Exam 8: Budgeting for Planning and Control Key

Missoula, Inc., is looking for feedback on performance. The company compares the budget for the year with the actual costs. Missoula, Inc., had the following budgeted data: Required:

Participative budgeting has which of the following potential problems?

The body responsible for reviewing the budget, providing policy guidelines and budgetary goals, resolving differences that may arise, and approving the final budget is the __________ committee.

Firefly Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000. Accounts receivable on December 31 were $45,000. Firefly Manufacturing Company would expect to have an accounts receivable balance on March 31 of

Static budgets show costs for varying levels of activities.

The city of Charleston had the following sales of water for the selected months of 2014: All sales are on credit. Historically, 50 percent is collected in the month of sale, 35 percent during the first month following the sale, and 15 percent in the second month following the sale. Cost of water averages 75 percent of sales. Water is purchased in the month of sale. All purchases are paid during the month following the purchase. Operating costs of $10,000 are paid each month. The April 1 cash balance is expected to be the minimum balance of $5,000. Money can be borrowed from a local bank in increments of $1,000. (Do not include interest charges in your budget.) Required: Prepare a cash budget for April, May, and June.

Ringwold, Inc., has done a cost analysis for its production of baseball cards. The following activities and cost drivers have been developed: Following are the actual costs of producing 35,000 cards: 60 labor hours; 500 machine hours; 5 batches; 30 purchase orders The following variances were given in the activity performance report: Required: Find the missing values. Prepare an activity-based performance report in good form.

Thunderbolt Corporation is in the process of preparing its budget for next year. Cost of goods sold has been estimated at 60 percent of sales. Merchandise purchases are to be made during the month preceding the month of the sales. Thunderbolt pays 60 percent in the month of purchase, and 40 percent in the month following. Wages are estimated at 20 percent of sales and are paid during the month of sale. Other operating costs amounting to 10 percent of sales are to be paid in the month following the sale. The accounts payable balance on June 30 was $48,000. Month Sales June $170,000 July 200,000 August 120,000 September 150,000 October 160,000 November 100,000 Required: Prepare a schedule of cash disbursements for July, August, and September.

What is the formula used to compute the units to be produced?

A flexible budget compares actual costs to budgeted costs.

Which of the following is a financial budget?

Volume variances examine differences between

Budgeting means to set standards, receive feedback, and executing corrective action.

Lumberton Company has the following projected account balances for June 30, 2014: Required:

Figure 8-6 The records of Morgantown, Inc.show the following forecasted sales: Collection pattern: 60 percent in month of sale 40 percent in month following the sale The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month's sales. Refer to Figure 8-6. How much is Accounts Receivable as of October 31?

Which of the following is an operating budget?

Alpha Beta Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000. How much merchandise inventory will Alpha Beta Company need to purchase next month?

Analysis that fosters management by exception is

Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: What is the budget for maintenance if 20,000 reflectors were made that required 3,500 machine hours, 12 batches, and 5,000 purchase orders?

Refer to Figure 8-3. What is the number of units of wood that need to be purchased by Roaming Vehicles Company during the first month?