Exam 9: The Master Budget

Ted's Graduation Store sells graduation supplies to students through the college bookstore. The bank charges Ted's Graduation Store 3.25% on the total credit card sales each day to settle the credit card transactions. The college bookstore reported that consumers purchased $420 in credit card purchases. The managerial accountant needs to update the sales budget, the operating expenses budget, and the cash collections budget to account for the credit sales. What amount should the managerial accountant use to complete the sales budget, the operating expenses budget, and the cash collections budget? In which month should the managerial accountant show this data? What should the managerial accountant consider when updating the master budget?

Desired ending inventory is 20% of next month's sales. If cost of goods sold is $300,000 and next month's sales are $900,000, which of the following statements is true regarding purchases?

Rachel's Beach Shoppe charges tourists to use their credit cards to purchase merchandise at the vacation store. On Monday, Rachel sold $4500 in merchandise to tourists that used their credit cards to purchase beachwear at the store. The bank charges Rachel's store 1.30% of the total credit card purchases per day to settle the credit transactions. What is the total deposit Rachel expects the bank to deposit into her account after the total bank fees and charges are taken out of the credit purchases on Monday?

Birch Company manufactures coffee makers. The following selected data relates to Birch Company's budgeted sales and inventory levels of the coffee makers for the upcoming quarter. How many coffee makers should Birch Company produce in November? Show your calculations.

The first component of the operating budget is the production budget.

Whistle Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget: Whistle Works sells each whistle for $12. It takes 3 ounces of metal to produce each whistle at a cost of $0.50 per ounce. They prefer to have 10% of materials required for the following month's production in ending inventory as well. What is the total cost of direct materials for October to meet production needs?

Sharon Corporation collects 5% in the second month following sale, 30% in the month following sale and 62% of a month's sales in the month of sale. The company has found that 3% of their sales are uncollectible. Budgeted sales for the upcoming four months are: The amount of cash that will be collected in November is budgeted to be

Lough Company prepared the following purchases budget: All purchases are paid for as follows: 5% two months after purchase, 35% in the following month, and 60% in the month of purchase. What are the cash disbursements in October to account for the September purchases at Lough Company?

Byerly Corporation anticipates the following sales revenue over a five month period: Byerly Corporation's sales are 40% cash and 60% credit. The Byerly Corporation's collection history indicates that credit sales are collected as follows: Required: Prepare a cash collections budget for each month in the quarter (January, February, and March)and for the quarter in total.

The cash budget is prepared before the budgeted balance sheet is prepared.

Bookworm Publishers publishes books and they have gathered the following data for the month of October: Bookworm Publishers requires an ending cash balance of at least $5,000 and can borrow from a line of credit in $1,000 increments. What is the excess or deficiency of cash for October?

Merchandising companies prepare sales, cash, and operating expenses budgets.

Bruner Stores wants to have 700 shovels in ending inventory on December 31. Budgeted sales for December are 1950 shovels. The November 30 inventory was 260 shovels. How many shovels should Benson Stores purchase for December?

The capital expenditures budget is not a component of the operating budget.

Potato State Manufacturing is preparing its cash payments budget in the upcoming month. The following information pertains to the cash payments: a. Potato State Manufacturing pays for 70% of its direct materials purchases in the month of purchase and the remainder the following month. Last month's direct material purchases were $40,000, while First State Manufacturing anticipates $45,000 of direct material purchases this coming month. b. Direct labor for the upcoming month is budgeted to be $25,000 and will be paid at the end of the upcoming month. c. Overhead is estimated to be 150% of direct labor cost each month and is paid in the month in which it is incurred. This monthly estimate includes $8,000 of depreciation on the plant and equipment. d. Monthly operating expenses for next month are expected to be $27,500, which includes $1,500 of depreciation on office equipment and $2,000 of bad debt expense. These monthly operating expenses are paid during the month in which they are incurred. e. Potato State Manufacturing will be making an estimated tax payment of $6,000 next month. Required: Prepare a cash payments budget for the month.

In which of the following company types would the manager use a direct materials budget?

Expected purchases for June and July are $76,000 and $90,000, respectively. Purchases for May were $56,000. All purchases are paid 40% in the month of purchase and 60% the following month. At what amount are June payments for purchases budgeted?

Bookworm Publishers publishes books and they have gathered the following data for the month of October: Bookworm Publishers requires an ending cash balance of at least $5,000 and can borrow from a line of credit in $1,000 increments. What is the ending cash balance for October?

Warshaw Company budgets payroll at $3000 per month plus a percentage of monthly sales. The June operating expenses budget includes total payroll of $12,600 with budgeted sales of $160,000. Sales for July are budgeted at $100,000 while purchases of inventory for July are budgeted at $1,000,000. Depreciation and insurance for July are estimated at $600 and $900, respectively. Office and administrative expenses related to purchasing inventory are budgeted at 10% of purchases for the month. The purchase of $2800 in equipment and $1100 in furniture is expected in July. If the percentage of monthly sales used in budgeting payroll increases 15%, what would the total payroll budgeted for July be?

Two Brothers Moving prepared the following sales budget: Credit collections are 25% in the month of sale, 60% in the month following the sale, and 10% two months following the sale. The remaining 5% is expected to be uncollectible. What are the total cash collections in June at Two Brothers Moving?