Uncle's Caps,Inc.,a merchandising company,has provided the following budgeted amounts for the next budget period. \[\begin{array} { | l | r | } \hline \text { Beginning cash balance } & \$ 30,400 \\ \hline \text { Cash collections } & 683,000 \\ \hline \text { Payments for: } & \\ \hline \text { Purchases of merchandise inventory } & 349,500 \\ \hline \text { Selling and administrative expenses } & 70,400 \\ \hline \text { Capital expenditures } &88,900\\ \hline \end{array}\] A minimum cash balance of $250,000 is required to be maintained.The company can borrow in increments of $10,000 as and when required.Assume the company can borrow the needed funds at the end of the period.Calculate the ending cash balance for the budget period.

A) $713,400 B) $254,600 C) $204,600 D) $733,000 A) $713,400 B) $254,600 C) $204,600 D) $733,000

Search Engine Corp.has provided the following details concerning budgeted sales: Budgeted Sales \[\begin{array} { l l } \text { Jan } & \$ 75,000 \\ \text { Feb } & 69,000 \\ \text { March } & 80,000 \\ \text { April } & 62,000 \\ \text { May } & 80,500 \\ \text { June } & 92,000 \end{array}\] The collection policy of the company is to collect 20% in the month of sale,40% in the following month,and remaining 40% in the second month after the month of sale.All sales are made on account. Calculate the cash receipts from customers for the first six months.

Calculation of cash receipts for the fir

A manufacturing company's budgeted income statement includes the following data: $\begin{array}{|l|r|r|r|r} \hline\text { Data extracted from budgeted } & & & & \\ \text { income statement } & \text { Mar } & \text { Apr } & \text { May } & \text { Jun }\\ \hline \text { Sales revenue } & \$ 140,000 & \$ 90,000 & \$ 140,000 & \$ 110,000 \\ \hline \text { Commission expense (15\% of } & & & & \\ \text { sale) } & 21,000 & 13,500 & 21,000 & 16,500 \\ \hline \text { Salaries expense } & 30,000 & 30,000 & 30,000 & 30,000 \\ \hline \text { Miscellaneous expense }-5 \% \text { of } & \\ \text { sales } & 7,000 & 4,500 & 7,000 & 5,500 \\ \hline \text { Rent expense } & 3,800 & 3,800 & 3,800 & 3,800 \\ \hline \text { Utilities expense } &2,200 & 2,200 & 2,200 & 2,200 \\ \hline \text { Insurance expense } & 2,400 & 2,400 & 2,400 & 2,400 \\ \hline \text { Depreciation expense } &4,500 & 4,500 & 4,500 & 4,500 \\ \hline \end{array}$ The budget assumes that 60% of commission expenses are paid in the month they were incurred,and the remaining 40% are paid one month later.In addition,50% of salaries expenses are paid in the month incurred and the remaining 50% are paid one month later.Miscellaneous expenses,rent expense,and utilities expenses are assumed to be paid in the same month in which they are incurred.Insurance was prepaid for the year on January 1.How much is the total of the budgeted cash payments for selling and administrative expenses for the month of May?

A) $55,000 B) $61,000 C) $58,500 D) $43,000 A) $55,000 B) $61,000 C) $58,500 D) $43,000

Iowa Supply,Inc.provides the following data taken from its third quarter budget: \[\begin{array} { | l | r | r | r | } \hline & { \text { Jul } } &{ \text { Aug } } & { \text { Sep } } \\ \hline \text { Cash collections } & \$ 83,000 & \$ 66,000 & \$ 56,000 \\ \hline \text { Cash payments: } & & & \\ \hline \text { Purchases of direct materials } & 49,000 & 28,000 & 25,000 \\ \hline \text { Operating expenses } & 8,000 & 19,000 & 20,000 \\ \hline \text { Capital expenditures } & 0 & 33,000 & 7,000 \\ \hline \end{array}\] The cash balance on June 30 is projected to be $11,000.Based on the above data,calculate the cash balance the company is projected to have at the end of September.

A) $27,000 B) $23,000 C) $79,000 D) $52,000 A) $27,000 B) $23,000 C) $79,000 D) $52,000

Exam 22: Master Budgets

Uncle's Caps,Inc.,a merchandising company,has provided the following budgeted amounts for the next budget period. Beginning cash balance \ 30,400 Cash collections 683,000 Payments for: Purchases of merchandise inventory 349,500 Selling and administrative expenses 70,400 Capital expenditures 88,900 A minimum cash balance of $250,000 is required to be maintained.The company can borrow in increments of $10,000 as and when required.Assume the company can borrow the needed funds at the end of the period.Calculate the ending cash balance for the budget period.

(Multiple Choice)

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Question 141

When preparing the operating budgets for a manufacturing company,the manufacturing overhead budget ________.

(Multiple Choice)

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Question 142

Search Engine Corp.has provided the following details concerning budgeted sales: Budgeted Sales Jan \ 75,000 Feb 69,000 March 80,000 April 62,000 May 80,500 June 92,000 The collection policy of the company is to collect 20% in the month of sale,40% in the following month,and remaining 40% in the second month after the month of sale.All sales are made on account. Calculate the cash receipts from customers for the first six months.

(Essay)

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Question 143

Components of the master budget are the operating budget,the capital expenditures budget,and the financial budget.

(True/False)

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Question 144

Acme,Inc.has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections \ 50,000 \ 40,000 \ 47,700 Cash payments: Purchases of direct materials 30,000 21,900 17,500 Operating expenses 12,100 9,000 11,400 Capital expenditures 13,600 24,100 0 The cash balance on June 30 is projected to be $4,300.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.How much will the company have to borrow at the end of July?

