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

Identify each item as either part of the operating budget or the financial budget. -Sales budget

Briefly describe the advantages and disadvantages of using budgeting for performance evaluation?

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.What is BoomBoom's expected sales revenue for February?

Which of the following is a use of budgets for control?

Ideally,managers are held accountable for controllable costs.

Which of the following is the alignment of managerial and organizational goals?

Identify each item as a component of one of the following budgets. -Units of raw materials needed for each unit of product

Hillbrant Company purchased $40,000 of goods in July and expects to purchase $60,000 of goods in August.Hillbrant typically pays for 25% of purchases in the month of purchase and 75% in the following month.What total expected cash disbursements for purchases should Hillbrant Company expect to pay in August?

What is the most common starting point in the information-gathering process for budgeting?

Budgets identify objectives and the actions needed to achieve them because they are foresighted financial plans.

A company plans to sell 450 units.The selling price per unit is $5.The company has 45 units in beginning inventory and would like to have 100 units in ending inventory.How many units should be produced for the coming period?

The first budget prepared when developing a master budget is the sales budget.

It is May 28 and you have just landed a summer job that will pay you (net of taxes)$800 per month.You start June 1 and will work until mid-August.Your scholarship pays for tuition,room,and board.But you must buy books,pay for transportation to and from school,and pay for clothing,any extra meals,entertainment,and so on.You have gathered the following data: 1.One round trip airline ticket is $260,and you'd like to come home for Thanksgiving (your parents will drive you there in August,and you will try to catch a ride home with another student in December). 2.Books are estimated to cost about $500 per semester for your anticipated major. 3.Supplies should be another $150. 4.Clothing might run $100-you already have almost everything you think you'll need. 5.There are 16 weeks in the semester,and you think you'll need $50 per week to cover extra meals and entertainment. 6.Before school even starts,you need to cover any summer expenses,including going out with friends.$30 a week sounds about right,since all your friends will be working and saving for college as well.There are 11 weeks of summer. Right now,you have $200 in your chequing account. A. Prepare a cash budget for the summer and the first semester of university. (Do the entire time period; do not break it down by week or by month.) B. Comment on the estimated ending balance. What actions can you take, if any, to increase it?

Which of the following is an operating budget?

A strategic plan identifies strategies for future activities and operations,generally covering at least five years.

Identify each item as either part of the operating budget or the financial budget. -Budgeted income statement

Which of the following occurs when a manager deliberately underestimates revenues or overestimates costs?

Individual behaviour that is in basic conflict with the goals of the organization is called dysfunctional behaviour.

Cash budgets are often prepared monthly or even weekly.

Kanban Company estimated sales of 40,000 units at $6 each.Budgeted cost of goods sold per unit includes $1.20 of direct materials,six minutes of direct labour time at $15 per hour,and unit overhead cost of $1.30.Kanban pays a sales commission of 10% of sales revenue.Fixed selling and administrative expenses are budgeted at $25,000.