Exam 9: Budgeting Systems

BeActive Sporting Goods sells tandem bicycles.The following data was taken from the most recent quarterly sales forecast.BeActive's cost for one bicycle is $125.How many units should the company purchase in May?

A cash budget:

Budgeted sales for ABC Company are as follows: All stock is marked up to sell at its invoice cost plus 25 per cent.On average 60 per cent of credit sales are collected in the month of sale,35 per cent in the month following sale and the remainder is uncollectible.Budgeted total cash receipts for November are:

If an organisation were more focused on outputs rather than inputs,they would be advised to use program budgeting as opposed to other alternatives.

The Grainger Company's Budgeted Profit & Loss Statement reflects the following amounts: Sales are collected 50 per cent in the month of sale,30 per cent in the month following sale,19 per cent in the second month following sale and 1 per cent is uncollectible.The uncollectible accounts are expensed at the end of the year.Grainger pays for purchases by the fifth of the month following purchase,to take advantage of the 3 per cent discount allowed.On January 1,Grainger had a cash balance of $88 000 and an accounts receivable balance of $58 000;$35 000 on account will be collected in January with the remaining balance to be collected in February.Grainger had an accounts payable balance of $72 000 on January 1.Invoices are recorded at their gross amount.The monthly expense figures include $5000 in monthly depreciation.The expenses are paid for in the month incurred.What is Grainger's expected cash balance at the end of January?

Which of the following items should be taken into account when setting budgets?

Sales of 50 000 finished products are budgeted for Tracey Company.Four kilograms of direct material are required for each finished unit.Actual beginning and desired ending inventories of direct material and finished goods are as follows.All products are finished at the end of the period,so there is no work in process at the beginning and end of the period.How many kilograms of direct material is the company planning to purchase?

The Z Company has prepared a sales budget for 40 000 units for a three-month period.The company desires a closing finished goods inventory of 12 000 units,and closing direct material inventory of 14 000 units at the end of the quarter.There is no beginning finished goods inventory,but beginning inventory of direct materials is 2000 units.It takes two units of direct material to make one unit of finished product.The number of units of direct material to be purchased during the quarter is:

The budget is:

When employees throughout an organisation are meaningfully involved in the budget-setting process,this is referred to as:

On January 1,Bandy Manufacturing plans to introduce a product called Handy Dandy.The company plans to sell each unit of Handy Dandy for $25.00.Management has forecast the following in sales units for the first three months.Each unit of Handy Dandy requires 2 kg of Dingaling and 1 hour of direct labour.Management wants to end each month with a Handy Dandy inventory level equal to 10 per cent of the following month's sales and a Dingaling inventory equal to 5 per cent of the following month's production.Dingaling can be purchased for $3 per kg and direct labour costs are estimated to be $5.00 per hour.How many units should Bandy Manufacturing produce in February?

Based on the production budget,the manufacturer develops budgets for:

There should never be inaccuracies when forecasting sales figures as these figures are only affected by internal factors which management can control.

The purposes of a budget include:

Which of the following items would not be taken into account when preparing a firm's cash budget?

A manufacturer prepares a production budget.The comparable budget for a retail or wholesale business would be a budget for:

Consider the following statements about zero-base budgeting.i.The budget for virtually every activity in an organisation is initially set to the level that existed during the previous year Ii)The budget helps identify areas of waste and redundant activities. Iii)The budget must be justified in terms of its continued usefulness.Which statement/s is/are true?

Which of the following includes the cash receipts and cash payments and discloses a firm's financial plans?

A problem with participative budgeting is that there will always be a tendency for those participating to build slack into the budget to ensure a better outcome for their performance assessment.

Budgets can be broken into three main categories,capital expenditure budgets,operating budgets and continuous budgets.