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Exam 6: Budgeting

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Question 51

True/False

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

A) True
B) False

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Question 52

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At the beginning of the period, the Assembly Department budgeted direct labor of $110,000, direct material of $170,000 and fixed factory overhead of $28,000 for 8,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting.

A) $288,000
B) $305,000
C) $350,000
D) $378,000

E) All of the above
F) A) and C)

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Question 53

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At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct material of $165,000 and fixed factory overhead of $15,000 for 9,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?

Heedy Company is trying to decide how many units of merchandise to order each month. The company policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. How many units must be purchased in September?

Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May.

Purple Inc. production budget for Product X for the year ended December 31 is as follows:

As of January 1 of the current year, the Grackle Company had accounts receivables of $50,000. The sales for January, February, and March were as follows: $120,000, $140,000 and $150,000. 20% of each month's sales are for cash. Of the remaining 80% (the credit sales) , 60% are collected in the month of sale, with remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales) in the month of February?

Supervisor salaries, maintenance, and indirect factory wages would normally appear in the operating expenses budget.

In preparing flexible budgets, the first step is to identify the fixed and variable components of the various costs and expenses being budgeted.

The responsibility for coordinating the preparation of a master budget should be assigned to the CEO of a firm.

Warmfeet manufactures comforters. Assume the estimated inventories on January 1, 2012, for finished goods, work in process, and materials were $51,000, $28,000 and $33,000 respectively. Also assume the desired inventories on December 31, 2012, for finished goods, work in process, and materials were $48,000, $35,000 and $29,000 respectively. Direct material purchases were $555,000. Direct labor was $252,000 for the year. Factory overhead was $176,000. Prepare a cost of goods sold budget for Warmfeet, Inc.

As of January 1 of the current year, the Grackle Company had accounts receivables of $50,000. The sales for January, February, and March were as follows: $120,000, $140,000 and $150,000. 20% of each month's sales are for cash. Of the remaining 80% (the credit sales) , 60% are collected in the month of sale, with remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales) in the month of March?

The budgeted balance sheet assumes that all operating and financing plans are met.

Supervisor salaries, maintenance, and indirect factory wages would normally appear in the factory overhead cost budget.

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

Flexible budgeting requires all levels of management to start from zero and estimate sales, production, and other operating data as though operations were being started for the first time.

After the sales budget is prepared, the production budget is normally prepared next.

Doran Technologies produces a single product. Expected manufacturing costs are as follows: Variable costs

A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future is called continuous budgeting.

Star Co. was organized on August 1 of the current year. Projected sales for the next three months are as follows: