Exam 1: Master Budgeting

A continuous or perpetual budget is a budget that almost never needs to be revised.

Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: -The net income for December would be:

Planning involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change.

Clay Corporation has projected sales and production in units for the second quarter of the coming year as follows: Cash-related production costs are budgeted at $5 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $100,000 per month. The accounts payable balance on March 31 totals $190,000, which will be paid in April. All units are sold on account for $14 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $500,000 ($90,000 from February's sales and $410,000 from March's sales). Required: a. Prepare a schedule for each month showing budgeted cash disbursements for Clay Corporation. b. Prepare a schedule for each month showing budgeted cash receipts for Clay Corporation.

Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: -The cash balance at the end of December would be:

The LFG Corporation makes and sells a single product, Product T. Each unit of Product T requires 1.4 direct labor-hours at a rate of $9.80 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. LFG Corporation needs to prepare a Direct Labor Budget for the second quarter of next year. -The company has budgeted to produce 24,000 units of Product T in June. The finished goods inventories on June 1 and June 30 were budgeted at 600 and 800 units, respectively. Budgeted direct labor costs for June would be:

The LFG Corporation makes and sells a single product, Product T. Each unit of Product T requires 1.4 direct labor-hours at a rate of $9.80 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. LFG Corporation needs to prepare a Direct Labor Budget for the second quarter of next year. -The budgeted direct labor cost per unit of Product T is closest to:

Poriss Corporation makes and sells a single product called a Yute. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the year. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. -If the total budgeted selling and administrative expense for October is $459,200, then how many Yutes does the company plan to sell in October?

di Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The remaining 70% is paid for in the month following the purchase. -The budgeted direct labor cost per Clop is closest to:

The cash budget is typically prepared before the direct materials budget.

Mate Boomerang Corporation manufactures and sells plastic boomerangs. Expected boomerang sales (in units) for the upcoming months are as follows: Mate likes to maintain a finished goods inventory equal to 10% of the next month's estimated sales. Seven ounces of plastic resin are needed to produce every boomerang. Mate likes to have enough plastic resin on hand at the end of the month to cover 25% of the next month's production requirements. Required: How many ounces of plastic resin should Mate plan on purchasing during the month of October?

Cashan Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 1.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: The company wants to maintain monthly ending inventories of Jurislon equal to 30% of the following month's production needs. On July 31, this requirement was not met since only 10,400 kilograms of Jurislon were on hand. The cost of Jurislon is $4.00 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. -The desired ending inventory of Jurislon for September is:

Adi Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The remaining 70% is paid for in the month following the purchase. -How much cash should Adi expect to pay out for raw material purchases during November?

Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: -Retained earnings at the end of December would be:

Sparks Corporation has a cash balance of $7,500 on April 1. The company must maintain a minimum cash balance of $6,000. During April, expected cash receipts are $48,000. Cash disbursements during the month are expected to total $52,000. Ignoring interest payments, during April the company will need to borrow:

In companies that do not have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate.

In business, a budget is a method for putting a limit on spending.

Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: -The difference between cash receipts and cash disbursements for December would be:

Sioux Corporation is estimating the following sales for the first four months of next year: Sales are normally collected 60% in the month of sale, 35% in the month following the sale, and the remaining 5% being uncollectible. Based on this information, how much cash should Sioux expect to collect during the month of April?

The direct materials budget is typically prepared before the production budget.