Exam 8: The Master Budget

Production of Product B has been budgeted at 200,000 units for Novenber.One unit of Product B requires 2 lbs.of raw material.The projected beginning and ending materials inventory for Novenber are: Beginning inventory: 2,000 lbs. Ending inventory: 10,000 lbs. How many lbs.of material should be purchased during Novenber?

If a company has a policy of maintaining an inventory of finished goods at a specified percentage of the next month's budgeted sales,budgeted production for January will exceed budgeted sales for January when budgeted

Denton Company Denton Company manufactures three products (A,B,and C)from three raw materials (X,Y,and Z).The following table indicates the number of pounds of each material that is required to manufacture each type of product: $\text {\underline{ Product} }$           $\text {\underline{ Material X} }$      $\text {\underline{ Material Y } }$           $\text {\underline{ Material Z} }$ A                                 2                                3                          2 B                                  2                               1                          2 C                                  3                               2                           2 The company has a policy of maintaining an inventory of finished goods on all three products equal to 25 percent of the next month's budgeted sales.Listed below is the sales budget for the first quarter of the current year: Month Product A Product B Product C Jan. 10,000 11,000 12,000 Feb. 9,000 12,000 8,000 Mar. 11,000 10,000 10,000 Refer to Denton Company.Assuming that the company meets its required inventory policy,prepare a production budget for the first 2 months of the current year for each of the three products.

The detailed plan for the acquisition and replacement of major portions of property,plant,and equipment is known as the

Budgeted sales for the first six months for Stone Corporation are listed below:

	JANUARY	FEBRUARY	MARCH	APRIL	MAY	JUNE
UNITS:	6,000	7,000	8,000	7,000	5,000	4,000

Stone Corporation has a policy of maintaining an inventory of finished goods equal to 40 percent of the next month's budgeted sales.If Stone Corporation plans to produce 6,000 units in June,what are budgeted sales for July?

Production of Product 101 has been budgeted at 300,000 units for June.One unit of Product 101 requires 3 lbs.of raw material.The projected beginning and ending materials inventory for June are: Beginning inventory: 4,000 lbs. Ending inventory: 16,000 lbs. How many lbs.of material should be purchased during June?

A purchases budget

Lindburgh Company Lindburgh Company manufactures toy airplanes.Information on Lindburgh Company's labor costs follow: Sales commissions \ 5 per plane Administration \ 10,000 per month Indirect factory labor \ 3 per plane Direct factory labor \ 5 per plane The following information applies to the upcoming month of July for Lindburgh Company: Budgeted production                    1,200 unit Budget sales                                1,000 unit: Refer to Lindburgh Company.What is Lindburgh's budgeted factory labor cost for July?

Budgeted sales for Parker Corporation for the second quarter the year are shown below:                                         $\text {\underline{ APRIL} }$                      $\text {\underline{ MAY} }$                                 $\text {\underline{ JUNE} }$ UNITS:                            40,000                            30,000                                    38,000 The company has a policy that requires the ending inventory in each period to be 15 percent of the following period's sales.Assuming that the company follows this policy,what quantity of production should be scheduled for May?

In estimating factory overhead,it is necessary to separate costs into their fixed and variable components.

The material purchases budget tells a manager all of the following except the

Whitney Corporation Whitney Corporation,a reseller of women's fashions,has budgeted its activity for March.The budget information is presented below: I. Sales are $\$ 350,000 .$ All sales are cash II.Merchanchise inventory on February 28 is $\$ 300,000$ III.Buclgeted depreciation for March is $\$ 35,000$ . IV.Cash in bank on March 1 is $\$ 25,000$ . V. Selling and administrative expenses are buclgeted at $\$ 60,000$ for March and are paid in cash VI. The planned merchandise inventory on March 31 is $\$ 270,000$ . VII. The invoice cost for merchandise purchases represents $75 \%$ of sales price. All purchases are paid for in cash Refer to Whitney Corporation.The budgeted cash receipts for March are:

Why have many managers in recent years moved toward emphasizing employee participation in the budgeting process rather than simply imposing the budget on the employees?

Why will there frequently be a difference between the budgeted cost of material in the material purchases budget and the budgeted cash disbursement for material in the cash budget?

Sullivan Company Sullivan Company is preparing its Manufacturing Overhead budget for the second quarter of the year.Budgeted variable factory overhead is $3.00 per unit produced;budgeted fixed factory overhead is $75,000 per month,with $16,000 of this amount being factory depreciation. Refer to Sullivan Company.If the budgeted production for April is 6,000 units,then the total budgeted factory overhead for April is:

Which of the following is a basic element of effective budgetary control?

Which of the following is not true about an imposed budget?

Coolidge Company has the following collection pattern for its accounts receivable: 40 percent in the month of sale 50 percent in the month following the sale 8 percent in the second month following the sale 2 percent uncollectible The company has recent credit sales as follows: Apri: \2 00,000 Muy: 420,000 Jus: 350,000 How much should the company expect to collect on its receivables in June?

Which of the following statements is true?

Beasley Company Beasley Company prepared a cash budget by quarters for the upcoming year.Missing data amounts are indicated with question marks or lower case letters;these lower case letters will be referred to in the questions that follow. Beasley requires a minimum balance of $10,000 to start a quarter. All data are in thousands. Beasley Corporation Cash Budget

	QTR 1	QTR 2	QTR 3	QTR 4
Cash balance, beginning	$16	$ e	$13	$10
Add collections from customers	a	70	67	80
Total cash available	?	?	80	90
Less disbursements:
Purchase of inventory	31	c	40	35
Operating expenses	25	22	?	15
Equipment purchases	10	14	19	0
Dividends	0	6	0	5
Total disbursements	66	?	f	55
Excess (deficiency) of cash available over disbursements	7	17	(2)	35
Financing:
Borrowings:	b	--	12	--
Repayments (including interest)	--	d	--	(12)
Total financing	?	?	12	(12)
Cash balance, ending	$10	$?	$10	$23
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Refer to Beasley Company.The cash balance at the beginning of the second quarter (item e)is: