Exam 9: Budgeting

Clay Company has projected sales and production in units for the second quarter of the coming year as follows: Cash-related production costs are budgeted at $5 per unit produced.Of these production costs,40% are paid in the month in which they are incurred and the balance in the following month.Selling and administrative expenses will amount to $100,000 per month.The accounts payable balance on March 31 totals $190,000,which will be paid in April. All units are sold on account for $14 each.Cash collections from sales are budgeted at 60% in the month of sale,30% in the month following the month of sale,and the remaining 10% in the second month following the month of sale.Accounts receivable on April 1 totalled $500,000 ($90,000 from February's sales and the remainder from March). Required: a)Prepare a schedule for each month showing budgeted cash disbursements for Clay Company. b)Prepare a schedule for each month showing budgeted cash receipts for Clay Company.

If 500,000 finished units were to be manufactured during July,what would be the units of raw material needed to be purchased?

What are the budgeted cash receipts for December?

Which of the following best describes a method of budgeting in which the cost of each program must be justified every year?

If the company has budgeted to sell 24,000 units of Product SW in September,what would be the total budgeted fixed selling and administrative expenses for September?

What are the total disbursements during the third quarter (item f),in thousands of dollars?

What would be the accounts receivable balance that would appear in the March 31 budgeted balance sheet?

Pardee Company plans to sell 12,000 units during the month of August.If the company has 2,500 units on hand at the start of the month,and plans to have 2,000 units on hand at the end of the month,how many units must be produced during the month?

What is a continuous (or perpetual)budget?

What amount would the flexible budget estimate for total variable overhead cost per direct labour hour?

Which of the following best describes a typical participative budget?

What was the flexible budget operating income (loss)for Winnipeg Company for January?

On March 31,Streuling Enterprises,a merchandising firm,had an inventory of 38,000 units,and it had accounts receivable totaling $85,000.Sales,in units,have been budgeted as follows for the next four months: Streuling's board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month's budgeted sales. The selling price is $2 per unit.One-third of sales are paid for by customers in the month of the sale;the balance is collected in the following month. Required: a)Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April,May,and June. b)Prepare a schedule of expected cash collections for each of the months April,May,and June.

What is the variance for occupancy costs in the flexible budget performance report for the month?

Walsh Company expects sales of Product W to be 60,000 units in April,75,000 units in May,and 70,000 units in June.The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales.Due to excessive production during March,there were 25,000 units of Product W in the ending inventory on March 31.Given this information,what should be Walsh Company's production of Product W for the month of April?

What would be the budgeted direct labour cost per unit of Product T?

A static budget is geared toward a single level of activity.

What is the budgeted net income for December?

Toyworld manufactures and sells a line of toys.The toys are primarily distributed through department stores.As president of Toyworld,you wanted to analyze Toyworld's profitability.Your capable assistant provided you with the following data: Required: a)Your assistant has requested you to complete the "Flexible Budget" and "Static/Master Budget" columns of the analysis,reproduced below (She had to attend to an out-of-town emergency):

Budgeting aids planning and controlling the level of both fixed costs and variable costs. Required: Explain the differences,if any,between the planning and controlling of fixed costs and variable costs.