Chapter 22-Accounting*

If budgeted beginning inventory is $8,000, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted production should be

$11,660

Next year's sales forecast 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 per unit, 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

$464,000 (Total budgeted sales = (20,000 × $10) + (22,000 × $12) = $464,000)

The budgeting process does not involve which of the following activities?

Increase in sales by increasing marketing efforts.

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

True

Principal components of a master budget include

all of these

The budget process involves doing all of the following except

dismissing all managers who fail to achieve operational goals specified in the budget

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called zero-based budgeting.

True

The budgeted direct materials purchases is based on the sum of (1) the materials needed for production and (2) the desired ending materials inventory, less (3) the estimated beginning materials inventory.

True

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

True

Production and sales estimates for April are as follows: Estimated inventory (units), April 19,000 Desired inventory (units), April 30 18,000 Expected sales volume (units): Area A 3,000 Area B 4,750 Area C 4,250 Unit sales price $20 ​ ​ The number of units expected to be manufactured in April is

11,000

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month's sales. Determine the budgeted units of production for February.

186,000

Production estimates for July are as follows: Estimated inventory (units), July 1 8,500 Desired inventory (units), July 31 10,500 Expected sales volume (units), July 76,000 For each unit produced, the direct materials requirements are as follows: Direct material A ($5 per lb.) 3 lbs. Direct material B ($18 per lb.) 1/2 lb.

234,000 lbs. of A; 39,000 lbs. of B

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month's sales.

46,000 (Budgeted units of inventory for March 31 = 20% of the expected sales for April = 0.20 × 230,000 = 46,000)

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month's sales. ​ Determine the budgeted units of inventory for March 31.

46,000 (Budgeted units of inventory for March 31 = 20% of the expected sales for April = 0.20 × 230,000 = 46,000)

If the expected sales volume for the current period is 9,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is

8,900​

A formal written statement of management's plans for the future, expressed in financial terms, is a

Budget

A budget can be an effective means of communicating management's plans to the owners of a business.

False

Employees view budgeting more positively when goals are established for them by senior management.

False

The budget procedures used by a large manufacturer of automobiles would probably not differ from those used by a small manufacturer of paper products.

False

The task of preparing a budget should be the sole task of the most important department in an organization.

False