Exam 22: The Master Budget and Responsibility Accounting

Which of the following describes the cash budget?

Chaterlain Company is preparing its budget for the 3^rd quarter. Cash balance at June 30 was $11,000. Additional budgeted data is provided here: Jul Aug Sep Cash collections \ 42,000 \ 51,000 \ 39,000 Cash payments: Purdhrses of invertory 14,000 9,000 11,000 Operating Experses 25,000 22,700 30,900 Capital expenditures 5,200 9,000 14,000 - What amount should be shown in the cash budget for the cash balance at the end of August?

Which of the following budgets focuses on the income statement and its supporting schedules?

AAA Company is preparing its 3rd quarter budget and provides the following data: Jul Aug Sep Cash collections \ 50,000 \ 40,000 \ 48,000 Cash payments: Purchases of inventory 31,000 22,000 18,000 Operating expenses 12,000 9,000 11,600 Capital expenditures 13,000 25,000 0 Cash balance at June 30 is projected to be $4,000. The company is required to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and pays interest monthly at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. Loan balance should be repaid in increments of $5,000 when there is surplus cash. - What will the final cash balance be at the end of August, after all required financing transactions have been taken into consideration?

Linda Diaz is responsible for managing the hand tool product line of a large manufacturing company. Linda's business unit would most accurately be described as a(n):

Zygot Biotech Company is budgeting for the 3rd quarter, and provide the following data: Jul Aug Sep Cash collections \ 50,000 \ 40,000 \ 48,000 Cash payments: Purchases of inventory 31,000 22,000 18,000 Operating expenses 12,000 9,000 11,600 Capital expenditures 0 19,000 0 The cash balance at June 30 is projected to be $5,600. There are no financing transactions planned in the 3rd quarter. - What is the projected cash balance at the end of August?

Henderson Industrial Products Company has three divisions-Construction, Manufacturing, and Military. It has also identified costs associated with several common service departments and has traced those costs to each division. The Construction Division Income Statement is shown here: Construction Division Income Statement Division Total Civil Residential Commercial Sales revenue \ 350,000 \ 36,000 \ 98,000 \ 216,000 Variable expenses \ 125,000 \ 24,000 \ 41,000 \ 60,000 Contribution margin \ 225,000 \ 12,000 \ 57,000 \ 156,000 Traceable fixed expenses \ 144,000 \ 20,250 \ 40,500 \ 83,250 Product margin \ 81,000 (\ 8,250) \ 16,500 \ 72,750 Non-traceable expenses \ 48,000 Division margin \ 33,000 Henderson is now consolidating the division data into a company income statement. The format is shown below, including the data from the other two divisions-Manufacturing and Military. Using this format, please insert the relevant data for the Construction Division and complete the statement. Henderson Industrial Products - Income Statement Company Total Construction Manufacturing Military Sales revenue \ 220,000 \ 88,000 Variable expenses \ 52,000 \ 44,000 Contribution margin \ 168,000 \ 44,000 Traceable fixed expesnes \ 144,000 \ 48,000 Divisional segment margin \ 24,000 (\ 4,000) Non-traceable expenses \ 21,000 Net operating income

Which of the following is an example of the planning function of a budget?

California Products Company has the following data as part of its budget for the 2^nd quarter: Apr May Jun Cash collections \ 30,000 \ 32,000 \ 36,000 Cash payments: Purchases of inventory 4,500 4,600 3,800 Operating expenses 7,200 7,600 8,000 Capital expenditures 0 24,500 5,200 The cash balance at April 1 is forecast to be $8,200. - Assume that there will be no financing transactions or costs during the quarter. Based on the above information only, what will the cash balance be at May 31?

