FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 23: Master Budgets and Planning

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected. Compute the amount of cash received from credit sales for May.

A) $561,500.
B) $652,500.
C) $817,500.
D) $592,500.
E) $890,000.

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

Correct Answer

verified

Show Answer

Question 72

Essay

Review LaterAdd Note

Review Later

Clic, Inc., provides the following data for the next four months: Desired Ending Inventory: Raw Materials = 30% of next month's production needs Finished Goods = 20% of next month's sales Pounds of raw material required for each finished Unit = 5 lbs. Required: Calculate the amount of purchases of raw materials in pounds for April and May.

Correct Answer

verified

Show Answer

Question 73

Essay

Review LaterAdd Note

Sweeny Co. is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted: Additional data: (1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000. (2) Purchases are all on credit, with 40% paid in the month of purchase and the balance paid in the following month. (3) Operating expenses are paid in the month they are incurred. (4) A minimum cash balance of $40,000 is required at the end of each month. (5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made whenever excess cash is available. Prepare the company's cash budget for May. Show the ending loan balance at May 31.

The production budget for Sergei Company revealed the following production volume for the months of July - September. Each unit produced requires 2 hours of direct labor. The direct labor rate is currently $16 per hour but is predicted to be $16.75 per hour in September. Prepare a direct labor budget for Sergei Company for July - September.

___________________________ is a budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities.

Tappet Corporation is preparing its master budget for the quarter ending March 31. It sells a single product for $25 a unit. Budgeted sales are 40% cash and 60% on credit. All credit sales are collected in the month following the sales. Budgeted sales for the next four months follow: At December 31, the balance in accounts receivable is $10,000, which represents the uncollected portion of December sales. The company desires merchandise inventory equal to 30% of the next month's sales in units. The December 31 balance of merchandise inventory is 340 units, and inventory cost is $10 per unit. Forty percent of the purchases are paid in the month of purchase and 60% are paid in the following month. At December 31, the balance of Accounts Payable is $8,000, which represents the unpaid portion of December's purchases. Operating expenses are paid in the month incurred and consist of: Sales commissions (10% of sales) Freight (2% of sales) Office salaries ($2,400 per month) Rent ($4,800 per month) Depreciation expense is $4,000 per month. The income tax rate is 40%, and income taxes will be paid on April 1. A minimum cash balance of $10,000 is required, and the cash balance at December 31 is $10,200. Loans are obtained at the end of a month in which a cash shortage occurs. Interest is 1% per month, based on the beginning of the month loan balance, and must be paid each month. If an excess of cash exists, loan repayments are made at the end of the month. At December 31, the loan balance is $0. Prepare a master budget (round all dollar amounts to the nearest whole dollar) for each of the months of January, February, and March that includes the: Sales budget Table of cash receipts Merchandise purchases budget Table of cash disbursements for merchandise purchases Table of cash disbursements for selling and administrative expenses Cash budget, including information on the loan balance Budgeted income statement

Long-term liability data for the budgeted balance sheet is derived from:

The overall coordinating activity of the budget process is the responsibility of the:

Past performance is the best overall basis for evaluating current performance and assessing the need for corrective action.

Financial budgets are normally completed after preparation of operating and capital expenditure budgets.

Kent Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are not collected. Compute the amount of cash received from credit sales for June.

There are at least five benefits from budgeting. Identify two of these benefits: (1) _______________________________________ (2) _______________________________________

Use the following information to prepare a budgeted income statement for Arbor Company for the month of June. a. Beginning cash balance on June 1 is $52,000. b. Cash receipts from sales: 40% is collected in the month of sale, 50% in the next month, and 10% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: April (actual), $1,450,000, May (actual), $1,600,000, and June (budgeted), $1,700,000. c. Payments on merchandise purchases: 80% in the month of purchase and 20% in the month following purchase. Purchases amounts are May (actual), $830,000; and June (budgeted), $867,000. d. Budgeted cash disbursements for salaries in June: $260,000. Salaries payable on May 31 are $60,000 and are expected to be $50,000 on June 30. e. Budgeted depreciation expense for June: $24,000. f. Other cash expenses budgeted for June: $282,000. g. Accrued income taxes due in June: $48,000. h. Bank loan interest due in June: $8,000 which represents the 1% monthly expense on a bank loan of $800,000. i. Loan payment of $50,000 if the preliminary cash balance is greater than $100,000. j. Cost of goods sold is 53% of sales. k. The income tax rate applicable to the company is 30%.

Ecology Co. sells a biodegradable product called Dissol and has predicted the following sales for the first four months of the current year: Ending inventory for each month should be 20% of the next month's sales, and the December 31 inventory is consistent with that policy. How many units should be purchased in February?

A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:

Grafton sells a product for $700. Unit sales for May were 400 and a 3% growth in unit sales is forecasted for each month. Grafton pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars. Assume 30% of Grafton's sales are for cash. The remaining 70% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.

The usual starting point for preparing a master budget is forecasting or estimating:

Which of the following is a benefit derived from budgeting?

The task of preparing a budget should be the sole task of the most important department in an organization.

A department store has budgeted sales of 12,000 men's suits in September. Management wants to have 6,000 suits in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4,000 suits. What is the dollar amount of the purchase of suits? Each suit has a cost of $75.