Exam 9: Profit Planning

October 75,000 November 98,000 December 63,000 Each jar requires half a pound of berries. Yummy prefers to buy the freshest berries, so its policy is to have just 3% of the following month's production needs in ending inventory. On October 1, the company had 1,125 pounds of berries in inventory. Yummy's pays $0.60 per pound of berries. It buys all berries on account and typically pays 40% of a month's purchases in that month, and the remaining 60% the following month. -Refer to Figure 9-9. How many pounds of berries will be purchased during the month of November?

SR200 TX500 May 8,000 20,000 June 13,000 32,000 July 11,000 39,000 August 18,000 46,000 Kenner's ending inventory policy is that SR200 should have 15% of next month's sales in ending inventory and TX500 should have 40% of next month's sales in ending inventory. On May 1, there were 1,200 units of SR200 and 9,000 units of TX500.TX500 requires 6 units of component A. (SR200 does not use component A.) There were 30,000 units of component A in inventory on May 1. Kenner wants to have 20% of the following month's production needs in inventory for Component A. -Refer to Figure 9-2. What is the budgeted production of SR200 for May in units?

The sales budget is used directly in the development of the production budget.

_________________ are used to ensure that budgeted costs can be realistically compared with costs for actual levels of activity.

Watson Corporation manufactures boxes. The estimated numbers of boxes sold for the first three months of 2014 are as follows: Month Sales January 3,000 February 4,200 March 3,900 Finished goods inventory at the end of December was 600 units. Ending finished goods inventory is equal to 20% of the next month's sales. Watson Corporation expects to sell the boxes for $5 each. April 2014 sales are projected at 4,500 boxes. How many boxes should be produced in February?

Identify each item as an advantage or disadvantage of budgeting. -improves communication and coordination

Identify each item as an advantage or disadvantage of budgeting. -leads to budgetary slack

Allison Company makes luggage. One popular model is the Traveler (a 21" wheeled carry-on). Budgeted sales for this model are: Desired ending inventory is 20% of the next month's sales. Inventory on March 1 is 3,100 units. Prepare a production budget for as many months as possible.

June Corporation has the following sales forecasts for the first three months of the current year: Month Sales January \ 36,000 February 24,000 March 40,000 75% of sales are collected in the month of the sale and the remainder is collected in the following month. Accounts receivable balance (January 1) \ 22,800 Cash balance (January 1) 22,000 Minimum cash balance needed 20,000 What is the cash balance at the end of January, assuming that cash is received only from customers and that $48,000 is paid out during January?

Budgeted operating income includes

In a (n) ____, as one month expires, an additional month in the future is added to the budget so that the company always has a 12-month plan on hand.

Boyle Company has put together the following data in order to complete their operating budget for the second quarter in 20XX: Additional information: Company policy requires 60% of next month's sales (in units) be in ending inventory. This policy was met in March. It takes 2.5 hours of direct labor to produce one unit. The average wage cost is $14. Variable overhead rate is $6 per direct labor hour and fixed overhead is $15,000 per month. Required: A. Prepare a production budget for April, May, June and the quarter in total. B. Prepare a direct labor budget for April, May, June and the quarter in total. C. Prepare an overhead budget for April, May, June and the quarter in total.

Identify each item as either part of the operating budget or the financial budget. -ending finished goods inventory budget

Quillin Company had the following budgeted information for October:

Identify each item as a component of the production budget or the direct materials purchases budget. a.production budget b.direct materials purchases budget -units of raw materials needed for each unit of product

Budgets improve _________________.

A company expects the following sales for the coming year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units 40,000 30,000 60,000 80,000 Average selling price \ 5 \ 5 \ 5 \ 6 Budgeted sales revenue for the year is

Identify each item as a component of the production budget or the direct materials purchases budget. a.production budget b.direct materials purchases budget -ending inventory of product

Which of the following is not an advantage of participative budgeting?

The cash budget and budgeted balance sheet are part of the ________________.