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

Which is NOT a characteristic of the master budget?

Ulna Company production has variable overhead costs of $8 per direct labour hour and fixed overhead costs of $56,000 per month.Budgeted production for the next three months is as follows: Each unit requires three hours of direct labour. Month Production October 6,000 November 5,500 December 8,000 A. What is Ulna's total variable overhead for October? B. What is Ulna's total overhead for October? C. What is Ulna's total variable overhead for November? D. What is Ulna's total fixed overhead for December? E. What is Ulna's total budgeted overhead for the last three months of the year?

Suppose that a company has the following accounts receivable collection pattern: All sales are on credit.Suppose credit sales for March and April are $300,000 and $200,000,respectively.What would be the company's cash collection for April? Paid in the month of sale 30\% Paid in the month following sale 70\%

Describe some problems with participative budgeting.

Comparing actual results with budgeted results on a periodic basis provides planning in a budgetary system.

Budgets should be based on ideal standards to encourage everyone to reach for the highest level of performance.

Southern Inc. produces a line of salsas. Southern Inc. estimated production of jars of salsa for the third quarter of the year is as follows: Each jar requires 0.25 kg of peppers. Southern Inc. prefers to buy the freshest peppers, so its policy is to have just 5% of the following month's production needs in ending inventory. On July 1, the company had 1,200 kg of peppers in inventory. Southern Inc. pays $0.40 per kilogram of peppers. It buys all peppers on account and typically pays 50% of a month's purchases in that month, and the remaining 50% the following month. July 80,000 August 90,000 September 70,000 -Refer to the Figure.How much cash is paid in August for pepper purchases (rounded to the nearest dollar)?

What is the term for looking backward,determining what actually happened,and comparing what actually happened with the previously planned outcomes?

Sessional Company finds that typically 30% of a month's sales are paid in cash.Payments on accounts receivable are 60% in the month of sale and 38% in the month following sale.Budgeted sales for June are $100,000,for July are $140,000,and for August are $120,000.What are the total cash receipts budgeted for July?

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

CleanFace Company makes and sells two types of shaving cream: foamy and gel.Last year,foamy cream sold for $2.35 per can,and gel sold for $3.15 per can.Sales volume was as follows: CleanFace expects sales for foamy cream to increase by 6% in each quarter as long as price remains constant.The gel price will increase to $3.50,but an aggressive advertising is expected to raise volume by 5% in quarters 1 and 4 and by 10% in quarters 2 and 3.Prepare a sales budget for the coming year. Quarter 1 Quarter 2 Quarter 3 Quarter 4 Foamy 75,000 82,000 84,000 72,000 Gel 50,000 80,000 90,000 60,000

A company has provided a sales budget for the next four months (January,February,March,and April).It bases its production budget on the sales budget.According to company policy,each month's ending inventory of finished product must be equal to 25% of the following month's sales needs.The direct materials purchases budget is based on the production budget.Company policy states that each month's ending inventory of raw materials must be equal to 10% of the following month's production needs for raw materials.For how many months can the company prepare direct materials purchases budgets?

A company expects the following sales for the coming year: What is the company's budgeted sales revenue for the year? 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units 50,000 40,000 30,000 90,000 Average selling price \ 5 \ 4.50 \ 5 \ 6

The cash is directly used in the development of the production budget.

In which order are budgets prepared?

Chatters Salons anticipates giving 104 permanents in May,140 in June,and 130 in July.Chatters needs one permanent wave kit for each perm,along with two boxes of wave tissues.Its inventory policy is to have 10% of the following month's materials needs on hand.On May 1,there were 18 wave kits and five boxes of wave tissues on hand.(Round any fractions of a unit to the nearest whole unit.)

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 Y Brand are budgeted for production in June?

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 is Garden's expected cash disbursement in July to pay for purchases of goods?

Wammy Company makes rolling suitcases.Its sales budget for four months is as follows: Wammy's policy is that ending inventory of finished suitcases should equal 30% of the next month's sales.Beginning inventory (March 1)is 5,300 suitcases. Each suitcase required 1.5 metres of ballistic nylon.The ending inventory policy for nylon is that 20% of the following month's production needs must be on hand.On March 1,Wammy had 10,450 metres of nylon in inventory. Month Unit Sales March 15,000 April 20,000 May 40,000 June 60,000 A. What is the desired ending inventory of suitcases for April? B. What is the budgeted production of suitcases for April? C. What is the desired ending inventory of nylon for March? D. What are the budgeted metres of nyl on to be purchased in March? E. Assuming each suitcase required 2 metres of ballistic nylon, what is the desired ending inventory of nylon for March?

What calculation is used when budgeting direct labour hours for the coming year?