Exam 9: Financial Planning and Analysis: the Master Budget

Bird plans to sell 5,000 units each quarter next year. During the first two quarters each unit will sell for $12; during the last two quarters the sales price will increase $1.50 per unit. What is Bird's estimated sales revenue for next year?

A company that uses activity-based budgeting performs the following: 1-Plans activities for the budget period. 2-Forecasts the demand for products and services as well as the customers to be served. 3-Budgets the resources necessary to carry out activities. Which of the following denotes the proper order of the preceding activities?

Which of the following budgets is prepared at the end of the budget-construction cycle?

Northcutt's production data for a new deluxe product were taken from the most recent quarterly production budget: In addition, Northcutt produces 5,000 units a month of its standard product. It takes two direct labor hours to produce each standard unit and 2.25 direct labor hours to produce each deluxe unit. Northwest's cost per labor hour is $15. Direct labor cost for August would be budgeted at:

A manufacturing firm would begin preparation of its master budget by constructing a:

Terry Pineno, new-accounts manager at East Bank of Clarion, has been asked to project how many new accounts she will open during 20x2. The local economy has been growing, and the bank has experienced a 10% increase in the number of new accounts over each of the past five years. In 20x1, the bank had 10,000 accounts. Pineno is paid a salary, plus a bonus of $20 for every new account above the budgeted amount. Thus, if the annual budget calls for 1,000 new accounts, and 1,080 new accounts are obtained, her bonus will be $1,600 (80 × $20). Pineno believes that the local economy will continue to grow at the same rate in 20x2 as it has in recent years. She decided to submit a projection of 700 new accounts for 20x2. Required: Your consulting firm has been hired by the bank president to make recommendations for improving the bank's operation. Write a memorandum to the president defining and explaining the negative consequences of budgetary slack. Also discuss the bank's bonus system for the new-accounts manager and how the bonus program tends to encourage budgetary slack.

Stiles Enterprises reported the following cash collections in July and August from credit sales: The company sells a single product for $20, and all sales are collected over a two-month period. Required: A. Determine the number of units that were sold in July. B. Determine the percent of credit sales collected in the month of sale and the percent of sales collected in the month following sale. C. How many units were sold in August? D. Determine the accounts receivable balance as of August 31.

Bison Sporting Goods sells bicycles throughout the northeastern United States. The following data were taken from the most recent quarterly sales forecast: End-of-Month Expected Sales Target Inventory July 1,800 units 210 units August 1,950 units 300 units September 1,880 units 270 units On the basis of the information presented, how many bicycles should the company purchase in August?

Northcutt's production data for a new deluxe product were taken from the most recent quarterly production budget: In addition, Northcutt produces 5,000 units a month of its standard product. It takes two direct labor hours to produce each standard unit and 2.25 direct labor hours to produce each deluxe unit. Northwest's cost per labor hour is $15. Direct labor cost for July would be budgeted at:

Swamp Fox has the following sales forecasts for its hip waders next year: What is Swamp Fox's estimated sales in units for next year?

The difference between the revenue or cost projection that a person provides, and a realistic estimate of the revenue or cost, is called:

A company's sales forecast would likely consider all of the following factors except:

Activity-based budgeting:

Telfair & Company had 3,000 units in finished-goods inventory on December 31. The following data are available for the upcoming year: January February Units to be produced 9,400 10,200 Desired ending finished-goods inventory 2,500 2,100 The number of units the company expects to sell in January is:

Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 30% are collected in the month of sale; 60% are collected in the first month after sale; and 10% are collected in the second month after sale. If sales for April, May, and June were $60,000, $80,000, and $70,000, respectively, what were the firm's budgeted collections for the quarter?

Which of the following would depict the logical order for preparing (1) a production budget, (2) a cash budget, (3) a sales budget, and (4) a direct-labor budget?

Turbon Manufacturing plans to produce 20,000 units, 24,000 units, and 30,000 units, respectively, in October, November, and December. Each of these units requires four units of part no. 879, which the company can purchase for $7 each. Turbon has 35,000 units of part no. 879 in stock on September 30. Required: Prepare a direct-material purchases budget for October and November in units and dollars. Management desires to maintain an ending raw-material inventory equal to 40% of the following month's production usage.

Wolverine, Inc. began operations on January 1 of the current year with a $12,000 cash balance. Forty percent of sales are collected in the month of sale; 60% are collected in the month following sale. Similarly, 20% of purchases are paid in the month of purchase, and 80% are paid in the month following purchase. The following data apply to January and February: January February Sales \ 35,000 \ 55,000 Purchases 30,000 40,000 Operating expenses 7,000 9,000 If operating expenses are paid in the month incurred and include monthly depreciation charges of $2,500, determine the change in Wolverine's cash balance during February.

Tiara Company has the following historical collection pattern for its credit sales: 70% collected in month of sale 15% collected in the first month after sale 10% collected in the second month after sale 4% collected in the third month after sale 1% uncollectible Budgeted credit sales for the last six months of the year follow. July \ 30,000 August 35,000 September 40,000 October 45,000 November 50,000 December 42,500 Required: A. Calculate the estimated total cash collections during October. B. Calculate the estimated total cash collections during the year's fourth quarter.

Generally speaking, budgets are not used to: