Exam 22: Master Budgets and Planning

Zhang Industries sells a product for $700. Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%. -Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales. Compute the projected selling expense to be reported on the selling expense budget for the manager for month ended June 30.

Alliance Company's budgets production of 24,000 units in January and 28,000 units in the February. Each finished unit requires 4 pounds of raw material K that costs $2.50 per pound. Each month's ending raw materials inventory should equal 40% of the following month's budgeted materials. The January 1 inventory for this material is 38,400 pounds. - What is the budgeted materials cost for January?

Junior Snacks reports the following information from its sales budget: Expected Sales: October 143,000 November 151,000 December 187,000 All sales are on credit and are expected to be collected 40% in the month of sale and 60% in the month following sale. The total amount of cash expected to be received from customers in November is:

The Ewing Company budgeted sales for January, February, and March of $96,000, $88,000, and $72,000, respectively. Seventy percent of sales are on credit. The company collects 60% of its credit sales in the month following sale, and 40% in the second month following sale. What are Ewing's expected cash receipts for March related to all current and past sales?

A sporting goods manufacturer budgets production of 45,000 pairs of ski boots in the first quarter and 30,000 pairs in the second quarter of the upcoming year. Each pair of boots require 2 kg of a key raw material. The company aims to end each quarter with ending raw materials inventory equal to 20% of the following quarter's material needs. Beginning inventory for this material is 18,000 kg and the cost per kg is $8. -What is the budgeted materials purchases cost for the first quarter?

The master budget process nearly always begins with the preparation of the ________ and usually finishes with the preparation of the ________, the ________, and the ________.

What is a merchandise purchases budget? How is the merchandise purchases budget constructed?

The central guidance of the budget process is the responsibility of the:

Part of the budgeting process is summarizing the financial statement effects on the budgeted income statement and the budgeted balance sheet.

The most useful budget figures are developed:

Why is the sales budget usually prepared first?

Use the following information to prepare a budgeted income statement for Stellar Company for the month of June. a. Beginning cash balance on June 1 is $52,000. b. Sales amounts are: April (actual), $1,450,000, May (actual), $1,600,000, and June (budgeted), $1,700,000. c. Cost of goods sold is 53% of sales. d. Budgeted cash disbursements for salaries in June: $260,000. Salaries payable on May 31 are $60,000 and are expected to be $50,000 on June 30. e. Budgeted depreciation expense for June: $24,000. f. Other cash expenses budgeted for June: $282,000. g. Accrued income taxes due in June: $48,000. h. Bank loan interest due in June: $8,000 which represents the 1% monthly expense on a bank loan of $800,000. i. The income tax rate applicable to the company is 30%.

Boulware Company's budgeted production calls for 5,000 units in October and 8,000 units in November. Each unit requires 8 pounds (lbs.) of raw material A. Each month's ending inventory of raw materials should equal 20% of the following month's budgeted materials requirements. The October 1 inventory for this material is 8,000 pounds. What is the budgeted materials purchases for this key material in pounds for October?

Western Company is preparing a cash budget for June. The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must:

A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:

Managers must ensure that activities of employees and departments, contribute to meeting the company's overall goals.

Memphis Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected. -Compute the amount of cash received from credit sales during the month of May.

Operating budgets include all the following except the:

A capital expenditures budget is prepared before the operating budgets.

Memphis Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected. - Compute the amount of cash received from total sales during the month of May.