Exam 21: Budgeting

Production estimates for August are as follows: For each unit produced, the direct materials requirements are as follows: The number of pounds of materials A and B required for August production is:

The budgeted volume of production is based on the sum of (1) the expected sales volume and (2) the desired ending inventory, less (3) the estimated beginning inventory.

Which of the following budgets provides the starting point for the preparation of the direct labor cost budget?

Production estimates for July are as follows: For each unit produced, the direct materials requirements are as follows: The number of pounds of materials A and B required for July production is:

The benefits of comparing actual performance of the operations against planned goals include all of the following except:

Crow Manufacturers, Inc. projected sales of 75,000 bicycles for 2012. The estimated January 1, 2012, inventory is 5,000 units, and the desired December 31, 2012, inventory is 8,000 units. What is the budgeted production (in units) for 2012?

Tara Company's budget includes the following credit sales for the current year: September, $25,000; October, $36,000; November, $30,000; December, $32,000. Experience has shown that payment for the credit sales is received as follows: 15% in the month of sale, 60% in the first month after sale, 20% in the second month after sale, and 5% is uncollectible. How much cash can Tara Company expect to collect in November as a result of current and past credit sales?

What is a cash budget? How does management use a cash budget?

Budget preparation is best determined in a top-down managerial approach.

As of January 1 of the current year, the Grackle Company had accounts receivables of $50,000. The sales for January, February, and March of 2012 were as follows: $120,000, $140,000 and $150,000. 20% of each month's sales are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with remaining 40% collected in the following month. What is the accounts receivable balance as of March 31?

Part of the cash budget is based on information drawn from the capital expenditures budget.

Bob and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production would show:

The operating budgets of a company include:

Scott Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $25,000. At 12,000 units of production, a flexible budget would show:

The responsibility for coordinating the preparation of a master budget should be assigned to the CEO of a firm.

A capital expenditures budget is prepared before the operating budgets.

Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $260,000, $375,000, and $400,000, respectively, for September, October, and November. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. The cash collections in November from accounts receivable are:

The first budget customarily prepared as part of an entity's master budget is the:

Truliant co. sells a product called Withall and has predicted the following sales for the first four months of the current year: Ending inventory for each month should be 20% of next month's sales, and the December 31 inventory is consistent with that policy. How many units should be purchased in February?

When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing: