Exam 22: Master Budgets

The budget process is a loop that consists of ________.

Which of the following best describes the term "sensitivity analysis"?

The ________ details how the business expects to go from the beginning cash balance to the desired ending cash balance.

Which of the following statements regarding the capital expenditures budget is correct?

The production budget is the first component of the operating budget.

The cash budget and the budgeted financial statements are collectively known as the ________.

Eudora,Inc.has a cash balance of $24,000 on April 1.The company is now preparing the cash budget for the second quarter.Budgeted cash collections and payments are as follows: Apr May Jun Cash collections \ 24,000 \ 22,000 \ 24,000 Cash payments: Purchases of direct materials 5000 4000 7000 Operating expenses 5300 5000 5000 There are no budgeted capital expenditures or financing transactions during the quarter.Based on the above data,calculate the projected cash balance at the end of June.

An operational budget is a short-term financial plan that coordinates activities needed to achieve short-term goals.

Which of the following statements is TRUE of the capital expenditures budget?

Carol's Chocolate Company has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections \ 49,000 \ 39,500 \ 47,200 Cash payments: Purchases of direct materials 30,000 21,900 18,000 Operating expenses 12,400 8400 11,400 Capital expenditures 13,400 24,200 0 The cash balance on June 30 is projected to be $4000.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 ending projected cash balance before financing for August.

Which of the following statements is TRUE of the budgeting process?

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

Kwanzan Industries expects to sell 470 units of Product A and 410 units of Product B each day at an average price of $25 for Product A and $28 for Product B.The expected cost for Product A is 45% of its selling price and the expected cost for Product B is 65% of its selling price.Kwanzan 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.)

The cash budget of a manufacturer is comprised of three sections: cash receipts,cash payments and long-term financing.

The Finished Goods Inventory account must be considered when calculating the amount of direct materials to be purchased.

Amounts needed for the preparation of the budgeted balance sheet for a manufacturer are taken from various operating and financial budgets.

Budgeted purchases of direct materials is determined by adding direct materials needed for production to the desired direct materials in ending inventory.

Which of the following is an example of the benchmarking function of the budgeting process?

Chavez Manufacturing Company's budgeted income statement includes the following data: Mar Apr May Jun Sales \ 320,000 \ 340,000 \ 360,000 \ 380,000 Commission expense: 15\% of sales 48,000 51,000 54,000 57,000 Salaries expense 50,000 50,000 50,000 50,000 Miscellaneous expense: 4\% of sales 12,800 13,600 14,400 15,200 Rent expense 4,000 4,000 4,000 4,000 Utilities expense 2,000 2,000 2,000 2,000 Insurance expense 2,100 2,100 2,100 2,100 Depreciation expense 5,000 5,000 5,000 5,000 The budget assumes that 60% of commission expenses are paid in the month in which they are incurred and the remaining 40% are paid one month later.In addition,50% of salaries expenses are paid in the month in which they are incurred,and the remaining 50% are paid one month later.Miscellaneous expenses,rent expense,and utility expenses are assumed to be paid in the same month in which they are incurred.Insurance was prepaid for the year on January 1.Prepare a schedule of cash payments for selling and administrative expenses for the quarter ending June 30.

When preparing the budgeted balance sheet of a merchandising company,the amount of Merchandise Inventory can be obtained from the ________.