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Exam 20: Master Budgets and Performance Planning

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Question 21

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The budget that lists the dollar amounts to be both received from plant asset disposals and spent to purchase additional plant assets to carry out the budgeted business activities is the ________.

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Question 22

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Coomb's Fashions forecasts sales of $125,000 for the quarter ended December 31.Its gross profit rate is 20% of sales,and its September 30 inventory is $32,500.If the December 31 inventory is targeted at $41,500,budgeted purchases for this quarter should be:

A) $134,000.
B) $109,000.
C) $91,500.
D) $25,000.
E) $91,000.

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

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Question 23

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Production budgets always show both budgeted units of product and total costs for the budgeted units.

What is a sales budget? How is the sales budget prepared?

The budgeted balance sheet is prepared primarily from data contained in the previously prepared components of the master budget.

Bioclean Co.,a merchandiser,sells a biodegradable cleaning product and has predicted the following unit 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?

Long-term liability balances for the budgeted balance sheet are obtained from:

Activity-based budgeting is a budget system based on expected activities and their levels for the budget period,which helps management plan for the resources required.

A cash budget shows the expected cash receipts and cash payments during the budget period.

Match the definitions 1 through 9 with the correct term or phrase (a) through (i) . -A managerial accounting report that shows predicted amounts of the company's assets,liabilities,and balances as of the end of the budget period.

Bengal Co.provides the following unit sales forecast for the next three months: The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales.Finished goods inventory on June 30 is 1,250 units. -The budgeted production units for August are:

Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August.The direct materials requirement per unit is 2 ounces (oz.) .The company requires to have safety stock of direct materials on hand at the end of each month to complete 20% of the units of budgeted production in the following month.There was 3,160 ounces of direct material in inventory at the start of July.The total ounces of direct materials to be purchased in July is:

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

________ is a budgeting guideline that recognizes employees affected by a budget should be involved in preparing it.

Use the following information to prepare a budgeted income statement for Stellar Company for the month of June. a.Beginning cash balance on June 1 is $52,000. b.Sales amounts are: April (actual),$1,450,000,May (actual),$1,600,000,and June (budgeted),$1,700,000. c.Cost of goods sold is 53% of sales. d.Budgeted cash payments 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.The income tax rate applicable to the company is 30%.

Use the following data to determine the company's cash payments for August and September:

Match the definitions 1 through 9 with the correct term or phrase (a)through (i).

Ewing Company budgeted sales for January,February,and March of $96,000,$88,000,and $72,000,respectively.Seventy percent of sales are on credit.The company collects 60% of its credit sales in the month following sale,and 40% in the second month following sale.What are Ewing's expected cash receipts for March related to its current and past sales?

Masterson Company's budgeted production calls for 56,000 units in April and 52,000 units in May of a key raw material that costs $1.85 per unit.Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials.The April 1 inventory for this material is 16,800 unit.What is the budgeted materials needed in units for April?

Southland Company is preparing a cash budget for August.The company has $17,000 cash at the beginning of August and anticipates $120,800 in cash receipts and $134,500 in cash payments during August.Southland Company wants to maintain a minimum cash balance of $10,000.The preliminary cash balance at the end of August before any loan activity is: