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Exam 9: Profit Planning

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Question 91

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__________________ is looking ahead to see what actions should be taken to realize particular goals.

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Question 92

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MATCHING Identify each item as a component of the production budget or the direct materials purchases budget. a. production budget b. direct materials purchases budget -ending inventory of product

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Question 93

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Fredder Company usually sells about 20% of its merchandise during a month for cash with the remaining sales on account. The company's accounts receivable payment history is as follows: 30% in the month of sale, 50% in the month following, and 15% in the second month following sale. Total budgeted sales for the second quarter are as follows: Assume all questions relate to the month of June.

Identify each item as an advantage or disadvantage of budgeting. a. advantage b. disadvantage 11. Pseudoparticipation 12. forces managers to plan 13. improves communication and coordination 14. leads to budgetary slack 15. provides standard for performance evaluation -forces managers to plan

The cash budget includes the beginning balance of cash, cash receipts, cash disbursements, and the ending balance of cash.

In preparing the direct labor budget, the average wage rate is used to calculate total direct labor cost.

Watson Corporation manufactures boxes. The estimated numbers of boxes sold for the first three months of 2014 are as follows: Finished goods inventory at the end of December was 600 units. Ending finished goods inventory is equal to 20% of the next month's sales. Watson Corporation expects to sell the boxes for $5 each. April 2014 sales are projected at 4,500 boxes. How many boxes should be produced in February?

A large difference between actual and planned results is feedback that the system is providing adequate control.

Comparing actual results with budgeted results on a periodic basis provides control in a budgetary system.

Figure 9-4. Bickford Company plans to sell 135,000 units in November and 180,000 units in December. Bickford's policy is that 10% of the following month's sales must be in ending inventory. On November 1, there were 14,000 units in inventory. It takes 30 minutes of direct labor time to make one unit. Direct labor wages average $17 per hour. Variable overhead is applied at the rate of $5 per direct labor hour. Fixed overhead is budgeted at $56,500 per month. -Refer to Figure 9-4. What is the direct labor cost budgeted for November?

The budget that describes how many units must be produced in order to meet sales needs and ending inventory objectives is the

A strategic plan identifies strategies for future activities and operations, generally covering at least five years.

Cash budgets are often prepared monthly or even weekly.

A company has provided a sales budget for the next four months. It bases its production budget on the sales budget, and has a policy that each month's ending inventory of finished product must be equal to 25% of the following month's sales needs. The direct materials purchases budget is based on the production budget. The company's policy for each month's ending inventory of raw materials is that they must be equal to 10% of the following month's production needs for raw materials. Given this information, the company can prepare direct materials purchases budgets for how many months?

Allison Company makes luggage. One popular model is the Traveler (a 21" wheeled carry-on). Budgeted sales for this model are: Desired ending inventory is 20% of the next month's sales. Inventory on March 1 is 3,100 units. Prepare a production budget for as many months as possible.

A company expects the following sales for the coming year: Budgeted sales revenue for the year is

Figure 9-6. Toscano Company makes all its sales on account. Accounts receivable payment experience is as follows: Toscano provided information on sales as follows: -Refer to Figure 9-6. How much of May's sales are expected to be uncollectible?

The cash budget and budgeted balance sheet are part of the ________________.

The master budget is composed of operating budgets and financial budgets.

Figure 9-8. Cohlmia Company makes all its sales on account. Cohlmia's accounts receivable payment experience is as follows: Cohlmia provided information on sales as follows: -Refer to Figure 9-8. What are the expected cash receipts in the month of November?