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Exam 8: Budgetary Planning

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Question 41

Multiple Choice

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Budgeted cost of goods sold should include which of the following?

A) Raw materials and direct labor.
B) Raw materials,direct labor,and manufacturing overhead.
C) Raw materials,direct labor,manufacturing overhead,and selling expenses.
D) Raw materials,direct labor,manufacturing overhead,selling expenses,and administrative expenses.

E) A) and C)
F) All of the above

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Question 42

True/False

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The production budget must be prepared before the sales budget can be prepared.The sales budget is the starting point for preparing the master budget.

A) True
B) False

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Question 43

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Operating budgets focus on the financial resources needed to support operations.Operating budgets cover the organization's planned operating activities for a particular period;financial budgets focus on the financial resources needed to support operations.

Which of the following statements about employee motivation is true?

Boxwood Inc.has forecast purchases on account to be $620,000 in March,$740,000 in April,$840,000 in May,and $980,000 in June.Seventy percent of purchases are paid for in the month of purchase,the remaining 30% are paid in the following month.What is the budgeted Accounts Payable balance for June 30?

Which of the following is not a component of the cash budget?

Jeremy Inc.produces leather handbags.The production budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Each handbag requires 0.5 square meters of leather.Jeremy Inc.'s leather inventory policy is 30% of next month's production needs.If the leather policy is met,what will the July 1 inventory be?

Larken has forecast sales for the next three months as follows: July 4,000 units,August 6,000 units,September 7,500 units.Larken's policy is to have an ending inventory of 40% of the next month's sales needs on hand.July 1 inventory is projected to be 1,500 units.Monthly manufacturing overhead is budgeted to be $17,000 plus $6 per unit produced.What is budgeted manufacturing overhead for July?

If a company produces and sells goods to order,the sales budget and production budget are identical.A company that produces and sells goods to order would not carry a finished goods inventory,which is the difference between a sales budget and a production budget.

Walnut has forecast sales for the next three months as follows: July 4,000 units,August 6,000 units,September 7,500 units.Walnut's policy is to have an ending inventory of 40% of the next month's sales needs on hand.July 1 inventory is projected to be 1,500 units.Selling and administrative costs are budgeted to be $15,000 per month plus $5 per unit sold.What are budgeted selling and administrative expenses for September?

When calculating the direct labor budget,the starting point should be

Meadow Company produces hand tools.A sales budget for the next four months is as follows: March 10,000 units,April 13,000,May 16,000 and June 21,000.Meadow Company's ending finished goods inventory policy is 10% of the following month's sales.What is budgeted ending finished goods inventory for May?

Jillian Inc.produces leather handbags.The production budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Each handbag requires 1.3 hours of unskilled labor (paid $8 per hour) and 2.2 hours of skilled labor (paid $15 per hour) .What will be the total labor cost for the month of August?

Ebony Co.has forecast sales to be $300,000 in May,$375,000 in June,$475,000 in July and $600,000 in August.Forty percent of sales are cash,the remainder is on account.Credit sales are partially collected in the month of sale,with all collections completed by the end of the month following the sale.The August 31 accounts receivable is budgeted to be $108,000.What are budgeted cash collections for July?

Jillian Inc.produces leather handbags.The production budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Each handbag requires 1.3 hours of unskilled labor (paid $8 per hour) and 2.2 hours of skilled labor (paid $15 per hour) .How many total labor hours will be budgeted for September?

Jackson Inc.produces leather handbags.The production budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Each handbag requires 0.5 square meters of leather.Jackson Inc.'s leather inventory policy is 30% of next month's production needs.On July 1 leather inventory was expected to be 1,000 square meters.What will leather purchases be in July?

Marlow Company produces hand tools.A production budget for the next four months is as follows: March 10,300 units,April 13,300,May 16,500,and June 21,800.Marlow Company's ending finished goods inventory policy is 10% of the following month's sales.Marlow plans to sell 16,000 units in May.What is budgeted ending inventory for March?

Jillian Inc.produces leather handbags.The production budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Each handbag requires 1.3 hours of unskilled labor (paid $8 per hour) and 2.2 hours of skilled labor (paid $15 per hour) .How many unskilled labor hours will be budgeted for August?

Parsley Inc,a merchandising firm,has forecasted sales to be $125,000 in February,$135,000 in March,$150,000 in April,and $140,000 in May.The average cost of goods sold is 60% of sales.The merchandise inventory policy is to carry 50% of next month's sales needs.If actual February 1 inventory is $40,000,what will the cost of March purchases be?

Which of the following is the backward-looking phase of the planning and control cycle?