Exam 22: Master Budgets

Farmerlands Enterprises has budgeted sales for the months of September and October at $300,000 and $280,000, respectively. Monthly sales are 80% credit and 20% cash. Of the credit sales, 50% are collected in the month of sale and 50% are collected in the following month. Calculate cash collections for the month of October.

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 cash balance at the end of August taking into consideration all the financing transactions.

Fulkron Manufacturing provides the following data excerpted from its 3rd quarter budget: The cash balance on June 30 is projected to be $10,000. Based on the above data, calculate the shortfall the company is projected to have at the end of September.

Which of the following describes the production budget?

Sensitivity analysis is a what-if technique.

Use of advanced technology makes it more cost effective for managers to conduct sensitivity analysis.

The financial budget of a merchandiser is similar to that of a manufacturer.

Purchases for May were $100,000, while expected purchases for June and July are $110,000 and $125,000, respectively. All purchases are paid 25% in the month of purchase and 75% the following month. Calculate the budgeted payments for the month of June.

Which of the following is an example of the planning function of a budget?

Dry Fruit Grocers a local grocer has budgeted inventory purchases as follows: October: $300,000 November: $350,000 December: $390,000 Dry Fruit Grocers pays for 20% of their purchases during the month of purchase, 70% during the month following the purchase, and the remaining 10% two months after the month of purchase. What is the budgeted accounts payable balance on December 31?

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 are incurred and the remaining 40% are paid one month later. In addition, 50% of salary expenses are paid in the same month 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 has been paid in advance for the year on January 1^st. Calculate total budgeted cash payments for selling and administrative expenses for the month of April.

Unlike a manufacturing company, the cash budget is the cornerstone for the master budget of a merchandiser.

A manufacturer has budgeted sales for the first quarter of the next year to be 30,000 units. The inventory in hand at the beginning of quarter is 5,000 units. The desired ending inventory is 10,000 units. Calculate the budgeted production for the quarter.

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. How much will the company have to borrow at the end of August?

The ________ details how the business expects to go from the beginning cash balance to the desired ending cash balance.

For a merchandiser, the budgeted sales equals the number of units budgeted for sale multiplied by the budgeted selling price per unit.

While preparing the budgeted income statement of a merchandiser, the amount of cost of goods sold can be taken from:

Which of the following statements is true of the budgeting process?

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 ending cash balance before financing for August.

Fulkron Manufacturing provides the following data excerpted from its 3rd quarter budget: The cash balance on June 30 is projected to be $10,000. Based on the above data, calculate the shortfall the company is projected to have at the end of August.