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

Shortie Company produces two products: X Brand and Y Brand. Budgeted sales for four months are as follows: Shortie's ending inventory policy is that X Brand should have 10% of its next month's sales in ending inventory and Y Brand should have 20% of next month's sales in its ending inventory. On May 1, Shortie's inventory had 1,000 units of X Brand and 9,000 units of Y Brand.Y Brand requires four units of component A. (X Brand does not use component A.) On May 1, 2,100 units of component A were in inventory. Shortie wants to have 30% of the following month's production needs in inventory for component a. X Brand Y Brand May 10,000 40,000 June 20,000 70,000 July 15,000 80,000 August 30,000 90,000 -Refer to the Figure.How many units of component A are budgeted to be purchased in May?

The budget director is the person responsible for directing and coordinating the organization's overall budgeting process.

The department manager reviews the budget,provides policy guidelines and budgetary goals,resolves differences that arise as the budget is prepared,approves the final budget,and monitors the actual performance of the organization as the year unfolds.

The cash budget includes the beginning balance of cash,cash receipts,cash disbursements,and the ending balance of cash.

Identify each item as an advantage or disadvantage of budgeting. -Leads to budgetary slack

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 is Bingimton cost of goods sold per unit?

Communication and coordination are served by budgets.

A company has the following accounts receivable payment history: Which of the following actions might increase the cash receipts over the coming year? Paid in the month of sale 10\% Paid in the month following sale 30\% Paid in the second month following sale 40\% Paid in the third month following sale 10\%

Which of the following is an example of myopic behaviour?

Miller Corporation has the following sales budget for the first four months of the current year: Historically,the following trend has been established regarding cash collection of sales: 65% in month of sale 25% in month following sale 8% in second month following sale 2% uncollectible The company allows a 2% cash discount for payments made by customers during the month of the sale.November and December sales were $400,000 and $240,000,respectively. Required: Prepare a schedule of budgeted cash collections from sales for January,February,and March. Month Sales January \ 400,000 February 320,000 March 440,000 April 360,000

BoomBoom Company produces speaker systems for trucks. BoomBoom expects to sell 20,000 units in January, 25,000 units in February, and 22,000 units in March. Each unit is priced at $45. BoomBoom's desired ending inventory is 25% of the following month's sales. That requirement was met on January 1. Each speaker system requires two boxes and 10 metres of wire. Boxes cost $5 each, and wire is $0.90 per metre. BoomBoom's desired ending raw materials inventory is 30% of the following month's production needs. On January 1, BooBoom had 9,000 boxes and 100,000 metres of wire in inventory. -Refer to the Figure.How many boxes does BoomBoom expect to purchase in January?

Which budget adds an additional month in the future as one month expires so that the company always has a 12-month plan on hand?

The following forecasted sales pertain to Nyak Company: Collection pattern: 60% in month of sale 40% in month following the sale Month Sales April \ 200,000 May 250,000 June 150,000 July 100,000 The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20% of the next month's sales.How many units are expected to be produced in April? Accounts receivable as of March 31 \ 35,000 Finished goods inventory as of March 31 4,000 units

What does budgeted operating income include?

The direct labour budget includes units to be produced,direct labour time needed,and the beginning inventory.

What are future financial plans called?

Myopic behaviour is one of the advantages of participative budgeting.

Fredder Company usually sells about 20% of its merchandise during a month for cash with the remaining sales on account.The company's accounts receivable payment history is as follows: 30% in the month of sale,50% in the month following,and 15% in the second month following sale.Total budgeted sales for the second quarter are as follows: Assume all questions relate to the month of June. April \ 100,000 May 120,000 June 80,000 A. What are the expected cash sales? B. What are the expected receipts from accounts receivable for sales made in April? C. What are the expected receipts from accounts receivable for sales made in May? D. What are the total expected cash receipts? E. From the above accounts receivable history information, receipts from accounts receivable do not equal $100 \%$ . Why not? Does this amount appear on the cash budget?

Does a not-for-profit agency need to budget? Why or why not?

A company requires 400 kg of plastic to meet the production needs of a product.It currently has 40 kg of plastic inventory.The desired ending inventory of plastic is 120 kg.How many kilograms of plastic should be budgeted for purchasing during the coming period?