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

Which statement best describes an aspect of the master budget?

The cash budget includes the beginning balance of cash, cash receipts, cash disbursements, and the ending balance of cash.

Refer to BoomBoom Company. How many speaker boxes need to be purchased in January?

Kneeling Corporation has the following sales forecasts for the first three months of the current year: Month Sales January $36,000 February 24,000 March 40,000 In the month of the sale 65% of sales are collected, and the remainder is collected in the following month. Accounts receivable balance (January 1) \ 22,800 Cash balance (January 1) 30,000 Minimum cash balance needed 20,000 What is the cash balance at the end of January, assuming that cash is received only from customers and that $48,000 is paid out during January?

The following forecasted sales pertain to Nyak Company: Month Sales April $200,000 May 250,000 June 150,000 July 100,000 Collection pattern: 60% in month of sale 40% in month following the sale Accounts receivable as of March 31 $35,000 Finished goods inventory as of March 31 4,000 units The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20% of the next month's sales. How many units are expected to be produced in April?

Which term reflects looking backward, determining what actually happened, and comparing what actually happened with the previously planned outcomes?

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 gross profit?

Budgets are financial plans for the future which identify objectives and the actions needed to achieve them.

A company plans to sell 450 units. The selling price per unit is $5. The company has 45 units in beginning finished goods inventory and would like to have 100 units in ending finished goods inventory. How many units should be produced for the coming period?

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 Y Brand are budgeted for production in June?

The direct materials purchases budget is based on the production 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. -Beginning direct materials inventory

Individual behaviour that is in basic conflict with the goals of the organization is called dysfunctional behaviour.

Refer to Stumble Inc. What is the budgeted manufacturing overhead for March?

Rival Company purchases merchandise on account. In general, the company pays 50% in the month of purchase and 50% in the following month. All payments in the month of purchase qualify for a 2% cash discount. First quarter budgeted purchases are: January $90,000 February 80,000 March 96,000 Required: A. Calculate the total cash disbursements expected in February. B. Calculate the total cash disbursements expected in March. C. Suppose that there is no cash discount for purchases made in the month of purchase. Recalculate the total cash disbursements expected in February and March.

Miller Corporation has the following sales budget for the first four months of the current year: Month Sales January \ 400,000 February 320,000 March 440,000 April 360,000 Historically, the following trend has been established regarding cash collection of sales: 65% in month of sale 25% in month following sale 8% in second month following sale 2% uncollectible The company allows a 2% cash discount for payments made by customers during the month of the sale. November and December sales were $400,000 and $240,000, respectively. Required: Prepare a schedule of budgeted cash collections from sales for January, February, and March.

Which statement highlights a potential problem of participative budgeting?

Cash budgets are often prepared monthly or even weekly.

Doitall Company Doitall Company makes all its sales on account. The company's accounts receivable payment experience is as follows: Percent paid in the month of sale 18\% Percent paid in the month after the sale 77\% Percent paid in the second month after the sale 3\% The company provided information on sales as follows: September \ 120,000 October \ 150,000 November \ 220,000 December (expected) \ 250,000 -Refer to Doitall Company. What are the expected cash receipts for November?

Sleep Country Company produces and sells pillows. It expects to sell 10,000 pillows the coming year, and it had 1,000 pillows in the finished goods inventory at the end last year. The company would like to complete operations in the coming year with at least 1,250 completed pillows in finished goods inventory. There is no ending work-in-process inventory. The pillows sell for $5 each. How many pillows should be produced in the coming year?