Exam 22: Budgeting

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:

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 production for product XXX during the month is:

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 necessary component budgets except the capital expenditures budget.

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

The cash budget summarizes future plans for acquisition of fixed assets.

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?

Motorcycle Manufacturers, Inc. projected sales of 78,000 machines for 2012. The estimated January 1, 2012, inventory is 6,500 units, and the desired December 31, 2012, inventory is 7,000 units. What is the budgeted production (in units) for 2012?

If the expected sales volume for the current period is 8,000 units, the desired ending inventory is 1,400 units, and the beginning inventory is 1,200 units, the number of units set forth in the production budget, representing total production for the current period, is:

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

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

Cuisine Inc. manufactures flatware sets. The budgeted production is for 80,000 sets in 2012. Each set requires 2.5 hours to polish the material. If polishing labor costs $15.00 per hour, determine the direct labor budget for 2012.

When budget goals are set too tight, the budget becomes less effective as a tool for planning and controlling operations.

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

Once a static budget has been determined, it is changed regularly as the underlying activity changes.

Supervisor salaries, maintenance, and indirect factory wages would normally appear in the factory overhead cost 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 198,000 units.

The treasurer of Systems Company has accumulated the following budget information for the first two months of the coming year: The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent $6,400 of the probable monthly selling and administrative expenses. Insurance is paid in February and a $40,000 installment on income taxes is expected to be paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred and the balance in the following month. Capital additions of $250,000 are expected to be paid in March. Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses). Management desires to maintain a minimum cash balance of $20,000. Prepare a monthly cash budget for March and April.