chapter 8

Assume a company's budgeted unit sales and its required production in units for April are 80,000 units and 78,000 units, respectively. The direct labor-hours required per unit is 1.25 hours and the direct labor wage rate is $16.50 per hour. What is the budgeted direct labor cost for April?

1,608,750

Assume a company's sales budget for July estimates 15,000 units sold. The variable selling and administrative expense used for budgeting purposes is $4.00 per unit sold. The total budgeted cash disbursements for selling and administrative expenses in July is $125,000. The total fixed selling and administrative expenses included in the selling and administrative expense budget for July is $80,000. What is the amount of depreciation included in the selling and administrative expense budget for July?

15000

Assume a merchandising company provides the following information from its master budget for the month of May: Sales$ 220,000Cost of goods sold$ 80,000Cash paid for merchandise purchases$ 75,000Selling and administrative expenses$ 35,000Cash paid for selling and administrative expenses$ 28,000 What is the budgeted net operating income?

105,000

Assume the sales budget for April and May is 30,000 units and 32,000 units, respectively. The production budget for the same two months is 27,000 units and 28,800 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following month's production needs. How many pounds of raw material need to be purchased in April?

109080

Assume a company's sales budget for April and May is 30,000 units and 32,000 units, respectively. Its production budget for the same two months is 27,000 units and 28,800 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following months production needs.Also assume the company pays $2.50 per pound of raw material. It always pays for 50% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on March 31st is $130,000. What would be the accounts payable balance at the end of April?

136350

Assume a company's budgeted unit sales and its required production in units for April are 80,000 units and 78,000 units, respectively. The direct labor-hours required per unit is 1.25 hours. The company's total budgeted direct labor cost for April is $1,608,750. What is the budgeted direct labor wage rate per hour for April?

16.50

Which of the following equations is used to prepare a production budget? 1Budgeted unit sales − Desired units of ending finished goods inventory + Units of beginning finished goods inventory = Required production in units 2Budgeted unit sales + Desired units of ending finished goods inventory − Units of beginning finished goods inventory = Required production in units 3Budgeted unit sales + Desired units of beginning finished goods inventory − Units of ending finished goods inventory = Required production in units 4Budgeted unit sales − Desired units of beginning finished goods inventory + Units of ending finished goods inventory = Required production in units

2

Which of the following statements is true? 1Planning involves developing goals and preparing various budgets to achieve those goals. 2Planning involves gathering feedback that enables organizations to make modifications as circumstances change. 3The definition of planning states that managers should be held responsible for those items—and only those items—that the manager can actually control. 4Planning is usually done independent from the budgeting process.

2

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale and the remaining 60% in the following month. What is the expected cash collections from credit sales during the first month?

20,000

Assume the following budgeted information for a merchandising company: Budgeted sales (all on credit) for November, December, and January are $250,000, $220,000, and $200,000, respectively. Cash collections of credit sales are expected to be 75% in the month of sale and 25% in the month following the sale. The cost of goods sold is always 65% of sales. Each month's ending inventory equals 20% of next month's cost of goods sold. 40% of each month's merchandise purchases are paid in the current month and the remainder is paid in the following month. Monthly selling and administrative expenses that are paid in cash in the month incurred total $20,500. Monthly depreciation expense is $20,000. The expected cash collections from customers in December are:

227500

Assume a company's estimated sales for January, February, and March are 25,000 units, 26,000 units, and 24,000 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next month's unit sales. What is the required production in units for January?

25150

Assume the sales budget for April and May is 30,000 units and 32,000 units, respectively. The production budget for the same two months is 27,000 units and 28,800 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following months production needs. If the company pays $2.50 per pound of raw material, then what is the estimated cost of raw material purchases for April?

272700

Which of the following estimates is not used in preparing a sales budget including a schedule of expected cash collections? 1The number of units sold 2The selling price per unit 3The percent of next quarter's unit sales in ending inventory Correct 4The credit sales collection pattern

3

Which of the following statements is false? 1.Budgets force managers to think about and plan for the future. 2.Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance. 3.Budgets enable each department to function independently from other departments. 4.Budgets communicate management's plans throughout the organization.

3

Assume that a merchandising company provided the following beginning and ending budgeted balance sheets for a forthcoming month: Beginning BalancesEnding BalancesCash$ 30,000$ 38,000Accounts receivable13,00016,000Inventory20,00018,000Buildings and equipment100,000100,000Accumulated depreciation(25,000)(30,000)Total assets$ 138,000$ 142,000Accounts payable$ 4,000$ 5,000Common stock60,00060,000Retained earnings74,00077,000Total liabilities and stockholders' equity$ 138,000$ 142,000 Assuming the company did not pay any dividends during the period, how much net income must be shown on the company's budgeted income statement?

3000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale and the remaining 60% in the following month. What amount of accounts receivable would the company report in its balance sheet at the end of the second month?

36,000

Assume the following budgeted information for a merchandising company: Budgeted sales (all on credit) for November, December, and January are $250,000, $220,000, and $200,000, respectively. Cash collections related to credit sales are expected to be 75% in the month of sale, 25% in the month following the sale. The cost of goods sold is 65% of sales. Each month's ending inventory equals 20% of next month's cost of goods sold. 40% of each month's merchandise purchases are paid in the current month and the remainder is paid in the following month. Monthly selling and administrative expenses that are paid in cash in the month incurred total $20,500. Monthly depreciation expense is $20,000. The budgeted net operating income for December would be:

36500

Assume a merchandising company's estimated sales for January, February, and March are $100,000, $120,000, and $110,000, respectively. Its cost of goods sold is always 40% of its sales. The company always maintains ending merchandise inventory equal to 10% of next month's cost of goods sold. What are the required merchandise purchases for January?

40800

Assume that a company provided the following information and assumptions from its master budget:Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month.Production budget: The ending finished goods inventory is always 25% of next month's unit sales.Direct labor budget: The direct labor-hours required per unit is 1.50 hours. The direct labor cost per hour is $18.What is the budgeted direct labor cost for July?

479250

Assume a merchandising company provides the following information from its master budget for the month of May: Cash collections from customers$ 115,000Cost of goods sold$ 80,000Cash paid for merchandise purchases$ 75,000Selling and administrative expenses$ 35,000Cash paid for selling and administrative expenses$ 28,000Accounts receivable, May 1st$ 15,000Accounts receivable, May 31st$ 20,000 If all of the company's sales are on account, what is the budgeted net operating income for May?

5000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale, 55% in the following month, and 5% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its cash budget for the second month?

51500

Assume that a company provided the following information and assumptions from its master budget:Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month.Production budget: The ending finished goods inventory is always 25% of next month's unit sales.Direct materials budget: Each unit of finished goods requires 3 pounds of raw material that cost $2.00 per pound. The ending raw materials inventory is always 30% of next month's production needs. 40% of raw material purchases are paid in the current and the remainder is paid in the following month.What is the budgeted accounts payable balance at the end of June?

68310

Assume a company's direct labor budget for July estimates 10,000 labor-hours to meet the month's production requirements. The variable manufacturing overhead rate used for budgeting purposes is $3.00 per direct labor-hour. The budgeted fixed manufacturing overhead for July is $60,000 including $8,000 of depreciation. What is the amount of budgeted cash disbursements for manufacturing overhead for July?

82000

A company's production budget indicates the following production requirements: October, 210,000 units; November 175,000 units, and December, 110,000 units. Each unit of finished goods requires 5 pounds of raw materials that cost $1.50 per pound. The company maintains raw materials inventory equal to 25% of the next month's production requirements. The company pays for 30% of its raw material purchases in the month of purchase. The remainder is paid the next month. The company's accounts payable balance at the end of November is closest to:`

833,438

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects cash sales of $30,000 and $40,000, respectively. It also expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale, 55% in the following month, and 5% is deemed uncollectible. What amount of cash collections would appear in the company's cash budget for the second month? Garrison 17e Rechecks 2020-07-14

91500

Which of the following equations is false with respect to the direct materials budget? Units of raw materials to be purchased × unit cost of raw materials = cost of raw material purchases Units of raw materials needed to meet production + desired units of ending raw materials inventory − units of beginning raw materials inventory = units of raw materials to be purchased Required production in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production Estimated sales in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production

Estimated sales in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production

Which of the following statements is false with respect to a budgeted income statement? Its net income should equal the net cash flows from the cash budget. Correct Its net income will impact the ending retained earnings balance shown on the balance sheet. Its interest expense flows from the financing section of the cash budget. Its selling and administrative expenses may include depreciation expense.

Its net income should equal the net cash flows from the cash budget.

Which of the following is not one of the sections within a cash budget? The financing section The investing sectionCorrect The cash receipts section The cash disbursements section

the investing section