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Exam 22: Budgeting

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Question 1

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Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale.​ -The cash collections expected in October are

A) $320,000
B) $248,000
C) $304,250
D) $382,500

E) None of the above
F) All of the above

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Question 2

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As of January 1 of the current year, Grackle Company had accounts receivable of $50,000. The sales for January, February, and March were $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. The total cash collected (both from accounts receivable and cash sales) in the month of March is

A) $74,800
B) $146,800
C) $102,000
D) $116,800

E) None of the above
F) A) and D)

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Question 3

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If Division Inc. expects to sell 200,000 units in the current year, desires ending inventory of 24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted volume of production for the year is 198,000 units.

The first budget to be prepared is usually the production budget.

A process whereby the effect of fluctuations in the level of activity is built into the budgeting system is referred to as flexible budgeting.

Which of the following budgets is not directly associated with the production budget?

Chelsa Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $23,000. At 8,000 units of production, a flexible budget would show

Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.​ Material A: 0.5 lb. per unit @ $0.60 per pound Material B: 1.0 lb. per unit @ $1.70 per pound Material C: 1.2 lbs. per unit @ $1.00 per pound -Production and sales estimates for March for Robin Co. are as follows: The number of units expected to be manufactured in March is

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

Below is budgeted production and sales information for Bluebird Company for the month of December. The unit selling price for Product XXX is $5 and for Product ZZZ is $14.​ -Truliant Co. sells a product called Withitall and has predicted the following sales for the first four months of the current year: Ending inventory for each month should be 20% of next month's sales. The number of units produced in February should be

Match each phrase that follows with the term (a-f) it describes. -An accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period A)Budget B)Capital expenditures budget C)Sales budget D)Production budget E)Cash budget F)Budgeted balance sheet

The cash budget presents the expected inflows and outflows of cash for a specified period of time.

Below is budgeted production and sales information for Bluebird Company for the month of December. The unit selling price for Product XXX is $5 and for Product ZZZ is $14.​ -Production and sales estimates for June are as follows: The number of units expected to be manufactured in June is

Prepare a flexible production budget for the year ending December 31 for Cedar Jeans Company using production levels of 16,000, 18,000, and 20,000 units produced. The following additional information is necessary to complete the budget: Variable costs: Direct labor ($6.00 per unit)Direct materials ($8.00 per unit)Variable manufacturing costs ($2.50 per unit)Fixed costs: Supervisor's salaries $80,000 Rent 12,000 Depreciation on equipment 24,000

What is a capital expenditures budget?

The first budget customarily prepared as part of an entity's master budget is the _____ budget.

Once a static budget has been determined, it is changed regularly as the underlying activity changes.

Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of Product B is 3,000 units. -If the expected sales volume for the current period is 9,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is

Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of Product B is 3,000 units. -Heedy Company is trying to decide how many units of merchandise to produce each month. The company policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. The number of units that must be produced in September is

Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following situations will not lead to human behavior problems?