Exam 22: Budgeting

Production estimates for August are as follows: For each unit produced, the direct materials requirements are as follows: The total direct materials purchases (assuming no beginning or ending inventory of material) of materials A and B required for August production is:

Below is budgeted production and sales information for Flushing Company for the month of December: The unit selling price for product XXX is $5 and for product ZZZ is $15. Budgeted sales for the month are:

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?

Budgeting supports the planning process by encouraging all of the following activities except:

To meet projected annual sales, Greenleaf Manufacturers, Inc. needs to produce 75,000 machines for 2012. The estimated January 1, 2012, inventory is 7,000 units, and the desired December 31, 2012, inventory is 12,000 units. What are projected sales units for 2012?

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

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:

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.

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.

Warmfeet manufactures comforters. Assume the estimated inventories on January 1, 2012, for finished goods, work in process, and materials were $51,000, $28,000 and $33,000 respectively. Also assume the desired inventories on December 31, 2012, for finished goods, work in process, and materials were $48,000, $35,000 and $29,000 respectively. Direct material purchases were $555,000. Direct labor was $252,000 for the year. Factory overhead was $176,000. Prepare a cost of goods sold budget for Warmfeet, Inc.

Why is the sales budget usually prepared first?

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?

The primary difference between a static budget and a flexible budget is that a static budget

Heedy Company is trying to decide how many units of merchandise to order each month. The company policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. How many units must be purchased in September?

Describe at least five benefits of budgeting.

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?

The budgeted direct materials purchases is normally computed as the sum of (1) the materials for production 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 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 total cash collected (both from accounts receivable and for cash sales) in the month of January?

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

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: