Exam 22: Master Budgets

The budgeted income statements of both manufacturing and merchandising companies include a calculation of gross profit.

Budgets provide a benchmark that motivates employees and helps managers evaluate performance.

A3+ has prepared its 3rd quarter budget and provided the following data: The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the final projected cash balance at the end of September.

Which of the following describes the selling and administrative expenses budget?

The following details have been extracted from the budget of a merchandiser. Commission and salaries expenses are paid 50% in the month to which they relate and the balance in the next month. Rent and miscellaneous expenses are paid as and when they occur. Insurance is prepaid at the beginning of the quarter. Calculate cash payments for the selling and administrative expenses for the first quarter of the next year.

Uncle's Caps, a merchandiser, has provided the following budgeted amounts for the next budget period. A minimum cash balance of $250,000 is required to be maintained. The company can borrow in increments of $10,000 as and when required. Assume the company can borrow the needed funds at the end of the period. Calculate the ending cash balance for the budget period.

Nobell Inc. has a cash balance of $20,000 on April 1, 2015. They are now preparing the cash budget for the second quarter. Budgeted cash collections and payments are as follows: There are no budgeted capital expenditures or financing transactions during the quarter. Based on the above data, calculate the projected cash balance at the end of May.

Delleate Inc. has prepared the following purchases budget: All purchases are paid for as follows: 10% in the month of purchase, 50% in the following month, and 40% two months after purchase. Calculate total cash payments made in October for purchases.

Diemans Corp .has provided a part of its budget for the 2^nd quarter: The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. Calculate the cash balance at the end of June.

Which of the following best describes the term sensitivity analysis?

Which of the following is an example of the coordination and communication function of a budget?

A budget is a financial plan that managers use to coordinate a business's activities.

Cirag Manufacturing Company's budgeted income statement includes the following data: The budget assumes that 60% of commission expenses are paid in the month in which they are incurred and the remaining 40% are paid one month later. In addition, 50% of salaries expenses are paid in the month in which they are incurred and the remaining 50% are paid one month later. Miscellaneous expenses, rent expense and utility expenses are assumed to be paid in the same month in which they are incurred. Insurance was prepaid for the year on January 1. Calculate the budgeted cash payments for selling and administrative expenses for the quarter ending June 30.

A manufacturing company's budgeted income statement includes the following data: The budget assumes that 60% of commission expenses are paid in the month they were incurred and the remaining 40% are paid one month later. In addition, 50% of salary expenses are paid in the month incurred and the remaining 50% are paid one month later. Miscellaneous expenses, rent expense and utility expenses are assumed to be paid in the same month in which they are incurred. Insurance was prepaid for the year on January 1. How much is the total of the budgeted cash payments for selling and administrative expenses for the month of May?

Which of the following is useful to combine the data of different segments using different software, for the purpose of creating companywide budgets?

Which of the following budgets focuses on the income statement and its supporting schedules?

Freighters Inc. has the following budgeted figures: Calculate the ending merchandise inventory for the month of March.

June sales were $40,000 while projected sales for July and August were $50,000 and $60,000, respectively. Sales are 40% cash and 60% credit. All credit sales are collected in the month following the sale. Calculate expected collections for July.

The cash budget and the budgeted financial statements are collectively known as the:

A strategic budget will be as detailed as an operating budget.