Exam 13: Planning and Budgeting

A company is preparing its cash budget for the coming month.All sales are on account.Given the following: Beginning Balances Budget Amounts Cash \ 50,000 Accounts Receivable 180,000 Sales \ 800,000 Cash disbursements 780,000 Depreciation 25,000 Ending acc ounts recevable balance 210,000 What is the expected cash balance of the company at the end of the coming month? (CIA adapted)

Ethical conflicts can occur in the budgeting process because managers supply information for the budgets that are then used to evaluate their performance.

The major objectives of any budget system are to: (CIA adapted)

Sensitivity analysis can best be used in the budgeting process to:

The Express Company is preparing its cash budget for the month of June.The following information is available concerning its inventories: Inventories at beginning of June \ 67,500 Estimated purchas es of June 330,000 Estimated cost of goods sold for June 337,500 Estimated payments in June for purchas es in May 56,250 Estimated payments in June for purchas es prior to May 15,000 Estimated payments in June for purchases in June 80\% What are the estimated cash disbursements for inventories in June?

Which one of the following budgets would be the last one prepared in the master budget preparation process?

In general,the first budget prepared is the:

Which of the following statements is(are)true regarding the benefits associated with participative budgeting? (A)Goal congruence by divisions means top management need not be concerned with overall profitability. (B)Budget assumptions and estimates are prepared by those closest to the budgeted activity.

What are the differences between strategic planning and the tactical planning process?

Bottlenecks in the production process can be discovered by the budgeting process before they occur.The budget will expose capacity problems before they occur.

Which of the following budgets is not required in a service organization?

Which of the following is not correct regarding the manufacturing overhead budget?

Jackson Company has developed the following sales projections for the calendar year: May \ 100,000 June 120,000 Juby 140,000 August 160,000 September 150,000 October 130,000 Normal cash collection experience has been that 50% of sales is collected during the month of sale and 45% in the month following the sale.The remaining 5% of sales are never collected.Jackson's budgeted cash collections for the third calendar quarter are: (CMA adapted)

A production budget is not needed for a service organization

The Ralston Company manufactures a special line of graphic tubing items.The company estimates it will sell 75,000 units of this item in 2016.The beginning finished goods inventory contains 20,000 units.The target for each year's ending inventory is 10,000 units.Each unit requires five feet of plastic tubing.The tubing inventory currently includes 70,000 feet of the required tubing.Materials on hand are targeted to equal three months' production.Any shortage in materials will be made up by the immediate purchase of materials.Sales take place evenly throughout the year.What is the production budget (in units)for 2016?

The marketing and administrative expense budget of Frazier Corporation is based on budgeted unit sales,which are 5,500 units for June.The variable marketing and administrative expense is $1.00 per unit.The budgeted fixed marketing and administrative expense is $101,200 per month,which includes depreciation of $6,050 per month.The remainder of the fixed marketing and administrative expense represents current cash flows.The cash disbursements for marketing and administrative expenses on the June marketing and administrative expense budget should be:

Software Corporation is preparing its cash budget for November.The budgeted beginning cash balance is $31,000.Budgeted cash receipts total $135,000 and budgeted cash disbursements total $141,000.The desired ending cash balance is $50,000.The company can borrow up to $100,000 at any time from a local bank,with interest not due until the following month.Required: Prepare the company's cash budget for November in good form.

Lien Company is a merchandising company that sells a single product.The company's inventories,production,and sales in units for the next three months have been forecasted as follows: October Nowember December Beginning imventory 10,000 10,000 10,000 Merchandise purchases 60,000 70,000 35,000 Sales 60,000 70,000 40,000 Ending inventory 10,000 10,000 5,000 Units are sold for $12 each.One fourth of all sales are paid for in the month of sale and the balance are paid for in the following month.Accounts receivable at September 30 totaled $450,000.Merchandise is purchased for $7 per unit.Half of the purchases are paid for in the month of the purchase and the remainder are paid for in the month following purchase.Marketing and administrative expenses are expected to total $120,000 each month.One half of these expenses will be paid in the month in which they are incurred and the balance will be paid in the following month.Accounts payable at September 30 totaled $290,000.Cash at September 30 totaled $80,000.A payment of $300,000 for purchase of equipment is scheduled for November,and a dividend of $200,000 is to be paid in December.Ignore depreciation for purposes of preparing the schedules.Required: a.Prepare a schedule of expected cash collections for each of the months of October,November,and December.b.Prepare a schedule showing expected cash disbursements for merchandise purchases and marketing and administrative expenses for each of the months October,November,and December.c.Prepare a cash budget for each of the months October,November,and December.There is no minimum required ending cash balance.

Page Company makes 30% of its sales for cash and 70% on account.60% of the account sales are collected in the month of sale,25% in the month following sale,and 12% in the second month following sale.The remainder is uncollectible.The following information has been gathered for the current year: Month Total sales \ 60,000 \ 70,000 \ 50,000 \ 30,000 Total cash receipts in Month 4 will be:

Serene Corporation had 17,000 units of brake calipers on hand at the end of 2016.The company's inventory policy was to maintain an ending inventory equal to 15% of the current year's sales.During 2016,Serene sold 210,000 units of calipers.How many units did Serene purchase in 2016?