Exam 22: Master Budgets

A manufacturing company's budgeted income statement includes the following data: 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?

Delleate,Inc.has prepared the following direct materials purchases budget: All purchases are paid for as follows: 10% in the month of purchase,50% in the following month,and 40% two months after purchase.Calculate total cash payments made in October for purchases.

Janeway,Inc.has a cash balance of $22,000 on April 1.The company is now preparing the cash budget for the second quarter.Budgeted cash collections and payments are as follows: 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.

The budgeted income statement shows operating income and net income.

The starting point in developing the master budget is the preparation of the ________.

Use of advanced technology makes it more cost effective for managers to conduct sensitivity analysis.

Which of the following statements is true of the operating budget?

A flexible budget is prepared to represent various levels of sales volume.

There is no need for managers to have employees participate in developing the budget because the budget is a management tool.

Lindsey Chocolate,Inc.has prepared its third quarter budget and provided the following data: The cash balance on June 30 is projected to be $4,000.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.

Developing a budget reduces coordination and communication at different levels in an organization.

The last step in the preparation of the master budget is the budgeted income statement.

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

Manhattan Enterprises manufactures cookware sets and sells the sets to department stores.Manhattan expects to sell 2,100 cookware sets for $260 each in April and 3,900 cookware sets for $275 each in May.Sales are 10% cash and 90% on account.Compute the total budgeted sales for May.

An objective of the budgeting process is to communicate a single,unified,comprehensive plan for the business.

Allain,Inc.has the following budgeted figures: Calculate the ending merchandise inventory for the month of March.

Iowa Supply,Inc.provides the following data taken from its third quarter budget: 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.

O'Reilly,Inc.has prepared its third quarter budget and provided the following data: The cash balance on June 30 is projected to be $4,200.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 amount of principal repayment at the end of September.

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Accounts Receivable can be obtained from the ________.

Star Moving Systems,Inc.has provided the following details for direct materials purchased on account in different months. The terms of payment offered by the suppliers are to pay 70% in the month of purchase and 30% in the following month.Calculate the payments on account made during the first six months.