ACCT 202 Chapter 20

A company has the following budget information: Sales: $118,800; COGS: $48,500; Depreciation expense: $1,500; Interest expense: $250; Other expenses: $41,880. If the company budgets 40% for income tax expense, the amount of budgeted income tax expense will be

$10,668

Direct materials are $15 per unit; direct labor is $7 per unit and variable overhead costs are $2 per unit. If total product costs are $27, what are fixed costs per unit?

$3 Reason: Total unit cost is $27. Direct materials $15 + direct labor $7 + variable overhead $2 = $24. Therefore, fixed costs per unit = $27 - 24 = $3.00.

If direct materials per unit are $20, direct labor per unit is $10, variable overhead per unit is $2, and fixed overhead per unit is $1, total product cost per unit is $

$33 20+10+2+1 = 33

A merchandising company's budget includes the following data for January: Sales: $400,000; COGS: $270,000; Administrative salaries: $1,250; Sales commissions: 5% of sales; Advertising: $10,000; Salary for sales manager: $30,000; Miscellaneous administrative expenses: $5,000. The total selling expenses on the January selling expense budget will be $

$60,000 Salary for sales manager + (budgeted sales x commissions) + Advertising 30,000+(400,000 x 5%) + 10,000 = $60,000

The formula to determine the materials to be purchased is

(Units to produce x materials required for each unit) + desired endings materials inventory - beginning materials inventory

Characteristics of budgets include:

- formal statement of a company's plans - expressed in dollars - typically cover a month, quarter or one year

List the individual budgets of the master budget in the order I which they are prepared, with the first on top.

1. Sales budget 2. Production budget 3. Direct materials, Direct labor, and Factory Overhead budgets 4. Cash budgets

A manufacturing company has budgeted direct labor hours of 600 at a variable overhead rate per direct labor hour of $20. The budgeted fixed cost is $500 per month. The total budgeted overhead cost will be $

12,500

A company expects to sell 400 units of Product X in January and expects sales to increase by 10% per month. If Product X sells for $10 each, the total sales for the first quarter of the year will be $

13240

A manufacturing company has budgeted direct labor hours of 940 at a budgeted direct labor hour rate of $15. The budgeted fixed cost is $950 per month. The total budgeted overhead cost will be $

15,050

A company has the following budget information: Sales: $118,800; COGS: $48,500; Depreciation expense: $1,500; Interest expense: $250; Other expenses: $41,880. If the company budgets 40% for income tax expense, the budgeted net income will be $

16,002

A company has the following budget information: Sales: $118,800; COGS: $48,500; Depreciation expense: $1,500; Interest expense: $250; Other expenses: $41,880. If the company budgets 40% for income tax expense, the budgeted net income will be $

16002

A manufacturing company's sales budget indicates the following sales: January: $30,000; February: $20,000; March: $15,000. The company expects 80% of the sales to be on account. Credit sales are collected 30% in the month of the sale and 70% in the month following the sale. The total cash receipts collected during March will be $

17800

A manufacturing company has budgeted production of 5,000 units for May and 4,400 units in June. Each unit requires 3 pounds of materials at a cost of $10 per pound. On May 1, there are 2,750 pounds of materials on hand. The company desires an ending materials inventory of 60% of the next month's materials requirements. The total cost of direct materials purchases for May will be $

201,700

A merchandising company's sales budget indicates the following sales: January: $25,000; February: $30,000; March: $35,000. Sales personnel are paid a salary plus commission. Salaries are expected to be $5,000 per month and the commission is 10% of sales. Additionally, advertising is expected to be $600 per month. The total selling expenses for the quarter will be $

25,800 (25,000 x 10%)+(30,000 x 10%)+(35,000 x 10%)+(5,000x3)+(600x3)= $25,800

A company's sales budget indicates the following sales: January: 25,000; February: 30,000; March: 35,000. Beginning inventory is 12,000 units and the company desires ending inventory of 45% of the next month's sales. Units to be produced in January will be

26,500

A manufacturing company's sales budget indicates the following sales: January: $25,000; February: $30,000; March: $35,000. The company expects 70% of the sales to be on account and the remainder to be cash sales. Credit sales are collected in the month following the sale. The total cash collected during March will be $

31500

JP Service Company has budgeted direct labor hours of 100 and direct labor cost per hour of $25 for data analysis personnel and budgeted direct labor hours of 50 and direct labor cost per hour of $30 for staff accountants. JP Service Company's cost of direct labor is $

4,000

A manufacturing company has units to produce of 940 units for the month. Each unit requires 3.5 hours of labor to produce. The cost of direct labor is $15 per hour. The total cost of direct labor for the month will be $

49350

A company expects to sell 500 units during the second quarter and 550 units in the third quarter. Currently, during the second quarter, they have 46 units in beginning inventory. If they desire ending inventory of 10% of the next quarter's sales, ___________ units will need to be produced in the second quarter.

509

A merchandising company's budget includes the following data for January: Sales: $400,000; COGS: $270,000; Administrative salaries: $1,250; Sales commissions: 5% of sales; Advertising: $10,000; Depreciation on store equipment: $25,000; Rent on administrative building: $30,000; Miscellaneous administrative expenses: $5,000. The total general and administrative expenses on the January general and administrative expense budget will be $

61,250 25,000+1,250+5,000+30,000

A company budgets the following direct materials purchases: April: $70,000; May $90,000; June: $60,000. All purchases are on account and the company pays 25% of purchases in the month of the purchase, 50% in the month after the purchase, and the remaining balance in the second month after the purchase. Cash payments for June for direct materials is $

77500

A company budgets the following direct materials purchases: April: $70,000; May $90,000; June: $60,000. All purchases are on account and the company pays 25% of purchases in the month of the purchase and the remaining amount in the following month. Cash payments for June for direct materials is $

82500

Match each figure on the budgeted balance sheet to the previously prepared budget from which the figure is derived

Accounts receivable - Sales budget Income tax payable - Income statement budget Bank loan payable - Cash budget

A(n) ____________ is a formal statement of a company's plans in dollars

Budget

Budgeted performance considers all of the following in relation to a benchmark: (Select all that apply).

Company factors Industry factors Economic factors

A manufacturing company would typically prepare all of the following except:

Merchandise inventory budget

Which of the following items would be included on the capital expenditures budget?

Plant asset purchases Sale of plant assets

T or F: A production budget is unique in that it does not show costs; it is always expressed in units of product

True

T or F: Depreciation on non-manufacturing assets and property taxes are considered general and admin expenses and, therefore, are included on the gen and admin expense budget.

True

The formula to compute the budgeted direct labor cost is:

Units to produce x direct labor required per unit x direct labor cost per hour

Most companies prepare a(n) _____________ budget that is separated into __________ budgets.

annual; quarterly or monthly

Budgeting guidelines that help insure budgeting is a positive motivating force include: (Check all that apply.)

attainable goals. the opportunity to explain differences between actual and budgeted amounts. participatory budgeting.

The budget which shows predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is the:

budgeted balance sheet

The formula to compute the budgeted direct labor cost for a service firm is:

budgeted direct labor hours times direct labor cost per hour

All of the following are guidelines that should be followed for budgets to be a positive motivating force except:

budgets should be prepared using a top-down approach

The reporting of expected cash receipts and cash payments related to the sale and purchase of plant assets is reported on the ___________ expenditures budget.

capital

The ___________ function requires that management evaluate operations against some norm

control

The primary purpose of using short-term budgets is to:

evaluate performance and take necessary corrective action

A manufacturer will prepare a _____________ budget which shows the number of units to be produced during a period

production

The first step in preparing the master budget is planning the ___________ budget.

sales