Exam 23: Master Budgets and Planning

Which of the following is not a result of following a well-designed budgeting process?

The set of periodic budgets that are prepared and periodically revised in the practice of continuous budgeting are called:

Northern Company is preparing a cash budget for June. The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during June. Northern Company has an agreement with its bank to maintain a cash balance of at least $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must:

The ___________________________ is prepared by manufacturing firms, and takes the place of the purchases budget prepared by merchandising firms.

If budgeted beginning inventory is $8,300, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted purchases should be:

A sporting goods store budgeted August purchases of ski jackets at $140,000. The store had ski jackets costing $12,000 in its inventory at the beginning of August; and to cover part of anticipated September sales, they expect to have $25,000 of ski jackets in inventory at the end of the month of August. What is the budgeted cost of goods sold for August?

Use the following information to prepare a budgeted balance sheet Magee Company for the month of June. a. The budgeted net income for the month of June is $236,000. b. The beginning cash balance is $62,000; budgeted cash receipts are $1,660,000; budgeted cash disbursements are $1,580,000. c. Budgeted sales for May and June are $1,600,000 and $1,700,000 respectively. Collections are 40% in the month of sale and 60% in the month following. d. The projected inventory balance is 10% of the following month's sales. Sales for July are projected to be $1,750,000. e. Purchases of inventory are paid 80% in the month of purchase, and 20% in the month following. Budgeted purchases for June are $900,000. f. The equipment account balance is $1,400,000 on June 30. On May 31, the accumulated depreciation on equipment is $276,000. Depreciation expense for June is estimated to be $24,000. g. There is an outstanding loan balance of $800,000. h. Accrued income taxes payable for June 30 are $71,000; and accrued salaries payable are $50,000. i. The only other balance sheet accounts are: Common Stock, with a balance of $800,000 on May 31, and Retained Earnings with a balance of $300,000 on May 31.

The merchandise purchases budget is the starting point for preparing the master budget.

The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and replacing budgets for periods that have lapsed.

What is a sales budget? How is the sales budget prepared?

Grafton sells a product for $700. Unit sales for May were 400 and a 3% growth in unit sales is forecasted for each month. Grafton pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars. Compute the projected selling expense to be reported on the selling expense budget for the manager for month ended June 30.

Berkley Co.'s sales are 10% cash and 90% on credit. Credit sales are collected as follows: 30% in the month of sale, 50% in the next month, and 20% in the following month. On December 31, the accounts receivable balance includes $12,000 from November sales and $42,000 from December sales. Assume that total sales for January are budgeted to be $50,000. What are the expected cash receipts for January from the current and past sales?

A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:

In preparing financial budgets:

Nano, Inc. is preparing its budget for the second quarter. The following sales data have been forecasted: How many units should be purchased in April, May, and June? How many units should be purchased in the second quarter in total?

The budget that lists the dollar amounts to be both received from plant asset disposals and spent to purchase additional plant assets to carry out the budgeted business activities is the _________________________.

Keegan Company manufactures a single product and has a JIT policy that ending inventory must equal 10% of the next month's sales. It estimates that May's ending inventory will consist of 20,000 units. June and July sales are estimated to be 280,000 and 290,000 units, respectively. Keegan assigns variable overhead at a rate of $1.80 per unit of production. Fixed overhead equals $400,000 per month. Compute the number of units to be produced and use to compute the total budgeted overhead that would appear on the factory overhead budget for month ended June 30.

There are at least five benefits from budgeting. Identify two of these benefits: (1) _______________________________________ (2) _______________________________________

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected. Compute the amount of cash received from total sales for May.