeted income statement reflects the following amounts: Sales are collected 50% in the month of sale, 30% in the month following sale, and 19% in the second month following sale. One percent of sales is uncollectible and expensed at the end of the year. Morgan pays for all purchases in the month following purchase and takes advantage of a 3% discount. The following balances are as of January 1: *Of this balance, $35,000 will be collected in January and the remaining amount will be collected in February. The monthly expense figures include $5,000 of depreciation. The expenses are paid in the month incurred -Morgan's expected cash balance at the end of February is:

The following information relates to Mega Corporation: * All sales are on account and are budgeted as follows: February, $350,000; March, $360,000; and April, $400,000. Mega collects 70% of its sales in the month of sale and 30% in the following month. * Cost of goods sold averages 60% of sales. Purchases total 65% of the following month's sales and are paid in the month following acquisition. * Cash operating expenses total $60,000 per month and are paid when incurred. Monthly depreciation amounts to $18,000. * Selected amounts taken from the January 31 balance sheet were: accounts receivable, $115,000; plant and equipment (net), $107,000; and retained earnings, $85,000. Required: (NOTE: Ignore income taxes in answering these questions). A. Prepare a budgeted income statement that summarizes activity for the two months ended March 31, 20x1. B. Compute the amounts that would appear on the March 31 balance sheet for accounts receivable, plant and equipment (net), and retained earnings.

Virginia Enterprises makes all purchases on account, subject to the following payment pattern: Paid in the month of purchase: 30% Paid in the first month following purchase: 65% Paid in the second month following purchase: 5% If purchases for April, May, and June were $200,000, $160,000, and $250,000, respectively, what was the firm's budgeted payables balance on June 30?

Salizar Corporation is budgeting its equipment needs on an on-going basis, with a new quarter being added to the budget as the current quarter is completed. This type of budget is most commonly known as a:

Cycle Sporting Goods sells bicycles throughout the northeastern United States. The following data were taken from the most recent quarterly sales forecast: On the basis of the information presented, how many bicycles should the company purchase in August?

Nonprofit organizations begin their budgeting process with:

Discuss the importance of budgeting and identify five purposes of budgeting systems.

A complete financial planning and analysis (FP&A) system includes subsystems for (1) planning, (2) measuring and recording results, and (3) evaluating performance.