Exam 20: The Budgeting Process

Which type of budgeting considers inputs from employees at all levels of a company?

A master budget consists of a set of operating budgets and a set of financial budgets for a specific accounting period.

The last step in a master budget is to prepare a

Great Lake Corporation wishes to prepare a cash budget for November 2014.Sales,purchases,and expenses for October (actual)and November and December (estimated)are as follows: Sales: All sales are on credit,and the company's experience shows that,on an average,80 percent of sales are collected in the month of sale and the balance in the following month.A 2 percent discount is allowed on all collections in the month of sale. Purchases: The company pays 60 percent of purchases in the month of purchase and the balance in the following month.The company is allowed an average discount of 1 percent on payments made in the month of purchase. Expenses: The monthly expenses for November include charges for depreciation amounting to $1,000 and $100 of prepaid expenses,which will expire.All other expenses are paid as incurred. Other: On September 1,2014,a new machine was purchased for $5,000.A down payment of $500 was made,and it was agreed that the balance would be paid in equal installments in the following three months. -The cash receipts in November for October sales of Great Lake are expected to be

If the cash budget of a company shows a cash shortage,the company would most likely

Richard Inc.expects to sell 28,000 units.Each unit requires 4 pounds of direct materials at $15 per pound and 3 direct labor hours at $12 per direct labor hour.The overhead rate is $9 per direct labor hour.The beginning inventories are as follows: direct materials,2,500 pounds;finished goods,3,100 units.The planned ending inventories are as follows: direct materials,4,000 pounds;finished goods,3,200 units. -Given a planned production of 5,000 units,what are the planned direct materials purchases of Richard?

The following information was reported in a cash budget: How much cash will the company have to borrow in order to meet its required needs?

A sales forecast for a retail organization is based on purchases and cost of goods sold budgets.

When making decisions to purchase new equipment,managers look into the capital expenditure budget of an organization

Operating budgets are plans used in daily operations.

The selling and administrative expense budget is typically separated into variable and fixed cost components.

Which of the following do not serve as a source of data while preparing a cash budget?

The cost of goods manufactured of a company is $850,000.The beginning and ending finished goods inventory are $360,000 and 250,000,respectively.Determine the cost of goods sold.

William Wills Inc.estimates the following for 2014: The ending cash balance for 2013 was $210,000. Prepare a cash budget to determine the ending cash balance for 2014.

Budgets identify potential constraints before they become problems.

The cost of goods manufactured budget is an operating budget.

All operating budgets should contain revenue and expense components.

Evaluating the value chain and capacity issues are not part of the budgeting process.

Participative budgeting results in setting unattainable standards.

J.J.Johnson has decided to supplement his income by selling beehives.He expects to sell 25,000 hives in 2014.He ended 2013 with 2,500 completed hives in inventory and would like to complete operations in 2014 with at least 2,800 completed hives in inventory.There is no ending work in process inventory.One beehive holds about 250 bees.The bees are purchased for $4.00 per 1,000 bees.The hives sell for $15.00 each. -What would be the total of the 2014 sales budget of Johnson?