Exam 9: Budgeting, production, cash, and Master Budget

Cash receipts must be at least as much as sales.

Control is looking ahead to see what actions should be taken to realize particular goals.

Stumble Inc. plans to sell 100,000 units in March and 140,000 units in April. Stumble Inc.'s policy is that 15% of the following month's sales must be in ending inventory. On March 1, 13,400 units were in inventory. It takes 15 minutes of direct labour time to make one unit. Direct labour wages average $20 per hour. Variable overhead is applied at the rate of $3 per direct labour hour. Fixed overhead is budgeted at $44,500 per month. -Refer to the Figure.What is the budgeted overhead for March?

Briefly describe the attributes of an ideal budgetary system.What features of budgeting have been identified that encourage positive behaviour?

Identify each item as a component of one of the following budgets. -Budgeted sales in dollars

Bortolli Company manufactures pasta bowls. Production of bowls for the coming three months is budgeted as follows: Each bowl requires 45 minutes of direct labour time. Direct labour wages average $20 per hour. Monthly overhead averages $4 per direct labour hour plus fixed overhead of $2,100. May 20,000 June 30,000 July 35,000 -Refer to the Figure.What is the total overhead budgeted for the month of June?

A company provided the following information on its projected sales for the coming year: Assume that the beginning inventory is 5,000 units,and that the company policy is to have 25% of the next quarter's sales in ending inventory.Which quarter will have the lowest production? 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units 50,000 40,000 30,000 80,000 Average selling price \ 5 \ 5 \ 5 \ 6

What are the advantages of budgeting?

Identify each item as a component of one of the following budgets. -Beginning inventory

Miso Company makes all its sales on account. Accounts receivable payment experience is as follows: Miso provided information on sales as follows: Percent paid in the month of sale 30\% Percent paid in the month after the sale 60\% Percent paid in the second month after the sale 8\% May \ 100,000 June \ 120,000 July \ 130,000 August (expected) \ 150,000 -Refer to the Figure.What dollar value of June credit sales is expected to be collected in July?

Garden Company purchased $140,000 of goods in June and expects to purchase $130,000 of goods in July. Garden typically pays for 20% of purchases in the month of purchase and 80% in the following month.Every month, Garden must make the following payments: In mid-July, Garden expects to buy a new computer for $4,500 using the company credit card. Typically, the credit card bill is paid in full in the following month. June credit card purchases totalled $6,000. Rent \ 5,000 Wages \ 14,000 Utilities \ 3,000 Telephone \ 400 Loan on equipment \ 1,200 -Refer to the Figure.What are the total cash disbursements expected by Garden during the month of July?

Dickson Company has the following projected account balances for September 30 of the current year: Required: Accounts payable \ 20,000 Sales \ 400,000 Accounts receivable 50,000 Capital stock 200,000 Depreciation, factory 12,000 Retained earnings (beginning) 64,000 Inventories (8/31) 90,000 Maintenance, factory 14,000 Inventories (9/30) 90,000 Cash 28,000 Materials used 100,000 Equipment, net 120,000 Office salaries 40,000 Buil dings, net 200,000 Insurance, factory 2,000 Utilities, factory 8,000 Factory wages 70,000 Selling expenses 30,000 Bonds payable 80,000 A. Prepare a budgeted income statement for the month ended September 30 . B. Prepare a budgeted bal ance sheet as of September 30 .

Identify each item as an advantage or disadvantage of budgeting. -Pseudoparticipation

Which of the following receives necessary information from the ending finished goods budget?

Which of the following do many companies use when preparing the overhead budget?

Adjustments to the sales budget need to be made for which of the following items when going from the sales budget to the production budget?

Bingimton Company provided the following information for last month.There were no beginning and ending inventories. Production in units 1,000 Direct materials cost \ 3,000 Direct labour cost \ 4,000 Overhead cost \ 7,600 Sales commission per unit sold \ 2 Price per unit sold \ 24 Fixed selling and admini strative expense \ 5,000 -Refer to the Figure.What was the operating income for Bingimton Company last month?

Identify each item as a component of one of the following budgets. -Beginning inventory of materials

The master budget is typically a comprehensive financial plan for the organization for the past fiscal year.

Fastly Company had the following budgeted information for October: 1.October 1 cash balance $3,500 2.Expected sales 2,500 units at $25 each (half in cash,remainder on credit due in November) 3.Inventory purchases 3,000 units at $14 each (all in cash) 4.Rent $1,450 5.Payroll $1,000 6. Utilities and other costs $4,500 7. Accounts receivable balance Oct.1,$35,000 (includes $700 bad debts allowance) A. What is the budgeted collection on accounts receivable for October? B. What are the total cash disbursements for October? C. What is the ending cash bal ance for October? D. Assuming sales are collected $75 \%$ in the month of sale and $25 \%$ the following month, what is the ending cash balance for October?