Exam 21: Budgeting

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 October are:

The sales budget is the starting point for preparation of the direct labor cost budget.

A disadvantage of static budgets is that they:

At the beginning of the period, the Assembly Department budgeted direct labor of $110,000, direct material of $170,000 and fixed factory overhead of $28,000 for 8,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting.

Management accountants usually provide for a minimum cash balance in their cash budgets for which of the following reasons:

Doran Technologies produces a single product. Expected manufacturing costs are as follows: Variable costs Fixed costs per month Required: Estimate manufacturing costs for production levels of 25,000 units, 30,000 units, and 35,000 units per month.

A budget can be an effective means of communicating management's plans to the employees of a business.

The master budget of a small manufacturer would normally include all component budgets that impact on the financial statements.

After the sales budget is prepared, the capital expenditures budget is normally prepared next.

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 March?

The capital expenditures budget is part of the planned investing activities of a company.

Production and sales estimates for June are as follows: The budgeted total sales for June is:

If the expected sales volume for the current period is 9,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is:

Warmfeet manufactures comforters. Assume the estimated inventories on January 1, 2012, for finished goods, work in process, and materials were $39,000, $33,000 and $27,000 respectively. Also assume the desired inventories on December 31, 2012, for finished goods, work in process, and materials were $42,000, $35,000 and $21,000 respectively. Direct material purchases were $575,000. Direct labor was $212,000 for the year. Factory overhead was $156,000. Prepare a cost of goods sold budget for Warmfeet, Inc.

The budgeted balance sheet assumes that all operating and financing plans are met.

Maxim Technologies projected sales of 35,000 computers for 2012. The estimated January 1, 2012, inventory is 3,000 units, and the desired December 31, 2012, inventory is 9,000 units. What is the budgeted production (in units) for 2012?

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. What should the budgeted production be for January?

Production and sales estimates for April are as follows: The number of units expected to be manufactured in April is:

The sales budget is derived from the production budget.

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 April are: