Exam 9: Budgeting, Production, Cash, and Master Budget

Identify each item as a component of one of the following budgets.* Each option may be used more than once, and it is possible that one or more of the options may not be used at all. -Budgeted sales in dollars

What do many companies use when preparing the manufacturing overhead budget?

Cash receipts must be at least as much as sales.

Refer to BoomBoom Company. What is the expected volume of production in February?

Which of the following receives necessary information from the ending finished goods inventory budget?

Hoovern Company provided the following data for May: Direct materials \ 60,000 Direct labour \ 30,000 Manufacturing overhead \ 80,000 Beginning finished goods inventory \ 15,000 Ending finished goods inventory \ 34,000 Production in units 10,000 What is the cost of goods sold?

Identify each item as an advantage or disadvantage of budgeting. -Forces managers to plan

Shortie Company Shortie Company produces two products: X Brand and Y Brand. Budgeted sales are as follows: May 10,000 40,000 June 20,000 70,000 July 15,000 80,000 August 30,000 90,000 The company's ending finished goods inventory policy is that X Brand should have 10% of its next month's sales in ending finished goods inventory and Y Brand should have 20% of next month's sales in its ending finished goods inventory. On May 1, finished goods inventory consisted of 1,000 units of X Brand and 9,000 units of Y Brand.Y Brand requires four units of component A. (X Brand does not use component A.) On May 1, 2,100 units of component A were in direct materials inventory. The company wants to have 30% of the following month's production needs in direct materials inventory for component A. -Refer to Shortie Company. How many units of X Brand are budgeted for production in May?

Identify each item as an advantage or disadvantage of budgeting. -Pseudoparticipation

A company has provided a sales budget for the next four months (January, February, March, and April). It bases its production budget on the sales budget. According to company policy, each month's ending finished goods inventory must be equal to 25% of the following month's sales needs. The direct materials purchases budget is based on the production budget. Company policy states that each month's ending direct materials inventory must be equal to 10% of the following month's production needs for direct materials. For how many months can the company prepare direct materials purchases budgets?

Refer to Emerald Company. What is the budget for direct materials purchases in February?

Which budget adds an additional month in the future as one month expires so that the company always has a 12-month plan on hand?

Bingimton Company Bingimton Company provided the following information for last month. Production in units 1,000 Direct materials cost \ 3,000 Direct labour cost \ 4,000 Manufacturing overhead cost \ 7,600 Sales commission per unit sold \ 2 Price per unit sold \ 24 Fixed selling and administrative expense \ 5,000 There were no beginning and ending inventories. -Refer to Bingimton Company. What was the operating income?

What budget shows a company's planned borrowings and repayments?

Braham's Bottling Company sells fruit-flavoured colas. Estimated sales in cartons for September, October, and November are 1,000, 3,000, and 5,000, respectively. The selling price is forecast at $5 per carton. The company requires that ending finished goods inventory be 20% of the next month's sales. Finished goods inventory was 500 units on September 1. Each carton requires 12 mL of fruit syrup and 130 mL of carbonated water. Ending direct materials inventory is 10% of the next month's production needs. September 1 direct materials inventory met that requirement. Required: A. Calculate the budgeted revenue for September. B. Calculate the budgeted revenue for November. C. Calculate the production in September (in cartons). D. Calculate the production in October (in cartons). E. Calculate the purchases of syrup in September (in mL). F. Calcualte the purchases of carbonated water in September (in mL).

Shortie Company Shortie Company produces two products: X Brand and Y Brand. Budgeted sales are as follows: May 10,000 40,000 June 20,000 70,000 July 15,000 80,000 August 30,000 90,000 The company's ending finished goods inventory policy is that X Brand should have 10% of its next month's sales in ending finished goods inventory and Y Brand should have 20% of next month's sales in its ending finished goods inventory. On May 1, finished goods inventory consisted of 1,000 units of X Brand and 9,000 units of Y Brand.Y Brand requires four units of component A. (X Brand does not use component A.) On May 1, 2,100 units of component A were in direct materials inventory. The company wants to have 30% of the following month's production needs in direct materials inventory for component A. -Refer to Shortie Company. What is the desired ending inventory of component A for May?

Budgets serve to communication and coordinate plans of the organization to employees.

Planning is looking ahead to see what actions should be taken to avoid particular goals.

Flight Company makes luggage. One popular model is the Traveller (a 50 cm wheeled carry-on). Budgeted sales for this model are: Month Unit Sales March 28,000 April 35,000 May 48,000 June 80,000 Desired ending finished goods inventory is 20% of the next month's sales. Finished goods inventory on March 1 is 3,500 units. Required: Prepare a production budget for as many months as possible.

Fastly Company had the following budgeted information for October: 1 October 1 cash balance $3,500 2 Expected sales 2,500 units at $25 each (half in cash, remainder on credit due in November) 3 Merchandise inventory purchases 3,000 units at $14 each (all in cash) 4 Rent $1,450 5 Payroll $1,000 6 Utilities and other costs $4,500 7 Accounts receivable balance Oct. 1, $35,000 ( $700 of which is estimated to be bad debts Required: A. Calculate the budgeted collection on accounts receivable for October. B. Calculate the total cash disbursements for October. C. Calculate the ending cash balance for October. D. Assuming sales are collected 75% in the month of sale and 25% the following month, calculate the ending cash balance for October.