Exam 9: The Master Budget

Carlton Cookie Company produces a hand-processed gourmet cookie that is made with organic sugar. Five (5)pounds of organic sugar are required per batch of gourmet cookies. The organic sugar costs $2.40 per pound. The company needs to have 20% of the following month's production needs of organic sugar in ending inventory so it is on hand to start each month. A total of 120 pounds of organic sugar are expected to be on hand on April 1. 1. Budgeted production of the gourmet cookies for the first four months of the upcoming year is as follows: Required: Prepare a direct materials budget for organic sugar for each of the months in the second quarter and for the second quarter in total. Include both the quantity of sugar to be purchased and the cost of the purchases in each month.

Warshaw Company budgets payroll at $4000 per month plus a percentage of monthly sales. The June operating expenses budget includes total payroll of $10,400 with budgeted sales of $160,000. Sales for July are budgeted at $110,000 while purchases of inventory for July are budgeted at $60,000. Depreciation and insurance for July are estimated at $1200 and $700, respectively. Office and administrative expenses related to purchasing inventory are budgeted at 15% of purchases for the month. The purchase of $2000 in equipment and $1700 in furniture is expected in July. The total operating expenses budgeted for July are

At the beginning of the year, Patio Living Corporation has 560 planters in inventory. The company plans to sell 5000 planters during the year and wants to have 1300 planters in inventory at the end of the year. How many planters must Patio Living Corporation produce during the year?

The master budget includes both the operating budgets and the financial budgets.

Which of the following is an advantage of the budgeting process?

List and describe three reasons why a company and its managers could benefit from the use of budgeting.

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. How much will Speedy Runner need to borrow at the end of October?

The four components of the operating budget are the sales budget; inventory, purchases and cost of goods sold budget; and the cash budget.

Victoria Corporation manufactures quality vases. Budgeted sales and production data for the vases are as follows: Each vase requires one pound of clay in its manufacture. Victoria Corporation has a policy that the inventory of clay at the end of each month needs to be equal to 10% of the production needs for the following month. At the beginning of January, 230 pounds of clay were in inventory. How many pounds of clay would Victoria Corporation need to purchase in February (Month 2)?

Which of the following is a benefit to an organization that implements a budget?

In which of the following company types does a manager use a sales budget?

When creating the sales budget, management simply takes the sales from the year before and divides that total by 12 months. Thus, each month will always predict the same amount of budgeted sales.

Thomas Corporation recorded sales of $150,000 during March. Management expects sales to increase 3% in April, another 25% in May, and another 8% in June. Cost of goods sold is expected to be 60% of sales. What is the budgeted gross profit for June?

The cash budget is prepared before the operating budget.

Einstein Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $10,000. Budgeted cash receipts are $85,000, while budgeted cash disbursements are $66,000. Einstein Company wants to have an ending cash balance of $25,000. The excess (deficiency)of cash available over disbursements for the month would be

Merchandising companies prepare which of the following budgets?

Fosnight Enterprises prepared the following sales budget: The expected gross profit rate is 20% and the inventory at the end of February was $12,000. Desired inventory levels at the end of the month are 10% of the next month's cost of goods sold. What are the total purchases budgeted for April?

Kennedy Enterprises has budgeted sales for the months of September and October at $170,000and $140,000, respectively. Monthly sales are 60% credit and 40% cash. Of the credit sales, 30% are collected in the month of sale and 70% are collected in the following month. What are the October cash collections from customers?

In which of the following company types does a manager use an operating expenses budget?

Feeney Furniture prepared the following sales budget: Credit collections are 5% two months following the sale, 30% in the month following the sale, and 62% in the month of sale. The remaining 3% is expected to be uncollectible. What is the total cash received in April from the April sales at Feeney Furniture?