Exam 9: Budgeting

The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation. -If the budgeted production for August is 5,000 units,what is the total budgeted factory overhead per unit?

Fairmont Inc.uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs.For example,if the sales manager accepts a rush order that will result in higher than normal manufacturing costs,these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager.What best describes this type of an accounting system?

The LFM Company makes and sells a single product: Product T. Each unit of Product T requires 1.3 hours of labour at a labour rate of $9.10 per hour. LFM Company needs to prepare a Direct Labour Budget for the second quarter of next year. -The company has budgeted to produce 25,000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 500 and 700 units,respectively.What would be the budgeted direct labour costs incurred in June?

Budgeted sales in Allen Company over the next four months are given below: September October November December Budgeted Sales \ 100,000 \ 160,000 \ 180,000 \ 120,000 Twenty-five percent of the company's sales are for cash,and 75% are on account.Collections for sales on account follow a stable pattern as follows: 50% of a month's sales are collected in the month of sale,30% are collected in the month following sale,and 15% are collected in the second month following sale.The remainder is uncollectible.Given these data,what should be cash collections for December?

There are various budgets within the master budget.One of these budgets is the production budget.Which of the following best describes the production budget?

The cash budget must be prepared before you can complete which of the following?

The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable cost per unit sold Monthly fixed cost Sales commissions \ 0.70 Shipping 1.10 Advertising 0.20 \1 4,000 Executive salaries 34,000 Depreciation on office equipment 11,000 Other 0.25 19,000 All expenses other than depreciation are paid in cash in the month they are incurred. -If the budgeted cash disbursements for selling and administrative expenses for November total $123,250,then how much was the total selling and administrative budget for November?

Isadore Hospital bases its budgets on patient-visits. The hospital's static budget for July appears below: Actual number of patient-visits 7,800 Supplies \ 38,250 Laundry \ 61,240 Salaries \ 46,190 Occupancy costs \ 65,650 -What is the variance for supplies costs in the flexible budget performance report for the month?

A sales budget is given below for one of the products manufactured by the OMI Co.: Tanuary 25,000 units February 40,000 units March 65,000 units April 45,000 units May 35,000 units June 30,000 units The inventory of finished goods at the end of each month must equal 20% of the next month's sales.However,on December 31,the finished goods inventory totalled only 4,000 units. Each unit of product requires three kilograms of specialized material.Since the production of this specialized material by OMI's suppliers is sometimes irregular,the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs.This requirement had been met on January 1 of the current year. Required: Prepare a budget showing the quantity of material to be purchased each month for January,February,and March,and in total for the quarter.

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below: Budgeted number of patient-visits 8,300 Budgeted variable overhead costs: Supplies (@ \5 .00 per patient-visit) \ 41,500 Laundry (@ \7 .30 per patient-visit) Total variable overhead cost 102,090 Budgeted fixed overhead costs: Wages and salaries 60,590 Occupancy costs Total fixed overhead cost 133,630 Total budgeted overhead cost \ 235,720 -What should be the total overhead cost at an activity level of 9,400 patient-visits per month?

Mongelli Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion.The Inn's guests appreciate its gourmet breakfasts and individually decorated rooms.The Inn's overhead budget for the most recent month appears below: Activity level 90 guests Variable overhead costs: Supplies \ 234 Laundry 315 Fixed overhead costs: Utilities 220 Salaries and wages 4,290 Depreciation 2,680 Total overhead cost \ 7,739 The Inn's variable overhead costs are driven by the number of guests. Assuming that the activity levels of 90 guests and 99 guests are within the same relevant range and rounding to the nearest dollar,what would be the total budgeted overhead cost for a month if the activity level is 99 guests?

nformation on the actual sales and inventory purchases of the Law Company for the first quarter follow: Inventory Sales Purchases January \ 120,000 \ 60,000 February 100,000 78,000 March 130,000 90,000 Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month. The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000. -What would be the expected cash disbursements during April for operating expenses?

The Bandeiras Company, a merchandising firm, has budgeted its activity for December according to the following information: I. Sales at $550,000, all for cash. II. Merchandise inventory on November 30 was $300,000. III. Budgeted depreciation for December is $35,000. IV. The cash balance at December 1 was $25,000. V. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash. VI. The planned merchandise inventory on December 31 is $270,000. VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash. -What are the budgeted cash receipts for December?

Barley Enterprises has budgeted unit sales for the next four months as follows: October 4,800 units November 5,800 units December 6,400 units January 5,200 units The ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on September 30 was below this level and contained only 600 units. -What is the desired ending inventory for December?

Budgets are used for planning rather than for control of operations.

ABC Company has a cash balance of $9,000 on April 1.The company must maintain a minimum cash balance of $6,000.During April,expected cash receipts are $45,000.Expected cash disbursements during the month total $52,000.What amount will the company need to borrow during April?

The Shoe Company, a merchandising firm, has budgeted its activity for April according to the following information: I. Sales at $650,000, all for cash. II. Merchandise inventory on March 31st was $300,000. III. Budgeted depreciation for April is $35,000. IV. The cash balance at April 1 was $25,000. V. Selling and administrative expenses are budgeted at $60,000 for April and are paid in cash. VI. The planned merchandise inventory on April 30 is $270,000. VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash. -What are the budgeted cash receipts for April?

Clay Company has projected sales and production in units for the second quarter of the coming year as follows: Apri May June Sales 50,000 40,000 60,000 Production 60,000 50,000 50,000 Cash-related production costs are budgeted at $5 per unit produced.Of these production costs,40% are paid in the month in which they are incurred and the balance in the following month.Selling and administrative expenses will amount to $100,000 per month.The accounts payable balance on March 31 totals $190,000,which will be paid in April. All units are sold on account for $14 each.Cash collections from sales are budgeted at 60% in the month of sale,30% in the month following the month of sale,and the remaining 10% in the second month following the month of sale.Accounts receivable on April 1 totalled $500,000 ($90,000 from February's sales and the remainder from March). Required: a)Prepare a schedule for each month showing budgeted cash disbursements for Clay Company. b)Prepare a schedule for each month showing budgeted cash receipts for Clay Company.

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) A zero amount is designated by a dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars. Carney Corporation Cash Budget -What are the total disbursements during the third quarter (item f),in thousands of dollars?

Which of the following best describes the direct materials purchase budget?