Exam 14: Planning for Profit and Cost Control

The accounts payable balance at the beginning of the year was $85,000. The company purchased $380,000 worth of goods on account, and the ending balance of the payables account was $70,000. What were the total payments on account?

Sales for January are budgeted at 50,000 units, and the company expects sales to increase 4% each month. How many units will need to be purchased in February if the company's policy is to keep ending inventory each month at 10,000 units?

O'Hare Company is in the process of preparing a purchases budget for the first quarter of Year 2. The company has budgeted sales as follows: Cost of goods sold is expected to be 75% of sales. The company would like to have ending inventory each month equal to 25% of the following month's predicted cost of sales. The total cost of purchases in January Year 2 is:

What is the amount of sales commissions payable that the company will report on its pro forma balance sheet at the end of the fourth quarter?

Bright Minds Toy Company prepared the following sales budget for the second quarter. Projected sales for each of the first three months of operations are as follows: Bright Minds expects to collect 70% of the sales on account in the month of sale, and 20% in the month following the sale, and the remainder in the second month following the sale. What is the amount of budgeted cash collections for June?

What is the total amount of S&A expenses for the fourth quarter that the company will report on its pro forma income statement?

The three major components of the master budget are the financial budgets, the capital budgets, and the pro forma financial statements.

Which of the following is a benefit associated with budgeting?

Which section is not included on the cash budget?

Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?

Oakton Furniture provided the following information relevant to its sales for December Year 1 and the first quarter of Year 2: Based on the company's collection history, 42% of credit sales are collected in month of sale and the remainder is collected in the following month. Total budgeted cash receipts in February are expected to be:

The budgeting process formalizes and documents managerial plans to clearly communicate objectives to both superiors and subordinates. This budgeting requirement is an example of:

Which of the following accounts would appear on the inventory purchases budget and pro forma balance sheet?

Which of the following statements is incorrect?

Select the correct statement regarding the selling and administrative (S&A) expense budget.

Which of the following would not be included in a selling and administrative expenses budget?

Which of the following items is not needed to prepare a sales budget by product line?

The first budget prepared in a master budget is the cash receipts budget.

Pro forma financial statements are financial statements that are prepared based on budgeted future amounts.

A company's numerous specific budgets (sales, inventory purchases, etc.) together are referred to as the: