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Exam 7: Budgeting

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Question 1

Multiple Choice

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When preparing the cash budget, all the following should be considered except

A) cash receipts from customers
B) depreciation expense
C) cash payments to suppliers
D) cash payments for equipment

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

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Question 2

Multiple Choice

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At the beginning of the period, the Assembly Department budgeted direct labor of $110,000, direct materials of $170,000, and fixed factory overhead of $28,000 for 8,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?

A) $288,000
B) $305,000
C) $350,000
D) $378,000

E) B) and C)
F) C) and D)

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Question 3

Multiple Choice

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Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business-September, October, and November-are $260,000, $375,000, and $400,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. The cash collections expected in November from accounts receivable are projected to be

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

Below is budgeted production and sales information for Flushing Company for the month of December: The unit selling price for product XXX is $5 and for product ZZZ is $15. Budgeted production for product XXX during the month is

Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. Sales on account are budgeted to be $225,000 for March and $250,000 for April. What are the budgeted cash receipts from sales on account for April?

Osprey Cycles, Inc. projected sales of 75,000 bicycles for the year. The estimated January 1 inventory is 5,000 units, and the desired December 31 inventory is 8,000 units. What is the budgeted production (in units) for the year?

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

If budgeted beginning inventory is $8,000, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted production should be

Part of the cash budget is based on information drawn from the capital expenditures budget.

Sleep Tight, Inc. manufactures bedding sets. The budgeted production is for 52,000 comforters this year. Each comforter requires 1.5 hours to cut and sew the material. The cost of cutting and sewing labor is $12.50 per hour. Determine the direct labor budget for this year.

Budgets are prepared in the Accounting Department and monitored by various department managers.

Match each phrase that follows with the term (a-e) it describes.

Budgets are normally used only by profit-making businesses.

What is a cash budget?  How does management use a cash budget?

The flexible budget is, in effect, a series of static budgets for different levels of activity.

The budgeted volume of production is based on the sum of (1) the expected sales volume and (2) the desired ending inventory, less (3) the estimated beginning inventory.

The capital expenditures budget is part of the planned investing activities of a company.

The budgeted direct materials purchases is normally computed as the sum of (1) the materials for production and (2) the desired ending inventory.

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