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Exam 7: Master Budgets and Performance Planning

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Question 21

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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, 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. -A quantity of merchandise or materials over the minimum needed reduce the risk of running short is called:

A) Just-in-time inventory.
B) Budgeted stock.
C) Continuous inventory.
D) Capital stock.
E) Safety stock.

F) C) and E)
G) D) and E)

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Question 22

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

A) Sales budget
B) Operating budget
C) Capital expenditures budget
D) Selling expense budget
E) Purchases budget

F) All of the above
G) B) and D)

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Question 23

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Which of the following is a financial budget?

What is a merchandise purchases budget? How is the merchandise purchases budget constructed?

Assume that total sales for January and February are budgeted to be $50,000 and $100,000, respectively.What are the expected cash receipts for February from current and past sales? Round all calculations to full dollar amounts.

The financial budgets of a business include the cash budget, the budgeted income statement, and the budgeted balance sheet.

The purchases budget depends on information provided by the sales budget.

The overall coordinating activity of the budget process is the responsibility of the:

The manufacturing budget shows only the direct materials needed for production.

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

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, 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:

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

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

Julia's Candy Co. reports the following information from its sales account and sales budget: $\begin{array} { l l r } \text { Sales } & \text { May } & \$ 105,000 \\& \text { June } & 93,000 \\\text { Expected } & \text { July } & \$ 90,000 \\\text { Sales: } & & \\& \text { August } & 110,000 \\& \text { September } & 120,000\end{array}$ Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. -Based on the information from Julia's, the total amount of cash expected to be received from customers in September is:

A company expects its September sales to be 15% higher than its August sales of $140,000.Purchases were $75,000 in August and are expected to be $85,000 in September.All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month.Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month.The beginning cash balance on September 1 is $71,500.The ending cash balance on September 30 would be:

A rolling budget is a specific budget application relevant only to a merchandising company.

A company's data is presented below.Desired ending inventory is a consistent percentage of the next quarter's sales and the previous year's fourth quarter ending inventory of 560 units meets this requirement.Compute the expected production in the third quarter of the current year. $\begin{array} { l l l l l } \text { Quarter } & 1 & 2 & 3 & 4 \\\text { Expected sales urits } & 7,000 & 5,000 & 8,000 & 6,000 \\\text { Urits produced } & 6,840 & ? & ? & ?\end{array}$

A ________________________ is a continuously revised budget that adds future months or quarters to replace months or quarters that have lapsed.

The master budget consists of three major groups of budget components: the operating budgets, the capital expenditures budgets, and the financial budgets.

A June sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit.The desired ending inventory of units is 15% higher than the beginning inventory of 1,000 units.Total June sales are anticipated to be: