Exam 9: Profit Planning

Every month, Lambert must make the following payments: Rent \ 5,000 Wages \ 14,000 Utilities \ 3,000 Telephone \ 400 Loan on equipment \ 1,200 In mid-October, Lambert expects to buy a new computer for $4,500 using the company credit card. Typically, the credit card bill is paid in full in the following month. September credit card purchases totaled $6,000. -Refer to Figure 9-7. What is Lambert's expected cash disbursement in October for purchases of goods?

Which of the following is an advantage of participative budgeting?

A company requires 200 pounds of plastic to meet the production needs of a product. It currently has 20 pounds of plastic inventory. The desired ending inventory of plastic is 60 pounds. How many pounds of plastic should be budgeted for purchasing during the coming period?

Borland Company makes backpacks. Its production budget for two months is: Borland uses two types of labor to make the backpacks: cutting labor and sewing labor. Each backpack requires 6 minutes, on average, of cutting labor. Each backpack requires 24 minutes of sewing labor. Borland has fixed overhead of $4,400 per month and variable overhead of $3 per direct labor hour. A. How many hours of cuthing labor are budgeted for July? B. How many hours of sewing labor are budigeted for July? C. What is the tatal amount of budgeted direct labor hours far July? D. What is the budgeted total averhead for the month of July?

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. What is the dollar cost of purchases for October?

What are the advantages of budgeting?

Production in units 3,000 Direct materials cost \ 7,000 Direct labor cost \ 10,000 Overhead cost \ 9,600 Sales commission per unit sold \ 4 Price per unit sold \ 29 Fixed selling and administrative expense \ 7,000 There were no beginning and ending inventories. -Refer to Figure 9-5. What is Sully's cost of goods sold per unit?

Salaries expense, advertising expense and depreciation expense would be included in the ______________________ budget.

Identify each item as a component of the production budget or the direct materials purchases budget. a.production budget b.direct materials purchases budget -sales in units

A __________________ is a moving 12-month budget.

Jones Corporation has the following budgeted sales for the selected four-month period: Month Unit Sales July 20,000 August 35,000 September 25,000 October 30,000 Required:

You are the senior accountant at Cannon Manufacturing and have been asked by the budget director to prepare the production budget for the upcoming quarter. The budget director stated that they chose you to prepare this budget because it is an important part of the overall operating budget and financial budget. Explain what the production budget calculates and how the production budget would affect other operating budgets and the financial budget.

Budgets identify objectives and the actions needed to achieve them because they are foresighted financial plans.

It takes 30 minutes of direct labor time to make one unit. Direct labor wages average $17 per hour. Variable overhead is applied at the rate of $5 per direct labor hour. Fixed overhead is budgeted at $56,500 per month. -Refer to Figure 9-4. What is the direct labor cost budgeted for November?

A company provided the following information on sales for the coming year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units 40,000 40,000 30,000 80,000 Average selling price \ 5 \ 5 \ 5 \ 6 Assuming that the beginning inventory is 3,000 units, and that the company policy is to have 25% of the next quarter's sales in ending inventory, which quarter will have the lowest production?

Cash budgets are often prepared monthly or even weekly.

_____________________ allows subordinate managers considerable say in how the budgets are established.

Budgets should be based on ideal standards to encourage everyone to reach for the highest level of performance.

There are as many direct materials purchases budgets as there are products.

Gilbert Company purchased $40,000 of goods in July and expects to purchase $60,000 of goods in August. Gilbert typically pays for 25% of purchases in the month of purchase and 75% in the following month. What are Gilbert Company's total expected cash disbursements for purchases in the month of August?