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Exam 1: Master Budgeting

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Question 81

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The direct labor budget is based on:

A) the desired ending inventory of finished goods.
B) the beginning inventory of finished goods.
C) the required production for the period.
D) the required materials purchases for the period.

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Question 82

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Skeete Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $1.70 per unit. The budgeted fixed selling and administrative expense is $57,720 per month, which includes depreciation of $9,360. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 3,900 units are planned to be sold in November. Required: Prepare the selling and administrative expense budget for November.

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Question 83

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Budgets are used to plan and to control operations.

Which of the following might be included as a disbursement on a cash budget?

Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. *Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 480,000 units during next year, the number of units it would have to manufacture during the year would be:

Davey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $3.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $66,000 per month, of which $10,000 is factory depreciation. -If the budgeted direct labor time for October is 6,000 hours, then the total budgeted manufacturing overhead for October is:

Sarter Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Each unit of finished goods requires 3 grams of raw material. The company plans to sell 880,000 units during the year. -The number of units the company would have to manufacture during the year would be:

Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: • Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January. • Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible. • The cost of goods sold is 75% of sales. • The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. • Other monthly expenses to be paid in cash are $21,800. • Monthly depreciation is $19,000. • Ignore taxes. -December cash disbursements for merchandise purchases would be:

Poriss Corporation makes and sells a single product called a Yute. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the year. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. -If the company has budgeted to sell 16,000 Debs in February, then the total budgeted fixed selling and administrative expenses for February is:

Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: • Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January. • Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible. • The cost of goods sold is 75% of sales. • The company would like to maintain ending merchandise inventories equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. • Other monthly expenses to be paid in cash are $21,800. • Monthly depreciation is $19,000. • Ignore taxes. -Expected cash collections in December are:

Prester Corporation has budgeted production for next year as follows: Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 30,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be:

Vandel Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 6,600 units are planned to be sold in April. The variable selling and administrative expense is $9.70 per unit. The budgeted fixed selling and administrative expense is $127,380 per month, which includes depreciation of $8,580 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be:

Which of the following benefits could an organization reasonably expect from an effective budget program?

The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and administrative expense per unit.

The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information: • Sales at $450,000, all for cash. • Merchandise inventory on October 31 was $200,000. • The cash balance November 1 was $18,000. • Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash. • Budgeted depreciation for November is $25,000. • The planned merchandise inventory on November 30 is $230,000. • The cost of goods sold is 70% of the selling price. • All purchases are paid for in cash. • There is no interest expense or income tax expense. -The budgeted cash receipts for November are:

Cartier Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $5.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $39,930 per month, which includes depreciation of $12,870. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,300 direct labor-hours will be required in April. -The April cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

di Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The remaining 70% is paid for in the month following the purchase. -If the company has budgeted to produce 20,000 Clops in January, then the budgeted direct labor cost for January is:

For July, White Corporation has budgeted production of 6,000 units. Each unit requires 0.10 direct labor-hours at a cost of $8.50 per direct labor-hour. How much will White Corporation budget for labor in July?

The TS Corporation has budgeted sales for the year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. The finished goods inventory at the start of the year is 2,500 units. Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,200 pounds. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in material. -Scheduled purchases of raw materials for the second quarter should be:

The Covey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $4.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $64,000 per month, of which $18,000 is factory depreciation -If the budgeted direct labor time for October is 8,000 hours, then the total budgeted manufacturing overhead for October is: