Exam 6: Master Budget and Responsibility Accounting

Use the information below to answer the following question(s).Boone Hobbies, a wholesaler, has a sales budget for next month of $600,000.Cost of units sold is expected to be 40 percent of sales.All units are paid for in the month following purchase.The beginning inventory of units is $20,000, and an ending amount of $24,000 is desired.Beginning accounts payable is $152,000. -The operating budget includes the

Answer the following question(s)using the information below.The following information pertains to Hepburn Company: Cash is collected from customers in the following manner: 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.Labour costs are 20% of sales.Other operating costs are $30,000 per month (including $8,000 of depreciation).Both of these are paid in the month incurred.The cash balance on March 1 is $8,000.A minimum cash balance of $6,000 is required at the end of the month.Money can be borrowed in multiples of $1,000. -How much cash will be collected from customers in March?

A master budget

Accrual accounting in compliance with ASPE/IFRS results in these timing differences between when a benefit or obligation must be reported for financial accounting purposes and when the cash inflow or outflow actually occurs.

Cash receipts depend on collections of accounts payable, cash sales, and miscellaneous sources, such as rental income.

Sensitivity analysis helps to evaluate outcomes from changes in data or assumptions.

The first three schedules to complete when preparing the master operating budget are the

The master budget reports a large amount of nonfinancial data from various value chain functions.

Answer the following question(s)using the information below.The following information pertains to Hepburn Company: Cash is collected from customers in the following manner: 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.Labour costs are 20% of sales.Other operating costs are $30,000 per month (including $8,000 of depreciation).Both of these are paid in the month incurred.The cash balance on March 1 is $8,000.A minimum cash balance of $6,000 is required at the end of the month.Money can be borrowed in multiples of $1,000. -How much cash will be paid to suppliers in March?

Spirit Company sells three products with the following seasonal sales pattern: The annual sales budget shows forecasts for the different products and their expected selling price per unit as follows: Required: Prepare a sales budget, in units and dollars, by quarters for the company for the coming year.

Use the information below to answer the following question(s).Contempo Futon manufactures futons.The estimated number of sales for the last quarter of 2018 is as follows: Beginning finished goods inventory should be equal to 30 percent of that month's budgeted sales plus 10 percent of the following month's budgeted sales.January and February 2018 sales are anticipated to be 15,000 futons in each month.The cost to produce a futon is $125. -What should be the number of futons Contempo Futon budgets to be produced in November?

Use the information below to answer the following question(s).Konrade Inc.expects to sell 30,000 athletic uniforms for $80 each in 2019.Direct materials costs are $20, direct manufacturing labour is $8, and manufacturing overhead is $6 for each uniform.Each uniform requires 2.0 square metres (sq.m.)of material which is all added at the start of production.The following inventory levels are expected to apply to 2019: -What is the amount budgeted for cost of goods manufactured in 2019?

Use the information below to answer the following question(s).Marguerite Inc..expects to sell 20,000 pool cues for $20.00 each.Direct materials costs are $2.00, direct manufacturing labour is $12.00, and manufacturing overhead is $0.80 per pool cue.Each pool cue requires 0.5 kilograms (kg)of material which is all added at the start of production.The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started..Each pool cue requires one hour of direct labour, and manufacturing overhead is allocated based on direct labour hours.The following inventory levels are expected to apply to 2019: -On the 2019 budgeted income statement, what amount will be reported for gross margin?

Use the information below to answer the following question(s).Contempo Futon manufactures futons.The estimated number of sales for the last quarter of 2018 is as follows: Beginning finished goods inventory should be equal to 30 percent of that month's budgeted sales plus 10 percent of the following month's budgeted sales.January and February 2018 sales are anticipated to be 15,000 futons in each month.The cost to produce a futon is $125. -What will be Contempo Futon's cost of goods manufactured for December?

Use the information below to answer the following question(s).Country Heather manufactures flowerpots.It expects to sell 40,000 flowerpots in 2019.The company had enough beginning inventory of direct materials to produce 48,000 units.Beginning inventory of finished units totalled 4,000 with a target ending inventory of 5,000 units.The flowerpots sell for $6.00 and the company keeps no work-in-process inventory.Direct materials costs for each flowerpot total $2.00 while direct labour is $1.00.Factory overhead is $0.40 per flowerpot. -What will be Country Heather's cost of goods sold?

The usual starting point in budgeting is to forecast net income.

Use the information below to answer the following question(s).Berry's Boxes manufactures boxes.It expects to sell 20,000 boxes in 2018.The company had enough beginning inventory of direct materials to produce 24,000 units.Beginning inventory of finished units totalled 2,000 with a target ending inventory of 2,500 units.The boxes sell for $3.00 and the company keeps no work-in-process inventory.Direct materials costs for each box total $1.00 while direct labour is $0.50.Factory overhead is $0.20 per box. -What will be Berry's Boxes production costs incurred for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 2018?

Clare's Bears manufactures stuffed bears.The company updates it annual budget every month in order to force management to think about the forthcoming 12 months and not just the current budget.This is an example of a

Budgeting is done in place of "strategic analysis."

The Doran Company prepared the following revenue budget: In addition, the gross profit rate is 40 percent and the desired inventory level is 30 percent of next month's cost of goods sold.Required: Prepare a purchases budget for April through June.