AAA Company is preparing its 3rd quarter budget and provides the following data: Jul Aug Sep Cash collections \ 50,000 \ 40,000 \ 48,000 Cash payments: Purchases of inventory 31,000 22,000 18,000 Operating expenses 12,000 9,000 11,600 Capital expenclitures 0 19,000 0 Cash balance at June 30 is projected to be $4,000. The company is required to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and pays interest monthly at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. Loan balance should be repaid in increments of $5,000 when there is surplus cash. Using the format below, please complete the cash budget: Cash Budget Jul Aug Sep Beginning cash balance Cash collections Cash available Cash payments: Purchases of inventory Operating expenses Capital expenditures Total cash payments Ending cash balance before financing Minimum cash balance desired Cash excess/(deficiency) Financing Borrowing at end of month Principal payments at end of month Interest expense at 5\% Total effects of financing Ending cash balance

Hi-value Products Company is creating an operating budget for the 3^rd quarter. Budgeted sales are $100,000 in July, $120,000 in August, $160,000 in September, and $200,000 in October. Cost of goods sold is 60% of sales. The desired ending inventory is 50% of the Cost of goods sold for the following month, plus a "safety cushion" of $2,000. The inventory balance at the end of June was $50,000. Using the format below, please prepare a budget for Inventory, Purchases and Cost of goods sold. Inventory, Purchases and C.O.G.S. Budget Jul Aug Sep Cost of goods sold (a) Desired ending inventory(b) Total inventory required less Beginning inventory Purchases (a) COGS = 60% of sales (b) $2,000 + 50% of COGS for next month

Which of the following statements is TRUE about the financial budget?

Farmington Enterprises has budgeted sales for the months of September and October at $300,000 and $280,000, respectively. Monthly sales are 80% credit and 20% cash. Of the credit sales, 50% are collected in the month of sale and 50% are collected in the following month. What are the October cash collections from customers?

Dahl Manufacturing is making its operating budget for the 4^th quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows: Variable: Miscellaneous: 5\% of sales Fixed: Salary expense: \ 12,600 per month Rent expense: \ 5,200 per month Depreciation expense: \ 4,000 per month Admin expense: \ 5,000 per month - How much are the total operating expenses in December?

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for Inventory, which document should be used?

At a company with different business units, individual managers can modify various assumptions of their budget in order to determine how the modifications would affect the operational and financial results. This is an example of:

At June 30, 2012, Alpha Company's cash balance is $4,000. Alpha is now preparing their cash budget for the third quarter of 2012. The following data is provided: For the budgeted balance sheet at September 30, 2012, what amount of Cash should be shown?

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for Retained earnings, which document should be used?

Craig Manufacturing Company's budgeted income statement includes the following data: Data extracted from budgeted income statement Mar Apr May Jun Sales \ 120,000 \ 90,000 \ 95,000 \ 100,000 Commission exp. - 15\% of sales 18,000 13,500 14,250 15,000 Salary exp 30,000 30,000 30,000 30,000 Miscellaneous expense - 4\% of sales 4,800 3,600 3,800 4,000 Rent expense 3,600 3,600 3,600 3,600 Utility expense 1,900 1,900 1,900 1,900 Insurance expense 2,100 2,100 2,100 2,100 Depreciation expense 4,400 4,400 4,400 4,400 The budget assumes that 60% of commission expenses are paid in the month they were incurred and the remaining 40% are paid one month later. In addition, 50% of salary expenses are paid in the month incurred and the remaining 50% are paid one month later. Miscellaneous expenses, rent expense and utility expenses are assumed to be paid in the same month in which they are incurred. Insurance was prepaid for the year on January 1. - How much is the total of the budgeted cash payments for operating expenses for the month of April?

Bartholomew Manufacturing Company is preparing the operating budget for the first quarter of 2012. They forecast sales of $50,000 in January, $60,000 in February, and $70,000 in March. Cost of goods sold is budgeted at 40% of Sales. Variable and fixed expenses are as follows: Variable: $\quad$ Miscellaneous expenses : $20 \%$ of Sales Fixed: $\quad$$\quad$ Salary expense: $\$ 11,000$ per month $\quad$$\quad$$\quad$$\quad$ Rent expense: $\$ 5,000$ per month $\quad$$\quad$$\quad$$\quad$ Depreciation expense: $\$ 1,200$ per month $\quad$$\quad$$\quad$$\quad$ Miscellaneous expenses/fixed portion: $\$ 3,300$ per month - How much is the operating net income/(loss) for January?