Exam 22: Budgeting

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

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 would be the budgeted production for March?

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

The first budget to be prepared is usually the sales budget.

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?

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:

Match the following terms with the best definition given.

Supervisor salaries and indirect factory wages would normally appear in the direct labor cost budget.

Estimated cash payments are planned reductions in cash from all of the following except:

After the sales budget is prepared, the production budget is normally prepared next.

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?

Yadkin Valley's April sales forecast projects that 6,000 units will sell at a price of $10.50 per unit. The desired ending inventory is 30% higher than the beginning inventory, which was 1,000 units. Budgeted purchases of units in April would be:

Budgetary slack can be avoided if lower and mid-level managers are requested to support all of their spending requirements with specific operational plans.

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

The budgeted finished goods inventory and cost of goods sold for a manufacturing company for the year 2012 are as follows: January 1 finished goods, $765,000; December 31 finished goods, $640,000; cost of goods sold for the year, $2,560,000. The budgeted costs of goods manufactured for the year is?

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 process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as:

Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. If sales on account are budgeted to be $225,000 for March and $250,000 for April, what are the budgeted cash receipts from sales on account for April?

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

Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. Budgeted purchases of Product B for the year would be: