Exam 9: The Master Budget

Warshaw Company budgets payroll at $3,600 per month plus a percentage of monthly sales. The June operating expense budget includes total payroll of $13,200 with budgeted sales of $160,000. Sales for July are budgeted at $180,000 while purchases of inventory for July are budgeted at $95,000. Depreciation and insurance for July are estimated at $1,000 and $600, respectively. Office and administrative expenses related to purchasing inventory are budgeted at 10% of purchases for the month. The purchase of $2,500 in equipment and $1,500 in furniture is expected in July. The total operating expenses budgeted for July are

Which of the following budgets or financial statements is part of the operating budget?

Lough Company prepared the following purchases budget: All purchases are paid for as follows: 20% two months after purchase, 55% in the following month, and 25% in the month of purchase. What are the total cash disbursements in August for the purchase of merchandise?

Budgets do not provide benchmarks to help managers evaluate performance.

Daisy Company manufactures dog collars. The following selected data relates to Daisy Company's budgeted sales and inventory levels of the dog collars for the upcoming quarter: How many dog collars should Daisy Company produce in November?

The capital expenditures budget is not part of the operating budget.

Which of the following is an advantage of the budgeting process?

At the beginning of the year, Patio Living Corporation has 550 planters in inventory. The company plans to sell 5,200 planters during the year and wants to have 1,200 planters in inventory at the end of the year. How many planters must Patio Living Corporation produce during the year?

All of the following budgets are prepared by merchandising companies except

Merchandising companies prepare sales, cash, and operating expense budgets.

Merchandising companies prepare a manufacturing overhead budget.

Fosnight Enterprises prepared the following sales budget: The expected gross profit rate is 30% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What is the desired beginning inventory on June 1?

The master budget is the set of budgeted financial statements and supporting schedules for the entire organization.

"Sets the targeted revenue and expenses for the period" is best described by which of the following terms?

The ________ budget is part of the operating budgets.

Pristine Yards Manufacturing produces weed whackers. On March 31, Pristine Yards Manufacturing had 144 weed whackers in inventory. The company has a policy that the ending inventory in any month must be 12% of the following month's expected sales. Pristine Yards Manufacturing expects to sell the following number of weed whackers in each of the next four months: Required: Prepare a production budget for the second quarter, with a column for each month and for the quarter.

Sander Enterprises prepared the following sales budget: The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What are the total purchases budgeted for May?

The budget committee

Sharon Corporation collects 15% in the second month following sale, 45% in the month following sale and 35% of a month's sales in the month of sale. The company has found that 5% of their sales are uncollectible. Budgeted sales for the upcoming four months are: The amount of cash that will be collected in November is budgeted to be

Budget committee is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.