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Exam 22: Budgetary Planning

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Question 101

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The budget components for Park Company for the quarter ended June 30 appear below. Park sells trash cans for $12 each. Budgeted sales and production for the next three months are: Park desires to have trash cans on hand at the end of each month equal to 20 percent of the following month's budgeted sales in units. On March 31, Park had 4,000 completed units on hand. Five pounds of plastic are required for each trash can. At the end of each month, Park desires to have 10 percent of the following month's production material needs on hand. At March 31, Park had 13,000 pounds of plastic on hand. The materials used in production cost $0.60 per pound. Each trash can produced requires 0.10 hours of direct labor. Instructions Determine how much the materials purchases budget will be for the month ending April 30.

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Question 102

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Grey Company has 24,000 units in beginning finished goods. If sales are expected to be 120,000 units for the year and Grey desires ending finished goods of 30,000 units, how many units must the company produce?

A) 114,000
B) 120,000
C) 126,000
D) 150,000

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

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Question 103

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Correy Company reported the following information for 2016: $\bullet$ Cost of goods sold is 35% of sales. $\bullet$ Correy purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month. $\bullet$ Accounts payable is used only for inventory acquisitions. How much is the budgeted balance for Accounts Payable at October 31, 2016?

The following facts are known: $\bullet$ The total pounds needed for production are 2 times the units to be produced. $\bullet$ The desired ending direct materials inventory is 20% of the total pounds needed for production. $\bullet$ The beginning direct materials inventory is equal in number to 10% of the units to be produced. $\bullet$ Cost per pound is $5. $\bullet$ Total cost of the direct materials purchases is $1,035,000. Instructions Prepare a direct materials budget for the period.

The manufacturing overhead budget shows the expected manufacturing overhead costs.

The management of Ocean Industries estimates that credit sales for August, September, October, and November will be $540,000, $750,000, $840,000, and $480,000, respectively. Experience has shown that collections are made as follows: Instructions Determine the collections from customers in October and November. Show all computations.

Casa Development, Inc. has budgeted sales revenues as follows: Past experience has indicated that 80% of sales each month are on credit and that collection of credit sales occurs as follows: 60% in the month of sale, 30% in the month following the sale, and 5% in the second month following the sale. The other 5% is uncollectible. Instructions Prepare a schedule which shows expected cash receipts from sales for the months of April, May, and June.

Which one of the following items would never appear on a cash budget?

What is the proper preparation sequencing of the following budgets? 1) Budgeted Balance Sheet 2) Sales Budget 3) Selling and Administrative Budget 4) Budgeted Income Statement

Jent Company reported the following information for 2013: $\bullet$ All sales are on credit. $\bullet$ Customer amounts on account are collected 40% in the month of sale and 60% in the following month. Instructions Compute the amount of cash Jent will receive during November.

Which of the following expenses would not appear on a selling and administrative expense budget?

Pitt Corp. makes and sells a single product, widgets. Two pounds of sand are needed to make one widget. Budgeted production of widgets for the next two months follows: September 25,000 units October 31,000 units The company wants to maintain monthly ending inventories of sand equal to 20% of the following month's production needs. On August 31, 10,000 pounds of sand were on hand. Instructions How much sand should be purchased in September?

Budgeting in not-for-profit organizations

The number of direct labor hours needed for production is obtained from the production budget.

Bear, Inc. estimates its sales at 200,000 units in the first quarter and that sales will increase by 20,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $35. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Production in units for the third quarter should be budgeted at

Instead of a production budget, a merchandiser will prepare a

The direct materials budget must be completed before the production budget because the quantity of materials available for production must be known.

The budget is developed within the framework of a sales forecast.

The ____________________ is the starting point in preparing the master budget.

On January 1, Kale Company has a beginning cash balance of $42,000. During the year, the company expects cash disbursements of $340,000 and cash receipts of $290,000. If Kale requires an ending cash balance of $40,000, the company must borrow