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Exam 20: Master Budgets and Performance Planning

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Question 31

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The usual budget period for most companies is:

A) An annual period of 250 working days.
B) A monthly period separated into daily budgets.
C) A quarterly period separated into weekly budgets.
D) An annual period separated into weekly budgets.
E) An annual period separated into quarterly and monthly budgets.

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

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Question 32

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Groundworks Company budgeted the following credit sales during the current year: September,$90,000; October,$123,000; November,$105,000; December,$111,000.Experience has shown that cash from credit sales is received as follows: 10% in the month of sale,50% in the first month after sale,35% in the second month after sale,and 5% is uncollectible.How much cash should Groundworks Company expect to collect in November from its current and past credit sales?

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Question 33

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Which of the following is a benefit derived from budgeting?

A company's history indicates that 20% of its sales are for cash and the remaining 80% are on credit. Collections on credit sales are 30% in the month of the sale and 70% the following month. Projected sales for January, February, and March are $75,000, $92,000 and $60,000, respectively. The March expected cash receipts are $77,920.

Cameroon Corp.manufactures and sells electric staplers for $16 each.If 10,000 units were sold in December,and management forecasts 4% growth in sales each month,the dollar amount of electric stapler sales budgeted for February should be:

Ruiz Co.provides the following unit sales forecast for the next three months: The company wants to end each month with ending finished goods inventory equal to 10% of the next month's sales.Finished goods inventory on December 31 is 300 units. -The budgeted production units for February are:

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 for October.

The most useful budget figures are developed:

A company's history indicates that 20% of its sales are for cash and the remaining 80% are on credit. Collections on credit sales are 30% in the month of the sale and 70% the following month. Projected sales for January, February, and March are $75,000, $92,000 and $60,000, respectively. The March expected cash receipts are $80,500.

All of the following are steps in the budgetary control process except:

Diego,Inc.,sells two products,Baubles and Charms.The sales forecast in units for the first quarter of the coming year is: Cash sales are 30% of each product's monthly sales.The remaining sales are credit sales which 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 Baubles and Charms,respectively. Determine the company's cash receipts for March from its current and past sales.

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 Product B is 3,000 units.Total budgeted sales of both products for the year would be:

A master budget refers to a company's sales budget that includes all of its segments or departments.

The number and types of budgets included in a master budget depend on the company's size and complexity.

Hammerly Corporation is preparing its master budget for the quarter ending March 31.It sells a single product for $25 a unit.Budgeted sales are 40% cash and 60% on credit.All credit sales are collected in the month following the sales.Budgeted unit sales for the next four months follow: At December 31,the balance in accounts receivable is $10,000,which represents the uncollected portion of December sales.The company desires merchandise inventory equal to 30% of the next month's sales in units.The December 31 balance of merchandise inventory is 340 units,and inventory cost is $10 per unit.40% of purchases are paid in the month of purchase and 60% are paid in the following month.At December 31,the balance of Accounts Payable is $8,000,which represents the unpaid portion of December's purchases. Operating expenses are paid in the month incurred and consist of: · Sales commissions (10% of sales) · Freight (2% of sales) · Office salaries ($2,400 per month) · Rent ($4,800 per month) Depreciation expense is $4,000 per month.The income tax rate is 40%,and income taxes will be paid on April 1.A minimum cash balance of $10,000 is required,and the cash balance at December 31 is $10,200.Loans are obtained at the end of a month in which a cash shortage occurs.Interest is 1% per month,based on the beginning of the month loan balance,and must be paid each month (The interest payment is rounded to the nearest whole dollar).If the ending cash balance exceeds the minimum,the excess will be applied to repaying any outstanding loan balance.At December 31,the loan balance is $0. Prepare a master budget (round all dollar amounts to the nearest whole dollar)for each of the months of January,February,and March that includes the: · Sales budget · Schedule of cash receipts · Merchandise purchases budget · Schedule of cash payments for merchandise purchases · Schedule of cash payments for selling and administrative expenses (combined) · Cash budget,including information on the loan balance · Budgeted income statement for the quarter

Memphis Company anticipates total sales for April,May,and June of $800,000,$900,000,and $950,000 respectively.Cash sales are normally 25% of total sales.Of the credit sales,30% are collected in the same month as the sale,65% are collected during the first month after the sale,and the remaining 5% are collected in the second month.Compute the amount of accounts receivable reported on the company's budgeted balance sheet for June 30.

A capital expenditures budget is prepared before the operating budgets.

The budget process rarely coincides with the accounting period.

Ballentine Company expects sales for June,July,and August of $48,000,$54,000,and $44,000,respectively.Experience suggests that 40% of sales are for cash and 60% are on credit.The company collects 50% of its credit sales in the month following sale,45% in the second month following sale,and 5% are not collected.What are the company's expected cash receipts for August from its current and past sales?

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 31 Accounts Payable balance is: