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 July is 6,000 units,what is the total budgeted factory overhead for July?

Noel Enterprises has budgeted sales in units for the next five months as follows: January 6,800 units February 5,400 units March 7,200 units April 4,600 units May 3,800 units Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year. -What is the desired ending inventory for March?

What is a continuous (or perpetual)budget?

Montero Corporation,a merchandising company,has provided the following budget data: Purchases Sales January \ 42,000 \ 72,000 February 48,000 66,000 March 36,000 60,000 April 54,000 78,000 May 60,000 66,000 Collections from customers are normally 70% in the month of sale,20% in the month following the sale,and 9% in the second month following the sale.The balance is expected to be uncollectible.Montero pays for purchases in the month following the purchase.Cash disbursements for expenses other than merchandise purchases are expected to be $14,400 for May.Montero's cash balance on May 1 was $22,000. Required: A)Compute the expected cash collections during May. B)Compute the expected cash balance on May 31.

Marple Company's budgeted production in units and budgeted raw materials purchases over the next three months are given below: January February March Budgeted Production (in Units) 60,000 ? 100,000 Budgeted Raw Materials: Purchases 129,000 165,000 188,000 (in Kilograrns) Two kilograms of raw materials are required to produce one unit of product.The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs.The company is expected to have 36,000 kilograms of raw materials on hand on January 1.What should be the budgeted production for February?

Parlee Company's sales are 30% in cash and 70% on credit.Sixty percent of the credit sales are collected in the month of sale,25% in the month following sale,and 12% in the second month following sale.The remainder is uncollectible.The following are budgeted sales data: January February March April Total Sales \ 60,000 \ 70,000 \ 50,000 \ 30,000 What would be the budgeted total cash receipts in April?

The LaGrange Company had the following budgeted sales for the first half of the current year: Cash Sales Credit Sales January \ 70,000 \ 340,000 February 50,000 190,000 March 40,000 135,000 April 35,000 120,000 May 45,000 160,000 June 40,000 140,000 The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled: Collections on sales: 60% in month of sale 30% in month following sale 10% in second month following sale The accounts receivable balance on January 1 of the current year was $70,000, of which $50,000 represents uncollected December sales and $20,000 represents uncollected November sales. -What would be the total cash collected by LaGrange Company during January?

O'Connors Inc., a small retail store, had the following results for May. The budgets for June and July are also given. May (actual) June (budget) July (budget) Sales \ 42,000 \ 40,000 \ 45,000 Cost of sales Gross margin 21,000 20,000 22,500 Operating expenses 20,000 20,000 20,000 Operating income \ 1,000 \ 0 \ 2,500 Sales are collected 70% in the month of the sale and the balance in the month following the sale. (There are no bad debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month following the purchase. The operating expenses are paid in the month of the sale. -What should be the cash disbursements during the month of June for goods purchased for resale and for operating expenses?

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below: Expected Sales January \ 10,000 February 24,000 March 16,000 April 25,000 The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred. -In a budgeted balance sheet,what would be the merchandise inventory on February 28?

The direct materials to be purchased for a period can be obtained by subtracting the desired ending inventory of direct materials from the total direct materials needed for the period.

Control involves developing objectives and preparing the various budgets to achieve those objectives.

The PDQ Company makes collections on credit sales according to the following schedule: 25% in month of sale 70% in month following sale 4% in second month following sale 1% uncollectible The following sales have been budgeted: Month Sales April \ 100,000 May 120,000 June 110,000 What would be the cash collections in June?

A continuous or perpetual budget is one that covers a 12-month period,but is constantly adding a new month onto the end of the 12-month period as the current month is completed.

Which of the following best describes a typical participative budget?

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below: Expected Sales January \ 10,000 February 24,000 March 16,000 April 25,000 The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred. -In a budgeted income statement for the month of February,what would be the net income?

In the merchandise purchases budget,the required purchases (in units)for a period can be determined by subtracting the beginning merchandise inventory (in units)from the budgeted sales (in units).

Roberts Enterprises has budgeted sales in units for the next five months as follows: June 4,500 units July 7,100 units August 5,300 units September 6,700 units October 3,700 units Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on May 31 contained 410 units. The company needs to prepare a production budget for the second quarter of the year. -What is the opening inventory in units for September?