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Exam 6: Budgeting

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Question 41

Multiple Choice

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The budgeting process does not involve which of the following activities:

A) Specific goals are established
B) Periodic comparison of actual results to goals
C) Execution of plans to achieve goals
D) Increase in sales by increasing marketing efforts.

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

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Question 42

Multiple Choice

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Consider the following budget information: materials to be used totals $64,750; direct labor totals $198,400; factory overhead totals $394,800; work in process inventory January 1, 2012, was expected to be $189,100; and work in progress inventory on December 31, 2012, is expected to be $197,600. What is the budgeted cost of goods manufactured?

A) $649,450
B) $657,950
C) $197,600
D) $1,044,650

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

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Question 43

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Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. Budgeted purchases of Product B for the year would be:

The production budget is the starting point for preparation of the direct labor cost budget.

Southern Company is preparing a cash budget for April. The company has $12,000 cash at the beginning of April and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during April. Southern Company has an agreement with its bank to maintain a cash balance of at least $10,000. To maintain the $10,000 required balance, during April the company must:

Management accountants usually provide for a minimum cash balance in their cash budgets for which of the following reasons:

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called zero-based budgeting.

Which of the following budgets provides the starting point for the preparation of the direct labor cost budget?

Scott Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $25,000. At 12,000 units of production, a flexible budget would show:

Maxim Technologies projected sales of 35,000 computers for 2012. The estimated January 1, 2012, inventory is 3,000 units, and the desired December 31, 2012, inventory is 9,000 units. What is the budgeted production (in units) for 2012?

The capital expenditures budget is part of the planned investing activities of a company.

Which of the following budgets allow for adjustments in activity levels?

Manicotti Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 108,000 units, and desired ending inventory is 90,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A .50 lb. per unit @ $ .60 per pound Material B 1.00 lb. per unit @ $1.70 per pound Material C 1.20 lb. per unit @ $1.00 per pound The dollar amount of direct material A used in production during the year is:

Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 30% in the month following the sale. The cash collections in October are:

The budgeted finished goods inventory and cost of goods sold for a manufacturing company for the year 2012 are as follows: January 1 finished goods, $765,000; December 31 finished goods, $640,000; cost of goods sold for the year, $2,560,000. The budgeted costs of goods manufactured for the year is?

A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 50% in the next month, 25% the following month, and 5% is uncollectible. Projected sales for December, January, and February are $60,000, $85,000, and $95,000, respectively. The February expected cash receipts from all current and prior credit sales is:

The budgeted finished goods inventory and cost of goods sold for a manufacturing company for the year 2012 are as follows: January 1 finished goods, $765,000; December 31 finished goods, $540,000; cost of goods sold for the year, $2,560,000. The budgeted costs of goods manufactured for the year is?

Below is budgeted production and sales information for Flushing Company for the month of December: The unit selling price for product XXX is $5 and for product ZZZ is $15. Budgeted production for product ZZZ during the month is:

The objectives of budgeting are (1) establishing specific goals for future operations, (2) executing plans to achieve the goals, and (3) periodically comparing actual results with these goals.

At the beginning of the period, the Molding Department budgeted direct labor of $33,000 and supervisor salaries of $24,000 for 3,000 hours of production. The department actually completed 2,500 hours of production. Determine the budget for the department assuming that it uses flexible budgeting?