Exam 9: The Master Budget

Roman Company is preparing its cash budget for the upcoming month. The budgeted beginning cash balance is expected to be $37,000. Budgeted cash receipts are $101,000, while budgeted cash disbursements are $129,000. Roman Company wants to have an ending cash balance of $40,000. How much would Roman Company need to borrow to achieve its desired ending cash balance?

Sander Enterprises prepared the following sales budget: The expected gross profit rate is 20% and the inventory at the end of February was $5000. Desired inventory levels at the end of the month are 30% of the next month's cost of goods sold. What are the total purchases budgeted for May?

Flawless Lawns Manufacturing produces lawn edger's. The company has a policy that the ending inventory in any month must be 10% of the following month's expected sales. On March 31, Flawless Lawns Manufacturing had 140 lawn edger's in inventory. Flawless Lawns Manufacturing expects to sell the following number of lawn edger's in each of the next four months: Required: Prepare a production budget for the second quarter, with a column for each month and for the quarter.

Fosnight Enterprises prepared the following sales budget: The expected gross profit rate is 30% and the inventory at the end of February was $5000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What are the total purchases budgeted for May?

Sally Scooters manufactures and sells scooters. Each scooter requires two rear view mirrors. For September, Sally Scooters has budgeted sales of 415 scooters, while 450 scooters are scheduled to be produced. Sally Scooters will begin September with 220 rear view mirrors in its beginning inventory. How many rear view wheels should Sally Scooters purchase for September?

For Dubinsky Company, experience has shown that payment for the credit sales is received as follows: 40% in the month of sale, 40% in the first month after sale, 10% in the second month after sale, and 10% uncollectible. Dubinsky Company has budgeted the following credit sales during the last four months of the year: September, $15,000; October, $18,000; November $16,000; December, $34,000. How much cash can Dubinsky Company expect to collect in November as a result of credit sales?

Strategic planning is beneficial because the organization can

A budget is a quantitative expression of a plan that helps managers coordinate and implement the plan.

A manager considers all of the following when he or she prepares the cash budget except

Daisy Company manufactures dog collars. The following selected data relates to Daisy Company's budgeted sales and inventory levels of the dog collars for the upcoming quarter: How many dog collars should Daisy Company produce in November?

The sales budget must be prepared after every other component of the operating budget.

Willard's Department Store has budgeted cost of goods sold of $38,000 for its men's shorts in March. Management also wants to have $7200 of men's shorts in inventory at the end of March to prepare for the summer season. Beginning inventory of men's shorts for March is expected to be $5800. What dollar amount of men's shorts should be purchased in March?

The cash budget helps managers determine whether or not the company requires financing in a given month.

Merchandising companies prepare a manufacturing overhead budget.

Merchandisers use a "cost of goods sold, inventory, and purchases budget" to calculate the amount of merchandise to purchase.

Speedy Runner makes running shoes and they have gathered the following data for the month of October: Speedy Runner requires an ending cash balance of at least $12,000 and can borrow from a line of credit in $1,000 increments. What is the ending cash balance for October?

________ is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.

The ________ budget starts with the number of units to be produced.

Whistle Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget: Whistle Works sells each whistle for $12. They have a desired ending inventory for production of 20% of the next month's budgeted sales in units. How many units does Whistle Works need to produce in November?

Which of the following statements about budgeting is not true?