Exam 10: Strategy and the Master Budget

Which of the following factors is least likely to be considered in preparing a sales budget?

Worton Distributing expects its September sales to be 25% higher than its August sales of $150,000.Purchases were $100,000 in August and are expected to be $120,000 in September.All sales are on credit and are expected to be collected as follows: 30% in the month of the sale and 70% in the following month.Purchases are paid 25% in the month of purchase and 75% in the following month.The beginning cash balance on September 1 is $10,000.The ending cash balance on September 30 would be:

Explain benefits of implementing a master budgeting system.

Which one of the following is a plan that will allow a manufacturing firm to satisfy its sales goals and have on hand the desired amount of inventory at the end of the budget period?

Omni, Inc. manages a medical-expense reimbursement program for colleges and universities throughout the United States. University employees submit claims for reimbursement of medical expenses from reimbursement accounts established each year by the employees. Omni then processes reimbursement requests, verifies the legitimacy of each request, computes the deductible and co-payment required, determines whether the employee's expense reimbursement account has adequate funds available, and, if applicable, issues a reimbursement check to the eligible employee. Omni employs three different types of clerks who manage these reimbursement accounts: managers, clerical staff-1, and clerical staff-2. The managers are each paid $50,000 per year, clerical staff-1 employees are paid $40,000 per year, while clerical staff-2 employees are paid $35,000 per year. Based on prior experience, for every 150,000 claims processed per year, Omni needs to budget for one manager's position, two clerical staff-1 positions, and six clerical staff-2 positions. Last year, Omni processed 2 million reimbursement claims, and employed 14 managers, 30 clerical staff-1 employees, and 83 clerical staff-2 employees. Required: 1. Based on the data provided, calculate the cost savings or excess staffing costs for Omni during the most recent year. (Assume that the policy of the company is to hire only full-time employees.) 2. What managerial insights are suggested on the basis of your analysis? If you were attempting to judge the processing efficiency of Omni's staff, what additional information might you want to have?

A plan that states the units or cost of merchandise to be purchased by a retailer or wholesaler during the budget period is called a:

Information pertaining to Yekstop Corp.'s sales revenue is presented below:Management estimates that 4% of credit sales are eventually uncollectible. Of the collectible credit sales, 65% are likely to be collected in the month of sale and the remainder in the month following the month of sale. The company desires to begin each month with an inventory equal to 75% of the sales projected for the month. All purchases of inventory are on open account; 30% will be paid in the month of purchase, and the remainder paid in the month following the month of purchase. Purchase costs are approximately 60% of the selling prices. Total budgeted cash collections in January by Yekstop Corp. are:

"Budgetary slack" occurs when:

Assume that only the specified parameters (that is, variables) change in a sensitivity analysis. The contribution margin ratio increases when:

A plan showing the units of goods expected to be sold and the expected revenue from sales is called the:

Critics (for example, The Beyond Budgeting Roundtable) of traditional budgeting assert that the budgeting process:

Which one of the following is not a way to deal with uncertainty in the budgeting process?

The budgeted income statement and budgeted balance sheet benefit a business primarily in terms of the ability of the organization to:

Ardel Co. budgeted to sell 200,000 units of Zbox in September. Production of one unit of Zbox requires two pounds of aluminum and five pounds of steel powder. The beginning inventory and the desired ending inventory are as follows:How many pounds of steel powder does Ardel Co.need to purchase during September if Ardel plans to manufacture 150,000 units of Zbox in September?

Oracle Supply Co. supply forecasts purchases of 15,000 widgets in June. It sells the widget at $12.00 per unit. The company has 1,000 units on hand on June 1. The desired ending inventory of widgets on June 30 is to be 20% lower than the beginning inventory. Total June sales for widgets are anticipated to be (in dollars):

Which one of the following choices represents alternatives to traditional budgeting approaches?

Zero-base budgeting (ZBB) differs from traditional budgeting in terms of its requirement to:

Graham Corporation's budgeted production schedule, by quarters, for the coming year is as follows: Quarter 1 = 22,500 units Quarter 2 = 19,000 units Quarter 3 = 17,000 units Quarter 4 = 24,000 units Each unit of product requires three pounds of direct material. The company's policy is to begin each quarter with 30% of that quarter's direct materials production requirements. Graham expects to have 50,000 pounds of direct materials on hand at the beginning of Quarter 1. What would be Graham's budgeted direct materials purchases for the second quarter of the year?

Brownsville Novelty Store prepared the following budget information for the month of May: Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is made for each month at three percent of sales for the month. Inventory was $84,000 on April 30; an inventory increase of $12,000 is planned for May 31. All inventory is marked to sell at cost plus 50 percent. Estimated cash disbursements for selling and administrative expenses for the month are $48,000. Depreciation for May is projected at $6,000. Brownsville's budgeted cost of inventory purchases for May is:

A comprehensive or overall formal plan for a business that includes specific plans for expected sales, the units of product to be produced, the merchandise (or materials) to be purchased, the manufacturing, selling, administrative, and general expense to be incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as well as a budgeted income statement and balance sheet, is called a(n):