Exam 22: Master Budgets and Planning

Which of the following budgets is not a budget that a manufacturer would include in its master budget?

Budgeting is an informal plan for future business activities.

Memphis Company's May sales budget calls for sales of $900,000. The store expects to begin May with $50,000 of inventory and to end the month with $55,000 of inventory. Gross margin is typically 45% of sales. Compute the budgeted cost of merchandise purchases for May.

Groundworks Company budgeted the following credit sales during the current year: September, $90,000; October, $123,000; November, $105,000; December, $111,000. Experience has shown that cash from credit sales is received as follows: 10% in the month of sale, 50% in the first month after sale, 35% in the second month after sale, and 5% is uncollectible. How much cash should Groundworks Company expect to collect in November from all current and past credit sales?

A plan that states the number of units to be produced in a future period, based on the projected unit sales and inventory considerations, is the:

List the three important guidelines that should be followed in the budgeting process.

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months: Material purchases January February March \ 12,040 \ 14,150 \ 10.970 Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $6,500. The budgeted cash payments for materials in January are:

Walter Enterprises expects its September sales to be 20% higher than its August sales of $150,000. Purchases were $100,000 in August and are expected to be $120,000 in September. All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month. Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month. The beginning cash balance on September 1 is $7,500. The ending cash balance on September 30 would be:

Bengal Co. provides the following sales forecast for the next three months: Sales units July August September 5,000 5,700 5,560 The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales. Finished goods inventory on June 30 is 1,250 units. -The budgeted production units for August are:

A formal statement of future plans, usually expressed in monetary terms, is a:

Use the following information to prepare the June cash budget for Springer Company. It should show expected cash receipts and cash disbursement for the month and the cash balance expected on June 30. a. Beginning cash balance on June 1 is $52,000. b. Cash receipts from sales are expected to be $1,625,000. c. Cash payments for direct materials and direct labor are expected to be $246,500 and 573,100, respectively. d. Budgeted cash payments for variable overhead is $340,000. e. Budgeted depreciation, the only fixed overhead estimated for June: $24,000. f. Cash selling and administrative expenses budgeted for June are $282,000. g. Bank loan interest due in June: $8,000. i. Loan payment of $50,000 should be made if the preliminary cash balance is greater than $200,000.

A budget is a formal statement of future plans, usually expressed in monetary terms.

In preparing a budgeted balance sheet, the amount for Accounts Receivable data can be derived from:

The Ballentine Company expects sales for June, July, and August of $48,000, $54,000, and $44,000, respectively. Experience suggests that 40% of sales are for cash and 60% are on credit. The company collects 50% of its credit sales in the month following sale, 45% in the second month following sale, and 5% are not collected. What are the company's expected cash receipts for August from its current and past sales?

Webster Corporation's monthly projected general and administrative expenses include $5,000 administrative salaries, $2,400 of other cash administrative expenses, $1,350 of depreciation expense on the administrative equipment, and 0.5% monthly interest on an outstanding bank loan of $10,000. Compute the total general and administrative expenses to be reported on the general and administrative expense budget per month.

Zhang Industries budgets production of 300 units in June and 310 units in July. Each unit requires 1.5 hours of direct labor. The direct labor rate is $14 per hour. The indirect labor rate is $21.00 per hour. Compute the budgeted direct labor cost for July.

Guidance for the budget process is usually supplied by a ________ of department heads and other executives responsible for seeing that budgeted amounts are realistic and coordinated.

Webster Corporation is preparing its cash budget for April. The March 31 cash balance is $36,400. Cash receipts are expected to be $641,000 and cash payments for purchases are expected to be $608,500. Other cash expenses expected are $27,000 selling and $33,500 general and administrative. The company desires a minimum cash balance at the end of each month of $30,000. If necessary, the company borrows enough cash to meet the minimum using a short-term note. -The amount Webster must borrow during April is:

Use the following information to determine the ending cash balance to be reported on the month ended June 30 cash budget. Beginning cash balance on June $1 , \$ 73,000$ . Cash receipts from sales, $\$ 413,000$ . Budgeted cash disbursements for purchases, $\$ 268,000$ . Budgeted cash disbursements for salaries, $\$ 35,000$ . Other budgeted cash expenses, $\$ 57,000$ . Cash repayment of bank loan, $\$ 32,000$ . Budgeted depreciation expense, $\$ 34,000$ .

The ________ shows the budgeted costs for factory overhead that will be needed to complete the estimated production for the period, often separated into variable and fixed costs.