FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 22: Master Budgets and Planning

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 101

Short Answer

Review LaterAdd Note

Review Later

Presented below are terms or phrases preceded by letters a through j and followed by a list of definitions 1 through 10. Match the correct definitions with the terms or phrases by placing the letter of the term or phrase in the answer space provided at the beginning of the definition. (a) Budget (b) Capital expenditures budget (c) Activity-based budgeting (d) Sales budget (e) Production budget (f) Cash budget (g) Budgeted balance sheet (h) Continuous budgeting (i) Selling expense budget (j) Rolling budgets ________ (1) A plan that lists the types and amounts of selling expenses expected during the budget period. ________ (2) A plan that shows expected activities and their levels for the budget period used to estimate resources required to perform the activities. ________ (3) A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period. ________ (4) A formal statement of future plans, usually expressed in monetary terms. ________ (5) A plan showing the expected sales units and dollars from the sales; the starting point in the budgeting process. ________ (6) A plan that lists dollar amounts estimated to be received from disposing of plant assets and spent on purchasing additional plant assets to carry out the budgeted business activities. ________ (7) The practice of preparing budgets for a selected number of several periods and revising those budgets as each period is completed. (8) A plan showing the number of units to be produced each period, based on the units projected in the sales budget, along with inventory considerations. ________ 9) A plan that shows the expected cash inflows and outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans. ________ (10) Additional monthly or quarterly budgets to replace the ones that have lapsed as each budget period goes by.

Correct Answer

verified

1. I; 2. C; 3. G; 4....

View Answer

Show Answer

Question 102

True/False

Review LaterAdd Note

Review Later

A company's history indicates that 20% of its sales are for cash and the remaining 80% are on credit. Collections on credit sales are 30% in the month of the sale and 70% the following month. Projected sales for January, February, and March are $75,000, $92,000 and $60,000, respectively. The March expected cash receipts are $80,500.

A) True
B) False

Correct Answer

verified

Show Answer

Question 103

Multiple Choice

Review LaterAdd Note

Funcycle Manufacturing's budget includes the following credit sales for the current year: September, $145,000; October, $136,000; November, $120,000; December, $157,000. Experience has shown that payment for the credit sales is received as follows: 15% in the month of sale, 50% in the first month after sale, and 35% in the second month after sale. What are the cash collections of credit sales in the month of December?

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

The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.

The manufacturing budgets include the sales budget and the budgeted income statement.

What is activity-based budgeting?

One of the major benefits of formal budgeting is the positive effect it can have on employee attitudes if applied correctly.

Argenta, Inc. is preparing its master budget for the first quarter of its calendar year. The following forecasted data relate to the first quarter: $\begin{array}{ll}\text { Unit sales: }\\ \text { January } & 40,000 \\ \text { February } & 55,000 \\ \text { March } & 50,000 \\\text { Unit sales price } & \$ 25 \\ \text { Cost of goods sold per unit } & \$ 13 \\\text { Expenses: }\\ \text { Commissions } & 10 \% \text { of sales } \\ \text { Rent } & \$ 20,000 / \text { month } \\ \text { Advertising } & 15 \% \text { of sales } \\ \text { Office salaries } & \$ 75,000 / \text { month } \\ \text { Depreciation } & \$ 50,000 / \text { month } \\\text {Interest }&\text { 15 \% annually on a \( \$ 250,000 \) note pavable}\\\text { Tax rate }&40\%\end{array}$ Prepare a budgeted income statement for this first quarter.

Zhang Industries budgets production of 300 units in June and 310 units in July. Each finished unit requires 4 pounds (lbs.) of raw material K, which costs $5 per pound. Each month's ending inventory of raw materials should be 30% of the following month's budgeted production. The June 1 raw materials inventory has 360 pounds of raw material K. Compute budgeted purchases for raw material K in pounds for June.

A sporting goods manufacturer budgets production of 45,000 pairs of ski boots in the first quarter and 30,000 pairs in the second quarter of the upcoming year. Each pair of boots require 2 kg of a key raw material. The company aims to end each quarter with ending raw materials inventory equal to 20% of the following quarter's material needs. Beginning inventory for this material is 18,000 kg and the cost per kg is $8. -What is the budgeted materials need in kg. in the first quarter?

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 the fourth quarter should be:

The process of planning future business actions and expressing them as a formal plan is called:

Cameroon Corp. manufactures and sells electric staplers for $16 each. If 10,000 units were sold in December, and management forecasts 4% growth in sales each month, the dollar amount of electric stapler sales budgeted for February should be:

A capital expenditures budget shows dollar amounts estimated to be spent to purchase additional plant assets and amounts expected to be received from plant asset disposals.

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a:

The budget process rarely coincides with the accounting period.

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

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 disbursements 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:

The responsibility for coordinating the preparation of a master budget should be assigned to the Chief Executive Officer.