Exam 9: Financial Planning and Analysis: the Master Budget

The budgeted income statement, budgeted balance sheet, and budgeted statement of cash flows comprise:

Houseman, Inc. anticipates sales of 50,000 units, 48,000 units, and 51,000 units in July, August, and September, 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 July?

That employees make little effort to achieve budgetary goals is an outcome sometimes associated with participative budgeting.

The accounting records of Lowery, Inc., revealed an accounts receivable balance of $195,000 on January 1, 20x6. Forty percent of the company's sales are for cash, and the remaining 60% are on account. Of the credit sales, 30% are collected in the month of sale and 70% are collected in the following month. Total sales in January and February are expected to amount to $500,000 and $530,000, respectively. Assume that in the latter half of 20x6, Lowery hired a new sales manager who aggressively tried to maximize the company's market share. She implemented a compensation system for the sales force that was 100% commission based, with the commission calculated on the basis of gross sales dollars. Sales volume increased dramatically in a very short period of time, and the sales and collection patterns changed, as follows: Required: A. Compute the company's cash inflows for January and February, 20x6. B. Determine the outstanding receivables balance at the end of February. C. Compare the sales and collection patterns before and after the arrival of the new sales manager. Have things improved or deteriorated? Explain. D. On the basis of the information presented, determine what likely caused the improvement or deterioration in collection patterns.

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 budgeted cash payments in February are:

Which of the following statements is false regarding the budgeted schedule of cost of goods manufactured and sold?

A budgeted income statement, a budgeted balance sheet, and a budgeted statement of cash flows are the end result of the master budgeting process.

State University is preparing its master budget for the upcoming academic year (an academic year consists of two semesters). Currently, 12,000 students are enrolled on campus; however, the admissions office is forecasting a 5% growth in the student body despite a tuition hike to $80 per credit hour. The following additional information has been gathered from an examination of university records and conversations with university officials: · State is planning to award 150 tuition-free scholarships. · The average class has 30 students, and the typical student takes 15 credit hours each semester. · Each class is three credit hours. · Each faculty member teaches five classes during the academic year. Required: A. Compute the budgeted tuition revenue for the upcoming academic year. B. Determine the number of faculty members needed to cover classes. C. In preparing the university's master budget, should the administration begin with a forecast of students or a forecast of faculty members? Briefly explain.

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 August would be budgeted at:

Which of the following organizations is not likely to use budgets?

The budgeting technique that helps managers assess the company's future and know if they are reaching their performance goals is called life-cycle budgeting.

Assume that Toy Craft makes ragdolls. Each ragdoll requires 12 square feet of fabric. If the number of dolls to be produced during the quarter is 19,000, the desired ending inventory of fabric is 11,400 square feet, the beginning inventory of fabric is 22,800 square feet, and the cost of the fabric is $9 per square foot, what is the total cost of fabric purchases?