Exam 22: The Budgeting Process

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 yearly total on the direct materials purchases budget for bee purchases of Johnson? (Assume for this question that 40,000 beehives will be produced. )

The budget committee oversees each stage in the preparation of a master budget.

Lee Carter Inc.forecast of sales is as follows: July,$50,000;August,$80,000;September,$150,000.Sales are normally 75 percent cash and 25 percent credit.Credit sales are collected in full in the following month.Merchandise cost averages 70 percent of sales price.The company desires an inventory as of September 30 of $50,000.The inventory as of June 30 was $30,000.The accounts receivable had zero balance on June 30. -Total cash receipts for August of Lee Carter will be

Harrisburg Manufacturing produces three products requiring the following inputs of raw materials: Unit cost and inventory for each raw material: Scheduled production: Prepare a direct materials purchases budget for the year ended December 31,2014.

Sol Del Inc.was preparing the master budget for 2014 when a computer virus deleted some of the data contained in the cash budget for the first quarter shown below: a.Determine the missing amounts. b.Should Sol Del Inc.anticipate borrowing during the quarter? How much and when? What effect would this have on the cash budget shown? When will the company have sufficient funds available to pay back any loans?

Static budgets are prepared on quarterly basis and require frequent change during the annual budget period.

Which of the following forms the base of all operating budgets?

Which of the following budgets is prepared soon after the preparation of sales budget in a master budget?

Sondari Corporation estimates the following for 2014: Ending cash balance for 2013 was $150,000. Prepare a cash budget to determine the ending cash balance for 2014.

Which of the following budgets should be prepared before the others listed?

Operating budgets for the DiP Company reveal the following information: net sales,$400,000;beginning materials inventory,$23,000;materials purchased,$185,000;beginning work in process inventory,$64,700;beginning finished goods inventory,$21,600;direct labor costs,$34,000;overhead applied,$67,000;ending work in process inventory,$61,200;ending materials inventory,$18,700;and ending finished goods inventory,$16,300.Compute DiP Company's budgeted gross margin.

Sales budget is the final product of the budgeting process.

The long-term plan or budget involves every part of the enterprise and is much more detailed than the short-term plan.

A cash budget

Holman Company pays each of its three salespeople a base salary of $1,000 per month plus a commission of 10 percent of their sales.The base salary is paid each month as incurred;the 10 percent commission is paid the month following the month of sale.The total sales for the past four months are as follows: Total salary and commission cash payments for September total

A continuous budget is a 12-month forward-rolling budget that summarizes budgets for the next 12 months.

Zero-based budgeting requires the preparation of budget from scratch.

Describe three benefits budgeting provides to an organization's success.

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. -What is the planned production of Richard?

A continuous budget is prepared