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Exam 22: Master Budgets and Planning

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Question 31

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Part of the cash budget is based on information taken from the capital expenditures budget.

A) True
B) False

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Question 32

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The sequence of the budgets within the master budget are dictated by GAAP.

A) True
B) False

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Question 33

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Todd Enterprises is preparing a cash budget for the second quarter of the coming year.The following data have been forecasted: Additional data: (1)Sales are 40% cash and 60% credit.The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter.Total sales in March were $125,000. (2)Purchases are all on credit,with 40% paid in the month of purchase and the balance paid in the following month. (3)Operating expenses are paid in the month they are incurred. (4)A minimum cash balance of $25,000 is required at the end of each month. (5)Loans are used to maintain the minimum cash balance.At the end of each month,interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month.Repayments are made whenever excess cash is available. Prepare the company's cash budget for May.Show the ending loan balance at May 31.

Widmer Corp.requires a minimum $10,000 cash balance.If necessary,loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly).If the ending cash balance exceeds the minimum,the excess will be applied to repaying any outstanding loan balance.The cash balance on July 1 is $10,400.Cash receipts other than for loans received for July,August,and September are forecasted as $24,000,$32,000,and $40,000,respectively.Payments other than for loan or interest payments for the same period are planned at $28,000,$30,000,and $32,000,respectively at July 1,there are no outstanding loans. Required: Prepare a cash budget for July,August,and September.

Guidance for the budget process is usually supplied by a _____________________ of department heads and other executives responsible for seeing that budgeted amounts are realistic and coordinated.

The budget process rarely coincides with the accounting period.

The sales budget for Modesto Corp.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,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.Total budgeted sales of both products for the year would be:

A formal statement of future plans,usually expressed in monetary terms,is a:

Operating budgets include all of the following budgets except the:

Use the following information to determine the ending cash balance to be reported on the month ended June 30 cash budget. A. Beginning cash balance on June 1,$73,000. B. Cash receipts from sales,$413,000. C. Budgeted cash disbursements for purchases,$268,000. D. Budgeted cash disbursements for salaries,$35,000. E. Other budgeted cash expenses,$57,000. F. Cash repayment of bank loan,$32,000. G. Budgeted depreciation expense,$34,000.

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months: Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase.The December Accounts Payable balance is $6,500.The expected January 30 Accounts Payable balance is:

Operating budgets include all of the following except the:

Glaston Company manufactures a single product using a JIT inventory system.The production budget indicates that the number of units expected to be produced are 193,000 in October,201,500 in November,and 198,000 in December.Glaston assigns variable overhead at a rate of $0.75 per unit of production.Fixed overhead equals $150,000 per month.Compute the total budgeted overhead that would appear on the factory overhead budget for month of October.

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n) :

Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 5% of the next month's sales.It estimates that May's ending inventory will consist of 14,000 units.June and July sales are estimated to be 280,000 and 290,000 units,respectively.Trago assigns variable overhead at a rate of $1.80 per unit of production.Fixed overhead equals $400,000 per month.Compute the number of units to be produced and use this amount to compute the total budgeted overhead that would appear on the factory overhead budget for month of June.

The usual budget period for most companies is:

The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed,adding a new budget each period so that the budgets always cover the same number of future periods,is called:

The financial statement effects of the budgeting process are summarized on the cash budget and the capital expenditures budget.

Justin Company's budget includes the following credit sales for the current year: September,$25,000;October,$36,000;November,$30,000;December,$32,000.Experience has shown that payment for the credit sales is received as follows: 15% in the month of sale,60% in the first month after sale,20% in the second month after sale,and 5% is uncollectible.How much cash can Justin Company expect to collect in November as a result of current and past credit sales?

A sporting goods store budgeted August purchases of ski jackets at $140,000.The store had ski jackets costing $12,000 in its inventory at the beginning of August;and to cover part of anticipated September sales,they expect to have $25,000 of ski jackets in inventory at the end of the month of August.What is the budgeted cost of goods sold for August?