Exam 22: Master Budgets and Planning

Cambridge,Inc.,is preparing its master budget for the quarter ended June 30.It sells a single product for $40 each.Sales are 60% cash and 40% on credit.All credit sales are collected in the month following the sale.At March 31,the balance in accounts receivable is $12,000,which represents the uncollected balance on March sales.Budgeted sales for the next four months follow: The product cost is $20 per unit,and desired ending inventory is 60% of the following month's sales in units.Inventory at March 31 is 480 units.Purchases are paid 50% in the month of purchase and 50% in the following month.At March 31,the balance in accounts payable is $11,000,which represents the unpaid purchases from March.Operating expenses are paid in the month incurred and consist of: · Commissions (10% of sales) · Shipping (3% of sales) · Office salaries ($3,000 per month) · Rent ($5,000 per month) Depreciation is $2,000 per month.Income taxes are 40%,and will be paid on July 1.There are no taxes payable at March 31.A minimum cash balance of $12,000 is required,and the beginning cash balance is $12,000.Loans are obtained at the end of any month when a cash shortage occurs.Interest is 1% per month based on the beginning of the month loan balance and is paid at each month end.If an excess balance of cash exists,loans are repaid at the end of the month.At March 31,the loan balance is $2,000.Prepare a master budget (round all dollar amounts to the nearest whole dollar)for each of the months of April,May,and June that includes the: · Sales budget · Table of cash receipts · Merchandise purchases budget · Table of cash disbursements for purchases of merchandise · Table of cash disbursements for selling and administrative expenses · Cash budget,including information on the loan balance · Budgeted income statement

Berkley Co.'s sales are 10% cash and 90% on credit.Credit sales are collected as follows: 30% in the month of sale,50% in the next month,and 20% in the following month.On December 31,the accounts receivable balance includes $12,000 from November sales and $42,000 from December sales.Assume that total sales for January are budgeted to be $50,000.What are the expected cash receipts for January from the current and past sales?

Long-term liability data for the budgeted balance sheet is derived from:

The master budget consists of three major groups of budget components: the operating budgets,the capital expenditures budgets,and the financial budgets.

The responsibility for coordinating the preparation of a master budget should be assigned to the Chief Executive Officer.

Tappet Corporation is preparing its master budget for the quarter ending March 31.It sells a single product for $25 a unit.Budgeted sales are 40% cash and 60% on credit.All credit sales are collected in the month following the sales.Budgeted sales for the next four months follow: At December 31,the balance in accounts receivable is $10,000,which represents the uncollected portion of December sales.The company desires merchandise inventory equal to 30% of the next month's sales in units.The December 31 balance of merchandise inventory is 340 units,and inventory cost is $10 per unit.Forty percent of the purchases are paid in the month of purchase and 60% are paid in the following month.At December 31,the balance of Accounts Payable is $8,000,which represents the unpaid portion of December's purchases.Operating expenses are paid in the month incurred and consist of: · Sales commissions (10% of sales) · Freight (2% of sales) · Office salaries ($2,400 per month) · Rent ($4,800 per month) Depreciation expense is $4,000 per month.The income tax rate is 40%,and income taxes will be paid on April 1.A minimum cash balance of $10,000 is required,and the cash balance at December 31 is $10,200.Loans are obtained at the end of a month in which a cash shortage occurs.Interest is 1% per month,based on the beginning of the month loan balance,and must be paid each month.If an excess of cash exists,loan repayments are made at the end of the month.At December 31,the loan balance is $0.Prepare a master budget (round all dollar amounts to the nearest whole dollar)for each of the months of January,February,and March that includes the: · Sales budget · Table of cash receipts · Merchandise purchases budget · Table of cash disbursements for merchandise purchases · Table of cash disbursements for selling and administrative expenses · Cash budget,including information on the loan balance · Budgeted income statement

Rich Company's experience shows that 20% of its sales are for cash and 80% are on credit.An analysis of credit sales shows that 50% are collected in the month following the sale,45% are collected in the second month,and 5% prove to be uncollectible.Calculate

The sales budget for Carmel shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12,respectively.The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units.The beginning inventory of Product B is 2,500 units.The desired ending inventory of B is 3,000 units.Total budgeted sales of both products for the year would be:

A manufacturing budget should include a list of equipment to be scrapped and additional equipment to be purchased if the proposed production budget is carried out.

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and replacing budgets for periods that have lapsed.

The budget process is usually administered by a _____________________.

Assuming a bottom-up process of budget development,which of the following should be initially responsible for developing sales estimates?

What is a manufacturing budget?