Exam 7: Budgeting

Stephanie Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 108,000 units, and desired ending inventory is 90,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A 0.50 lb. per unit @ $0.70 per pound Material B 1.00 lb. per unit @ $1.70 per pound Material C 1.20 lb. per unit @ $1.00 per pound The dollar amount of material A used in production during the year is

Production and sales estimates for June are as follows: The number of units expected to be manufactured in June is

The budgeting process is used to effectively communicate planned expectations regarding profits and expenses to the entire organization.

Chelsa Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $23,000. At 8,000 units of production, a flexible budget would show

The first budget to be prepared is usually the cash budget.

The operating budgets of a company includes the

Finch Company began its operations on March 31 of the current year.  Finch has the following projected costs: (1) Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month. (2) 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). (3) Property tax is paid once a year in November. The cash payments for Finch Company expected in the month of June are

A company's history indicates that 20% of its sales are for cash and the rest are on credit.  Collections on credit sales are 20% in the month of the sale, 50% in the next month, 25% the following month, and 5% is uncollectible.  Projected sales for December, January, and February are $60,000, $85,000, and $95,000, respectively.  The February expected cash receipts from all current and prior credit sales are

After the sales budget is prepared, the capital expenditures budget is normally prepared next.

Budget preparation is best determined in a top-down managerial approach.

Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. Sales on account are budgeted to be $150,000 for March and receipts from sales on account total $162,500 in April. What are budgeted sales on account for April?

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called continuous budgeting.

Production estimates for August are as follows: For each unit produced, the direct materials requirements are as follows: The total direct materials purchases (assuming no beginning or ending inventory of material) of Materials A and B required for August production is

A capital expenditures budget is prepared before the operating budgets.

Flexible budgeting builds the effect of changes in level of activity into the budget system.

Budgetary slack can be avoided if lower and mid-level managers are requested to support all of their spending requirements with specific operational plans.

The first budget to be prepared is usually the production budget.

Below is budgeted production and sales information for Bluebird Company for the month of December: The unit selling price for product XXX is $5 and for product ZZZ is $14. Budgeted production for product ZZZ during the month is

Production and sales estimates for March for the Robin Co. are as follows: The number of units expected to be manufactured in March is

Principal components of a master budget include