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Exam 20: Master Budgets and Performance Planning

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Question 81

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Ratchet Manufacturing anticipates total sales for August,September,and October of $200,000,$210,000,and $220,500 respectively.Cash sales are normally 25% of total sales and the remaining sales are on credit.All credit sales are collected in the first month after the sale.Compute the amount of cash received for September.

A) $150,000.
B) $202,500.
C) $157,500.
D) $102,500.
E) $307,500.

F) A) and C)
G) A) and D)

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Question 82

Multiple Choice

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Which of the following factors is least likely to be considered in preparing a sales budget?

A) Business capacity.
B) Forecasted economic and market conditions.
C) Prediction of unit sales.
D) The capital expenditures budget.
E) Proposed selling expenses,such as advertising.

F) All of the above
G) A) and B)

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Question 83

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Greco Company has prepared the following forecasts of monthly unit sales: Greco wants the number of units in its inventory at the end of each month to equal 25% of the next month's sales.The budgeted cost per unit is $30. (1)How many units should be in July's beginning inventory? (2)What amount should be budgeted for the cost of merchandise purchases in July?

Grason Corporation is preparing a budgeted balance sheet for 2018.The retained earnings balance at December 31,2017 was $533,500.The 2018 budgeted income statement shows expected net income of $112,000.The company expects to declare dividends during 2018 amounting to $40,000.The expected balance in retained earnings on the 2018 budgeted balance sheet is:

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

Budget preparation is best done in a top-down managerial approach.

Part of the budgeting process is summarizing the financial statement effects on the budgeted income statement and the budgeted balance sheet.

A formal statement of future plans,usually expressed in monetary terms,is a:

A sporting equipment store expects to purchase $8,000 of ski boots in October.The store had $2,000 of ski boots in merchandise inventory at the beginning of October,and expects to have $3,000 of ski boots in merchandise inventory at the end of October to cover part of anticipated November sales.What is the budgeted cost of goods sold for October?

What is a merchandise purchases budget? How is the merchandise purchases budget prepared?

Budgeting is an informal plan for future business activities.

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n) :

The capital expenditures budget summarizes the effects of financing activities on cash.

The master budget process usually ends with:

Webster Corporation is preparing a master budget for the first quarter.The company budgets production of 2,680 units in January,2,600 units in February and 2,740 units in March.Each unit requires 0.6 hours of direct labor.The direct labor rate is $12 per hour.Compute the budgeted direct labor cost for the first quarter budget.

A budget is a formal statement of future plans,usually expressed in monetary terms.

A budget is best described as:

Zhang Industries budgets production of 300 units in June and 310 units in July.Each unit requires 1.5 hours of direct labor.The direct labor rate is $14 per hour.The indirect labor rate is $21 per hour.Compute the budgeted direct labor cost for July.

The capital expenditures budget summarizes the effects of investing activities on cash.

Cahuilla Corporation predicts the following sales in units for the coming four months: Each month's ending Finished Goods Inventory in units should be 40% of the next month's sales.March 31 Finished Goods inventory is 96 units.A finished unit requires five pounds of direct material B at a cost of $2.00 per pound.The March 31 Raw Materials Inventory has 200 pounds of direct material B.Each month's ending Raw Materials Inventory should be 30% of the following month's production needs. -The budgeted purchases of pounds of direct material B during May should be: