Exam 9: The Master Budget

Lough Company prepared the following purchases budget: All purchases are paid for as follows: 20% two months after purchase,55% in the following month,and 25% in the month of purchase. What are the cash disbursements in October to account for the September purchases at Lough Company?

Which of the following budgets is a major part of the master budget and it focuses on the income statement and its supporting schedules?

Meers Corporation had beginning inventory of 21,000 units and expects sales of 76,500 units during the year.Desired ending inventory is 19,500 units.How many units should Meers Corporation produce?

When creating the sales budget,management simply takes the sales from the year before and divides that total by 12 months.Thus,each month will always predict the same amount of budgeted sales.

Regarding the budgeting process,which of the following statements is true?

Goliath Company prepared the following purchases budget: All purchases are paid for as follows: 30% in the month of purchase,45% in the following month,and 25% two months after purchase. What are the total cash disbursements in October to account for the purchase of merchandise at Goliath Company?

One of the key benefits of budgeting is that it forces managers to plan.

The managerial accountant at the Holly and Ivy Tree Store reported that the company anticipates sales of $600,000 in September and October,$625,000 in November,$635,000 in December,and note that the sales figure is $640,000 in January.The August sales revenue was equal to the September sales revenue.The managerial accountant establishes the prices at the Holly and Ivy Tree Store on its merchandise to ensure the company earns 45% gross profit on its sales.The managerial accountant expects the ending inventory at the store to equal 12% of the next month's cost of goods sold. Compute the COSG,inventory,and purchases budget for October,November,and December.

A company's plan to purchase property,plant,equipment,and other long-term assets is part of the budgeted balance sheet.

The final step in the preparation of the financial budget is the preparation of which of the following?

On the production budget,the number of units to be produced is computed as

Strategic planning enables the organization to establish long-term goals that extend 5-10 years into the future.

The master budget of a service company has fewer individual budget components compared to the master budget of a manufacturing company.

Loyal Pet Company expects to sell 5,000 beefy dog treats in January and 9,000 in February for $3 each.What will be the total sales revenue reflected in the sales budget for those months?

The Porch Cushion Company manufactures foam cushions.The number of cushions to be produced in the upcoming three months follows: Each cushion requires 2 pounds of the foam used as stuffing.The company has a policy that the ending inventory of foam each month must be equal to 25% of the following month's expected production needs.How many pounds of foam does The Porch Cushion Company need to purchase in August?

The managers at manufacturing,merchandising,and service companies prepare operating expenses budgets.

Piatt Company expects cash sales for July of $15,000,and a 26% monthly increase during August and September.Credit sales of $12,000 in July should be followed by 30% increases during August and September.What are budgeted cash sales and budgeted credit sales for September respectively?

Merchandising companies prepare a direct materials budget.

Distribution Corporation collects 40% of a month's sales in the month of sale,55% in the month following sale,and 5% in the second month following sale.Budgeted sales for the upcoming four months are: The amount of cash that will be collected in July is budgeted to be

Fosnight Enterprises prepared the following sales budget: The expected gross profit rate is 30% and the inventory at the end of February was $10,000.Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What is the desired ending inventory on May 31?