Exam 23: Operational Budgeting

Steps in the budgeting process Listed below are eight operating budgets.In the space provided,list which of these budgets is typically prepared first,second,third,etc. (a)____Operating expense budget (b)____Budgeted income statement (c)____Ending finished goods forecast (d)____Production schedule (in units) (e)____Manufacturing cost estimates (f)____Cost of goods sold budget (g)____Sales forecast (h)____Manufacturing cost budget

Aron Company makes computer screens,Model 1 and Model 2.Aron anticipates selling the screens as follows: The inventory on 1/1/15 is 2500 units of Model 1 and 3000 units of Model 2.Aron wants to have on hand 45% of the anticipated sales of the following month for each model.Prepare a production budget for the first 3 quarters of 2015 for both models.

A master budget is a comprehensive financial plan setting forth the financial and operational goals of a business.

Armstrong,Inc.uses a flexible budget.Armstrong produced 16,000 units in May incurring direct materials cost of $20,480.Its master budget for the year projected direct materials cost of $362,500,at a production volume of 290,000 units.A flexible budget for May should reflect direct materials cost of:

Which of the following is considered a financial budget?

Wateredge Corporation has budgeted a total of $361,800 in costs and expenses for the upcoming quarter.Of this amount,$45,000 represents depreciation expense and $7,300 represents the expiration of prepayments.Wateredge's current payables balance is $265,000 at the beginning of the quarter.Budgeted payments on current payables for the quarter amount to $370,000.The company's estimated current payables balance at the end of the quarter is:

A flexible budget is one that:

A segment of a master budget relating to that portion of a business under the control of a particular manager is termed a:

The preparation of a budgeted balance sheet requires consideration of the budgeted capital expenditures and budgeted net income.

A budget prepared using the total quality management approach is always achievable by departments within a company.

Which of the following is not a characteristic of the total quality approach to setting budgetary targets?

Production and purchases budgets Brian Furniture,Inc.manufactures a variety of desks,chairs,tables,and shelf units which are sold to public school systems throughout the Midwest.The controller of the company's School Desk Division is currently preparing a budget for the second quarter of 2015.The following sales forecast has been developed by the division's sales manager: April 6,500 desk and chair sets May 7,500 desk and chair sets June 9,000 desk and chair sets July 8,700 desk and chair sets August 8,800 desk and chair sets The inventory of finished desk and chair sets at the end of each month must be equal to 30% of the budgeted sales for the next month.On April 1,there will be 1,950 units of desk and chair sets on hand. Work-in-process inventories are negligible and can be safely ignored. Each desk and chair set requires 10 board feet of pine planks.Pine planks cost $0.75 per board foot,and the division ends each month with enough pine to cover 20% of the next month's production requirements.This requirement will be met on April 1 of 2015. Required.Prepare a production budget and a materials purchases budget for April,May,and June and in total for the three-month period.

Cash receipts budget The director of budgeting for Bond Products is beginning the process of preparing a cash budget for each month of the coming year.The sales forecast for the month of January is as follows: In the past,the accounts receivable originating from credit sales have been collected in the following pattern: Credit sales in the last two months of the current year,some of which remain uncollected at year-end,were as follows: Compute the amount of cash expected to be collected from customers in January of the coming year.

Which of the following is not a benefit of a careful and thorough budgeting process?

A common means of performance evaluation occurs by comparing budgeted amounts with actual amounts.

Which of the following is considered an operating budget?

The typical starting point of a master budget would be to prepare a budgeted balance sheet.

A cash budget determines the maximum amount of money that can be spent during the period.

Elements of the master budget Describe briefly the purpose of a master budget and discuss its elements.

Budgeted material purchases and payments to suppliers On January 1 of the current period,Gotham Corporation has direct materials on hand of $82,000.Of this amount,Gotham owes suppliers $51,000 on account.The company has prepared the following budget estimates for January: (a)Purchases of direct materials budgeted in January amount to: $_______________ (b)Cash payments to suppliers budgeted in January amount to: $_______________ Computations