Exam 11: The Master Budget

Projected sales for Kenworth Inc. for next year and beginning and ending inventory data are as follows: Each unit requires 5 pounds of material which costs $3.00 per pound. The beginning inventory of raw materials is 5,000 pounds. The company wants to have 3,000 pounds of material in inventory at the end of the year. Each unit produced requires 2 hours of direct labour time, which is billed at $8 per hour. -The budgeted number of total direct labour hours needed would be

The following sales budget has been prepared: Collections are 50 percent in the month of sale, 40 percent in the month following the sale, and 10 percent two months following the sale. No uncollectible accounts are anticipated. -The total cash collections in November will be

Johnson Company has gathered the following information: April 30, cash balance, $90,000 Dividends paid in May, $24,000 Cash expenditures in May for operating expenses, $73,600 Amortization expense in May, $9,000 Cash collections in May, $178,000 Merchandise purchases paid in cash in May, $112,400 Purchased equipment for cash in May, $35,000 Johnson desires to keep a minimum cash balance of $20,000. Required: Prepare a cash budget for May, and indicate whether or not Johnson meets minimum cash requirements.

________ are another term for forecasted financial statements.

Carey Company prepared the following purchases budget: Purchases are paid for in the following manner: 10 percent in the month of purchase 50 percent in the month after purchase 40 percent two months after purchase Required: Prepare a schedule of cash disbursements for purchases for March through May.

An example of a financial budget is a(n)

Mickle Company has the following information: Purchases are paid for in the following manner: 20 percent in the month of purchase 50 percent in the month after purchase 30 percent two months after purchase -Which of the following statements is NOT true?

Crouse Corporation has the following information: The cost of goods sold percentage is 65 percent, and the desired inventory level is 25 percent of next month's sales. -The total purchases budgeted for June should be

Crouse Corporation has the following information: The cost of goods sold percentage is 65 percent, and the desired inventory level is 25 percent of next month's sales. -The desired ending inventory for June is

A capital budget is a periodic business plan that includes a coordinated set of detailed operating schedules and financial statements.

Mickle Company has the following information: Purchases are paid for in the following manner: 20 percent in the month of purchase 50 percent in the month after purchase 30 percent two months after purchase -Which of the following factors would NOT be considered by sales forecasters?

The result of decisions to create conditions that will generate a desired level of sales.

The second step in preparing the master budget is preparing the

________ is a major part of a master budget that focuses on the income statement and its supporting schedules.

Miller Company has the following data: The gross profit rate is 40 percent, and the inventory at the end of December was $72,000. Desired inventory levels are 30 percent of next month's sales. -The total purchases budgeted for February should be

The accuracy of estimated purchases budgets, production schedules, and costs depends on the detail and accuracy of the budgeted operating expenses.

Mickle Company has the following information: Purchases are paid for in the following manner: 20 percent in the month of purchase 50 percent in the month after purchase 30 percent two months after purchase -The collection of cash from customers would appear on which of the following?

Producing forecasted financial statements for five- or ten-year periods.

Adel, Inc. has the following information: Budgeted Expenses per Month Note: All cash expenses are paid as incurred. -The total cash disbursements for expenses in February should be

Ogden Manufacturing Company has the following information: Budgeted Expenses per Month Note: All cash expenses are paid as incurred. -The total cash disbursements for expenses in January should be