Exam 23: Operational Budgeting

Sherman has budgeted sales for the upcoming quarter as follows: The desired ending finished goods inventory for each month is one-half of next month's budgeted sales.Three pounds of direct material are required for each unit produced.If direct material costs $5 per pound,and must be paid for in the month of purchase,the budgeted direct materials purchases (in dollars)for April are:

Flexible budgeting may be viewed as combining the concepts of budgeting and:

Preparation of cash budget Use the following information to prepare a cash budget for Knightsbridge Corporation for the month of June 2015. In May,30-day credit sales were $175,000; 80% of this amount is estimated to be collectible in June. June sales are estimated to be $425,000; cash sales are usually 25% of total sales.Only 10% of credit sales are collected in the month in which the sale is made. Total fixed expenses are $60,000 per month,including $26,000 depreciation.Variable expenses are 55% of sales.All expenses requiring payment are paid in cash when incurred. A $40,000 note payable must be paid on June 30. As of May 31,the cash balance is $94,000.

Which of the following is not considered an operating budget?

Because a budget is merely a forecast of future events,its benefits are extremely narrow and limited.

Mentha Company currently has the following statistics: Days in accounts receivable - 68 Operating cycle - 148 What is Mentha's days in inventory?

The operating cycle is the average time required to manufacture products for sale.

As the volume of output increases:

Flexible budgeting may be used for profit centers by applying cost-volume-profit relationships to the actual level of:

Benefits derived from budgeting do not include:

Which philosophy in setting budgeted amounts assumes both the complete elimination of inefficiencies and a level of absolute efficiency?

Explain what is meant by "profit rich,yet cash poor".

A flexible budget:

Capital expenditures budgets are typically prepared for a period of:

A company that is profitable may not have sufficient cash on hand to meet its immediate needs.

The benefits of budgeting include all of the following except:

A flexible budget allows management to spend more or less for labor and materials without regard to the amount of production.

The behavioral approach to budgeting has as its goal the complete elimination of inefficiency.

The total quality management approach to budgeting sets budgeted amounts at levels that can be achieved through reasonably efficient operations.

If the total quality management approach is employed to determine the level at which budgeted amounts are set,then absolute efficiency is assumed.