Exam 21: Budgeting

Crystal Company manufactures two models of microcassette recorders, VCH and MTV. Based on the following production data for April of the current year, prepare a production budget for April.

Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 30% in the month following the sale. The cash collections in November are:

A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future is called master budgeting.

A company is preparing its their Cash Budget. The following data has been provided for cash receipts and payments. The company's cash balance at January 1st is $290,000. This company desires a minimum cash balance of $340,000. What is the amount of excess cash or deficiency of cash (after considering the minimum cash balance required) for January?

Southern Company is preparing a cash budget for April. The company has $12,000 cash at the beginning of April and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during April. Southern Company has an agreement with its bank to maintain a cash balance of at least $10,000. To maintain the $10,000 required balance, during April the company must:

The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) the desired ending inventory.

As of January 1 of the current year, the Grackle Company had accounts receivables of $50,000. The sales for January, February, and March 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 total cash collected (both from accounts receivable and for cash sales) in the month of February?

The budget that summarizes future plans for the acquisition of fixed assets is the:

Flanders Industries collects 35% of its sales on account in the month of the sale and 65% in the month following the sale. If sales on account are budgeted to be $175,000 for May and $225,000 for June, what are the budgeted cash receipts from sales on account for June?

Gilbert's expects its September sales to be 20% higher than its August sales of $150,000. Purchases were $100,000 in August and are expected to be $120,000 in September. All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month. Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month. The beginning cash balance on September 1 is $7,500. The ending balance on September 30 would be:

The master budget of a small manufacturer would normally include all necessary component budgets except the capital expenditures budget.

What is a capital expenditures budget?

A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 50% in the next month, 25% the following month, and 5% is uncollectible. Projected sales for December, January, and February are $60,000, $85,000, and $95,000, respectively. The February expected cash receipts from all current and prior credit sales is:

Finch Company began its operations on March 31 of the current year. Finch Co. has the following projected costs: (1) 3/4 of the manufacturing costs are paid for in the month they are incurred. 1/4 is paid in the following month. (2) Insurance expense is $1,000 a month, however, the insurance is paid four times yearly in the first month of the quarter, i.e. January, April, July, and October. (3) Property tax is paid once a year in November. The cash payments for Finch Company in the month of June are:

Star Co. was organized on August 1 of the current year. Projected sales for the next three months are as follows: The company expects to sell 50% of its merchandise for cash. Of the sales on account, 30% are expected to be collected in the month of the sale and the remainder in the following month. Prepare a schedule indicating cash collections for August, September, and October.

The cash budget is affected by the sales budget, the various budgets for manufacturing costs and operating expenses, and the capital expenditures budget.

If Division Inc. expects to sell 200,000 units in 2012, desires ending inventory of 24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted volume of production for 2012 is 202,000 units.

Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May.

Callon Industries has projected sales of 67,000 machines for 2012. The estimated January 1, 2012, inventory is 6,000 units, and the desired December 31, 2012, inventory is 15,000 units. What is the budgeted production (in units) for 2012?

Consulting the persons affected by a budget when it is prepared can provide an effective means of motivation and cooperation.