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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?


A) 7,000
B) 9,100
C) 15,400
D) 24,500

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

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Skylark has forecast production for the next three months as follows: July 4,900 units,August 6,600 units,September 7,500 units.Monthly manufacturing overhead is budgeted to be $17,000 plus $6 per unit produced.What is budgeted manufacturing overhead for August?


A) $56,600
B) $17,000
C) $39,600
D) $62,000

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

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The starting point for preparing the master budget is the:


A) inventory budget.
B) sales budget.
C) production budget.
D) budgeted balance sheet.

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

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Budgeted direct labor hours are calculated as:


A) Budgeted production units × Direct labor requirements per unit + Ending inventory - Beginning inventory
B) Budgeted production units × Direct labor requirements per unit + Beginning inventory - Ending inventory
C) Budgeted production units × Direct labor requirements per unit
D) Budgeted sales units × Direct labor requirements per unit

E) A) and C)
F) C) and D)

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Manufacturing firms prepare a separate direct materials purchases budget for each material used in production.

A) True
B) False

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Atlantic,Inc.has prepared the following budgets for March.In March,budgeted production equals budgeted sales of 1,000 units,and direct materials inventory will stay constant. Atlantic,Inc.has prepared the following budgets for March.In March,budgeted production equals budgeted sales of 1,000 units,and direct materials inventory will stay constant. What is budgeted cost of goods sold for March? A) $16,800 B) $24,300 C) $31,800 D) $43,800 What is budgeted cost of goods sold for March?


A) $16,800
B) $24,300
C) $31,800
D) $43,800

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

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Young is a retailer of assorted baby products.The sales forecast for the coming months is: Young is a retailer of assorted baby products.The sales forecast for the coming months is: Young's cost of sales averages 60% of revenues.The inventory policy is to carry 30% of next month's sales needs.April 1 inventory will be as expected under the policy.Young pays for purchases 80% in the month of purchase and 20% the following month.Accounts payable on April 1 is $22,400. a.Prepare a purchases budget for as many months as is possible. b.Prepare a cash payments budget for April through July. Young's cost of sales averages 60% of revenues.The inventory policy is to carry 30% of next month's sales needs.April 1 inventory will be as expected under the policy.Young pays for purchases 80% in the month of purchase and 20% the following month.Accounts payable on April 1 is $22,400. a.Prepare a purchases budget for as many months as is possible. b.Prepare a cash payments budget for April through July.

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11eac99e_8c05_13f5_92f1_158539b63703_TB7948_00 Budgeted merchandise purchases = Budgeted sales + Budgeted ending finished goods inventory - Budgeted beginning finished goods inventory.Budgeted cash payments are calculated by multiplying purchases for the month by the percentage paid in cash,and adding in the amounts to be paid in the current month from purchases made in prior months.

Operating budgets focus on the financial resources needed to support operations.

A) True
B) False

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Ivory Inc.has forecast purchases on account to be $310,000 in March,$370,000 in April,$420,000 in May,and $490,000 in June.Seventy percent of purchases are paid for in the month of purchase,the remaining 30% are paid in the following month.What are budgeted cash payments for June?


A) $441,000
B) $469,000
C) $343,000
D) $294,000

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

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B

Skylark has forecast production for the next three months as follows: July 4,900 units,August 6,600 units,September 7,500 units.Monthly manufacturing overhead is budgeted to be $17,000 plus $6 per unit produced.What is budgeted manufacturing overhead for July?


A) $29,400
B) $47,000
C) $46,400
D) $17,000

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

Correct Answer

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Orchard has forecast sales to be $250,000 in February,$270,000 in March,$300,000 in April,and $280,000 in May.The average cost of goods sold is 70% of sales.All sales are made on credit and sales are collected 60% in the month of sale,and 40% the month following.What is the budgeted Accounts Receivable balance on May 31?


A) $196,000
B) $117,600
C) $112,000
D) $168,000

E) B) and D)
F) All of the above

Correct Answer

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Blue has forecast sales to be $410,000 in February,$540,000 in March,$580,000 in April,and $620,000 in May.The average cost of goods sold is 60% of sales.All sales are made on credit and sales are collected 50% in the month of sale,30% the month following and the remainder two months after the sale.What are budgeted cash receipts in May?


A) $592,000
B) $620,000
C) 310,000
D) $483,334

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

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


A) Budgeted balance sheet
B) Sales budget
C) Selling and administrative budget
D) Direct materials purchases budget

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

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Mango Place has forecast its sales for the coming months as follows: Mango Place has forecast its sales for the coming months as follows: The standard unit sells for $200,the deluxe unit sells for $350. Required: Prepare a sales budget for each of the three months April through June as well as the total for the quarter.Present the budget for each product as well as total sales. The standard unit sells for $200,the deluxe unit sells for $350. Required: Prepare a sales budget for each of the three months April through June as well as the total for the quarter.Present the budget for each product as well as total sales.

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blured image Preparation of the sales budg...

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


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

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

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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.Meadow plans to sell 16,000 units in May.How many units will be sold in April?


A) 12,380
B) 13,000
C) 13,570
D) 13,620

E) B) and C)
F) A) and C)

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B

The selling and administrative expense budget is based on the production budget.

A) True
B) False

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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.March 1 beginning inventory is projected to be 1,400 units.How many units will be produced in April?


A) 13,300
B) 15,900
C) 12,700
D) 13,000

E) A) and B)
F) B) and D)

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Which of the following is correct about budgetary slack?


A) Budgetary slack is a bit of cushion built into a budget,making it more likely budgetary goals will be met.
B) Managers may include budgetary slack by overstating budgeted sales figures.
C) Managers may include budgetary slack by understating budgeted expense figures.
D) Budgetary slack helps managers make responsible spending decisions since it removes performance evaluations based on budgeting.

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

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Which of the following statements about employee motivation is true?


A) A budget that is too easy to achieve is more likely to motivate than a budget that is too difficult or that is tight but attainable.
B) A budget that is too difficult to achieve is more likely to motivate than a budget that is too easy or that is tight but attainable.
C) A budget that is tight but attainable is more likely to motivate than a budget that is too easy or too difficult to achieve.
D) Budgets are difficult to use for motivation.

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

Correct Answer

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