(Multiple Choice)

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Question 145

Why is the forecast of sales revenue considered to be the cornerstone of the master budget?

(Essay)

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Question 146

Budgeting requires managers to develop overall business goals and budget for specific actions to achieve the goals.

(True/False)

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Question 147

To develop the cost of goods sold budget,it is necessary to start by calculating the projected cost to produce each unit.

(True/False)

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Question 148

The inventory,purchases,and cost of goods sold budget determines cost of goods sold for the budgeted income statement,ending Merchandise Inventory for the budgeted balance sheet,and merchandise inventory purchases for the cash budget.

(True/False)

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Question 149

Mealer,Inc.has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections \ 52,000 \ 39,800 \ 46,200 Cash payments: Purchases of direct materials 31,000 21,300 17,700 Operating expenses 12,300 9,000 11,000 Capital expenditures 13,200 24,600 0 The cash balance on June 30 is projected to be $4,100.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.Calculate the final projected cash balance at the end of September.

(Multiple Choice)

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Question 150

A manufacturing company's budgeted income statement includes the following data: Data extracted from budgeted income statement Mar Apr May Jun Sales revenue \ 140,000 \ 90,000 \ 140,000 \ 110,000 Commission expense (15\% of sale) 21,000 13,500 21,000 16,500 Salaries expense 30,000 30,000 30,000 30,000 Miscellaneous expense -5\% of sales 7,000 4,500 7,000 5,500 Rent expense 3,800 3,800 3,800 3,800 Utilities expense 2,200 2,200 2,200 2,200 Insurance expense 2,400 2,400 2,400 2,400 Depreciation expense 4,500 4,500 4,500 4,500 The budget assumes that 60% of commission expenses are paid in the month they were incurred,and the remaining 40% are paid one month later.In addition,50% of salaries expenses are paid in the month incurred and the remaining 50% are paid one month later.Miscellaneous expenses,rent expense,and utilities expenses are assumed to be paid in the same month in which they are incurred.Insurance was prepaid for the year on January 1.How much is the total of the budgeted cash payments for selling and administrative expenses for the month of May?

(Multiple Choice)

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Question 151

Iowa Supply,Inc.provides the following data taken from its third quarter budget: Jul Aug Sep Cash collections \ 83,000 \ 66,000 \ 56,000 Cash payments: Purchases of direct materials 49,000 28,000 25,000 Operating expenses 8,000 19,000 20,000 Capital expenditures 0 33,000 7,000 The cash balance on June 30 is projected to be $11,000.Based on the above data,calculate the cash balance the company is projected to have at the end of September.

(Multiple Choice)

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Question 152

Budgets provide a benchmark that motivates employees and helps managers evaluate performance.

(True/False)

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Question 153

Eleanor's Mittens,Inc.,a merchandising company,wants to prepare the budgeted balance sheet for the next budget period.For this purpose,the amount of ending cash balance can be retrieved from the ________.

(Multiple Choice)

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Question 154

DGT Industries expects to sell 450 units of Product A and 400 units of Product B each day at an average price of $23 for Product A and $31 for Product B.The expected cost for Product A is 38% of its selling price and the expected cost for Product B is 60% of its selling price.DGT Industries has no beginning inventory,but it wants to have a four-day supply of ending inventory for each product.Compute the budgeted purchases for the next (seven-day)week.(Round the answer to the nearest dollar.)

(Multiple Choice)

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Question 155

Projected manufacturing cost per unit of product sold does not include ________ cost per unit.

(Multiple Choice)

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Question 156

When preparing the budgeted balance sheet,the balance of the Accounts Payable account is taken from the cash budget.

(True/False)

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Question 157

A strategic budget will be as detailed as an operational budget.

(True/False)

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Question 158

MFL Sales expects to sell 400 units of Product A and 360 units of Product B each day at an average price of $20 for Product A and $26 for Product B.The expected cost for Product A is 36% of its selling price and the expected cost for Product B is 59% of its selling price.MFL Sales has no beginning inventory,but it wants to have a six-day supply of ending inventory for each product.Compute the budgeted cost of goods sold for the next (seven-day)week.(Round the answer to the nearest dollar.)

(Multiple Choice)

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Question 159

In preparing the master budget,the manufacturing overhead is the last period cost to consider.

(True/False)

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Question 160

When preparing the operating budgets for a manufacturing company,the manufacturing overhead budget ________.

Components of the master budget are the operating budget,the capital expenditures budget,and the financial budget.

Why is the forecast of sales revenue considered to be the cornerstone of the master budget?

Budgeting requires managers to develop overall business goals and budget for specific actions to achieve the goals.

To develop the cost of goods sold budget,it is necessary to start by calculating the projected cost to produce each unit.

The inventory,purchases,and cost of goods sold budget determines cost of goods sold for the budgeted income statement,ending Merchandise Inventory for the budgeted balance sheet,and merchandise inventory purchases for the cash budget.

Budgets provide a benchmark that motivates employees and helps managers evaluate performance.

Eleanor's Mittens,Inc.,a merchandising company,wants to prepare the budgeted balance sheet for the next budget period.For this purpose,the amount of ending cash balance can be retrieved from the ________.

Projected manufacturing cost per unit of product sold does not include ________ cost per unit.

When preparing the budgeted balance sheet,the balance of the Accounts Payable account is taken from the cash budget.

A strategic budget will be as detailed as an operational budget.

In preparing the master budget,the manufacturing overhead is the last period cost to consider.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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