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Exam 7: Master Budgets and Performance Planning

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Question 81

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Del Carpio, Inc.sells two products, Widgets and Gadgets.The sales forecast in units for the first quarter of the coming year is: $\begin{array} { l l l } & \underline{\text { Widgets }} & \underline{\text { Gadgets }} \\\text { Jaruary } & 20,000 & 36,000 \\ \text { February } & 28,000 & 60,000 \\\text { March }& 36,000 & 64,000\end{array}$ Cash sales are 30% of each product's monthly sales.The remaining sales are credit sales that are collected as follows: 70% in the month of sale, 20% the next month, and 10% in the following month.Unit sale prices are $30 and $20 for Widgets and Gadgets, respectively. Determine the company's cash receipts for March from its current and past sales.

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Question 82

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To determine the production budget for an accounting period, consideration is not given to which of the following:

A) Budgeted ending inventory.
B) Budgeted beginning inventory.
C) Budgeted sales.
D) Budgeted overhead.
E) Required units of inventory available.

F) A) and E)
G) A) and C)

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Question 83

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Indicate the order in which the following budgets would be completed (1 = first and so on) ______ (A)Merchandise purchases budget ______ (B)Capital expenditures budget ______ (C)Selling expense budget ______ (D)Budgeted balance sheet ______ (E)Cash budget

A department store has budgeted cost of goods sold for August of $60,000 for its women's coats.Management wants to have $12,000 of coats in inventory at the end of the month to prepare for the winter season.Beginning inventory in August was $8,000.What dollar amount of coats should be purchased to meet the above plans?

What is a cash budget? How can management use a cash budget?

Which of the following would not be used in preparing a cash budget for October?

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

There are at least five benefits from budgeting.Identify two of these benefits: (1)_______________________________________ (2)_______________________________________

Activity-based budgeting is a budget system based on expected activities and their activity levels, which helps management plan for the resources required.

In preparing financial budgets:

The set of periodic budgets that are prepared and periodically revised in the practice of continuous budgeting is called:

Briefly describe a master budget and the sequence in which the individual budgets within the master budget are prepared.

Long-term liability data for the budgeted balance sheet is derived from:

Consulting the persons affected by a budget when it is prepared can provide an effective means of motivation and cooperation.

Which of the following is not a benefit of following a well-designed budgeting process?

The most useful budget figures are developed:

A Company is preparing a cash budget for June.The company has $67,000 cash at the beginning of June and anticipates $82,330 in cash receipts and $93,520 in cash disbursements during June.This company has an agreement with its bank to maintain a cash balance of at least $65,000.As of May 31, the company owes $25,000 to the bank.To maintain the $65,000 required balance, during June the company must:

Briefly describe the process by which budgets are developed and administered.

A company's gross profit rate is 30% of sales.Expected January sales are $78,000 and desired January 31^st inventory is $7,500.Assuming the December 31^st inventory is $6,200 what amount of purchases should this company budget for the month of January?

Sweeny Co.is preparing a cash budget for the second quarter of the coming year.The following data have been forecasted: $\begin{array}{lrr}& \underline {\text { April } }& \underline {\text { May } }\\\text { Sales } & \$ 150,000 & \$ 157,500 \\\text { Merchandise purchases } & 107,000 & 112,400 \\\text { Operating expenses: } & \\\text { Payroll } & 13,600 & 14,280 \\\text { Advertising } & 5,400 & 5,700 \\\text { Rent } & 1,500 & 1,500 \\\text { Depreciation } & 7,500 & 7,500\\\text { End of April balances: }\\\text { Cash } & 40,000 \\\text { Bank loan payable } & 16,000\end{array}$ 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 $40,000 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.