Question 1

The Ruff Jeans Company produces two different types of jeans, Simple Life,  and Fancy Life. The company sales budget estimates that 350,000 of the Simple Life jeans and 200,000 of the Fancy Life jeans will be sold during the current year. The production budget requires 353,500 units of Simple Life and 196,000 Fancy Life be manufactured. The Simple Life jeans require 3 yards of denim material, a zipper, and 25 yards of thread. The Fancy Life jeans require 4.5 yards of denim material, a zipper, and 40 yards of thread. Each yard of denim material costs $3.25, the zipper costs $0.75 each, and the thread is $0.02 per yard. There is enough material to make 2,000 jeans of each type at the beginning of the year. The desired amount of materials left in ending inventory is to have enough to manufacture 3,500 jeans of each type. Prepare a direct materials purchases budget.

Accepted Answer

The answer of The Ruff Jeans Company produces two different...

Question 2

The sales budget is derived from the production budget.

Accepted Answer

A) True 
 B)False

Question 3

A series of budgets for varying rates of activity is termed a(n)

Accepted Answer

A)  flexible budget 
B)  variable budget 
C)  master budget 
D)  activity budget

Question 4

For March, sales revenue is $1,000,000; sales commissions are 5% of sales; the sales manager's salary is $80,000; advertising expenses are $65,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $2,100 plus 1% of sales. Total selling expenses for the month of March are

Accepted Answer

A)  $217,100 
B)  $205,000 
C)  $207,100 
D)  $142,100

Question 5

Gilbert's expects its September sales to be 20% higher than its August sales of $150,000.  Manufacturing costs were $100,000 in August and are expected to be $120,000 in  September.  All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month.  Payments of manufacturing costs are as follows: 25% in the month of production and 75% in the following month.  The beginning cash balance on September 1 is $7,500.  The ending balance on September 30 would be

Accepted Answer

A)  $61,500 
B)  $75,000 
C)  $72,300 
D)  $71,500

Question 6

As of January 1 of the current year, the Grackle Company had accounts receivables of $50,000. The sales for January, February, and March were as follows: $120,000, $140,000, and $150,000, respectively. Of each month's sales, 20% are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales) in the month of February?

Accepted Answer

A)  $129,600 
B)  $62,400 
C)  $133,600 
D)  $91,200

Question 7

Which of the following budgets allow for adjustments in activity levels?

Accepted Answer

A)  static budget 
B)  continuous budget 
C)  zero-based budget 
D)  flexible budget

Question 8

Production and sales estimates for June are as follows:  The budgeted total sales for June is

Accepted Answer

A)  $225,000 
B)  $500,000 
C)  $525,000 
D)  $200,000

Question 9

The financial budgets of a business include the cash budget, the budgeted income statement, and the budgeted balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

Kid's World Industries has projected sales of 67,000 machines for the current year. The estimated January 1 inventory is 6,000 units, and the desired December 31 inventory is 15,000 units. What is the budgeted production (in units) for the year?

Accepted Answer

The answer of Kid's World Industries has projected sales of...

Question 11

Finch Company began its operations on March 31 of the current year.  Finch has the following projected costs:  (1) Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month.
(2) Insurance expense is $1,000 a month; however, the insurance is paid four times yearly in the first month of the
     quarter, (i.e., January, April, July, and October).
(3) Property tax is paid once a year in November.
The cash payments expected for Finch Company in the month of April are

Accepted Answer

A)  $122,600 
B)  $120,600 
C)  $123,100 
D)  $121,100

Question 12

Production and sales estimates for April are as follows:  The number of units expected to be manufactured in April is

Accepted Answer

A)  11,000 
B)  9,500 
C)  12,000 
D)  13,000

Question 13

The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) the desired ending inventory.

Accepted Answer

A) True 
 B)False

Question 14

The sales budget is the starting point for preparation of the direct labor cost budget.

Accepted Answer

A) True 
 B)False

Question 15

Based on the following production and sales data of Frixion Co. for March of the current year, prepare: 
(a) a sales budget 
(b) a production budget.

Accepted Answer

The answer of Based on the following production and sales...

Question 16

A formal written statement of management's plans for the future, expressed in financial terms, is called a budget.

Accepted Answer

A) True 
 B)False

Question 17

The budgeted direct materials purchases is based on the sum of (1) the materials needed for production and (2) the desired ending materials inventory, less (3) the estimated beginning materials inventory.

Accepted Answer

A) True 
 B)False

Question 18

At the beginning of the period, the Cutting Department budgeted direct labor of $30,000 and supervisor salaries of $20,000 for 3,000 hours of production. The department actually completed 5,000 hours of production. Determine the budget for the department assuming that it uses flexible budgeting.

Accepted Answer

The answer of At the beginning of the period, the...

Question 19

Detailed supplemental schedules based on department responsibility are often prepared for major items in the operating expenses budget.

Accepted Answer

A) True 
 B)False

Question 20

Flexible budgeting requires all levels of management to start from zero and estimate sales, production, and other operating data as though operations were being started for the first time.

Accepted Answer

A) True 
 B)False

Exam 7: Budgeting

The sales budget is derived from the production budget.

A series of budgets for varying rates of activity is termed a(n)

For March, sales revenue is $1,000,000; sales commissions are 5% of sales; the sales manager's salary is $80,000; advertising expenses are $65,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $2,100 plus 1% of sales. Total selling expenses for the month of March are

Which of the following budgets allow for adjustments in activity levels?

Production and sales estimates for June are as follows: The budgeted total sales for June is

The financial budgets of a business include the cash budget, the budgeted income statement, and the budgeted balance sheet.

Kid's World Industries has projected sales of 67,000 machines for the current year. The estimated January 1 inventory is 6,000 units, and the desired December 31 inventory is 15,000 units. What is the budgeted production (in units) for the year?

Production and sales estimates for April are as follows: The number of units expected to be manufactured in April is

The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) the desired ending inventory.

The sales budget is the starting point for preparation of the direct labor cost budget.

Based on the following production and sales data of Frixion Co. for March of the current year, prepare: (a) a sales budget (b) a production budget.

A formal written statement of management's plans for the future, expressed in financial terms, is called a budget.

The budgeted direct materials purchases is based on the sum of (1) the materials needed for production and (2) the desired ending materials inventory, less (3) the estimated beginning materials inventory.

At the beginning of the period, the Cutting Department budgeted direct labor of $30,000 and supervisor salaries of $20,000 for 3,000 hours of production. The department actually completed 5,000 hours of production. Determine the budget for the department assuming that it uses flexible budgeting.

Detailed supplemental schedules based on department responsibility are often prepared for major items in the operating expenses budget.

Flexible budgeting requires all levels of management to start from zero and estimate sales, production, and other operating data as though operations were being started for the first time.