man acct ch 9
The starting point for creating the budget is ________.
actual or prior year budgeted data
The ________ merges the budgeted cash collections and cash payments to project the firm's ending cash position.
combined cash budget
Which of the following budgets reveal a manager's intent to invest in new property, plant, or equipment?
Capital expenditure budget
Which of the following is NOT an outcome of the combined cash budget?
Total liabilities and stockholders' equity
Which of the following represents the formula to compute the total units to produce in the production budget?
Units Needed for Sales + Desired Ending Inventory - Units in Beginning Inventory
Benchmarking ________.
may help a manager motivate employees and provide a measure to evaluate performance
The combined cash budget ________.
merges budgeted cash collections and cash payments to project the firm's ending cash position
Inventory kept on hand to account for increases in consumer demand or machine malfunction in case of emergency is ________.
safety stock
Expected Number of Unit Sales × Expected Sales Price per Unit = Expected Total Sales Revenue is the computation for ________.
sales revenue
A budget ________.
should force a manager to plan; promote coordination and communication; and provide a benchmark for motivating employees and evaluating actual performance.
Which of the following budgets is the comprehensive planning document for the entire organization?
Master budget
Strategic planning ________.
entails the planning and establishment of long-term goals which extend years into the future
A line of credit ________.
is a lending tool the company can use to draw money as needed at a specified rate of interest, for a specified amount of time, paying on the actual amount owed instead of a closed-end note
Which of the following is NOT a component of the operating budget of a service company?
Merchandise inventory
Which of the following is a benefit to a merchant who accepts credit and debit card transactions?
The acceptance of credit cards increases the speed of cash flows.
Which of the following is NOT a benefit to a merchant who accepts credit and debit card transactions?
The acceptance of credit cards slows the cash flows.
Customer World provides services to customers and allows customers to pay by credit card. On Thursday, a customer purchased a case of flash drives for $65 and used a credit card to pay. The credit card company charges Computer World a transaction fee equal to $0.25 + 2% of the total charge. What is the transaction fee Customer World must pay on this sale?
$1.55
The managerial accountant at Monumental Industries reported an upcoming sale of desks. Each desk requires .60 direct labor hours to produce. Monumental has a direct labor rate of $14 per direct labor hour to produce the product. The managerial accountant reported that the production budget indicates that the production schedule consists of 800 desks in January and 1,000 desks in February. What is the total direct labor budgeted cost together for January and February?
$15,120
The managerial accountant at Local Produce Services expects to collect 40% of its credit sales in the month after the sale and 60% two months after the sale. Assume credit sales in January were $200,000 and February sales were $100,000. January credit sales $200,000 February credit sales $100,000 What is the anticipated cash collection of credit sales for March?
$160,000
Speedy Runner makes running shoes and they are anticipating the incurrence of the following operating expenses during the upcoming year: Cost Sales commission $2 per pair of shoes sold Salaries $520,000 Shipping expenses $3.50 per pair of shoes sold Bad debt expense 1.5% of sales revenue Depreciation on sales vehicles $23,000 Advertising $20,000 Speedy Runner plans to sell 120,000 pairs of shoes at $100 per pair. What will Speedy Runner budget for cash disbursements related to operating expenses?
$1,200,000
Hewitt Company expects cash sales for July of $11,000, and a 19% monthly increase during August and September. Credit sales of $14,000 in July should be followed by 28% increases during August and September. What are budgeted cash sales and budgeted credit sales for September respectively?
$15,577 and $22,938
The following information pertains to sales of XYZ Company: Collections of sales are generally 20% in cash and 80% in credit. This means in the month of the sale 20% is paid in cash to XYZ and XYZ extends credit for the remaining 80% of the sales. The credits sales are collected as follows: * 30% in the month of the sale, * 60% in the month after the sale, * 6% two months after the sale, * 4% are never collected If the January sales are $15,500, what are the collections of credit sales in the month of January?
$3,720
Speedy Runner makes running shoes and they have gathered the following data for the month of October: Data Cash on 10/1 $15,300 Expected Cash Collections $435,000 Direct Materials Cash Disbursements $80,000 Direct Labor Cash Disbursements $32,000 MOH Cash Disbursements $25,000 Operating Expenses Cash Disbursements $110,000 Capital Expenditures Cash Disbursements $200,000 Speedy Runner requires an ending cash balance of at least $12,000 and can borrow from a line of credit in $1,000 increments. How much will Speedy Runner need to borrow at the end of October?
$9,000
Daisy Company manufactures dog collars. The following selected data relates to Daisy Company's budgeted sales and inventory levels of the dog collars for the upcoming quarter: October expected unit sales 2,400 November expected unit sales 2,300 December expected unit sales 3,000 October desired ending unit finished goods inventory 880 November desired ending unit finished goods inventory 720 December desired ending unit finished goods inventory 600 How many dog collars should Daisy Company produce in November?
2,140
The Paper Mill expects to sell 6,000 reams of paper in October and 8,000 in November for $6 each. What is the total sales revenue for the sales budget during October and November?
$36,000 October; $48,000 November
The Paper Mill expects to sell 9,000 reams of paper in November and 12,000 in December for $5 each. What is the total sales revenue for the sales budget during October and November?
$45,000 November; $60,000 December
Monumental Industries manufactures desks. Each desk requires .30 direct labor hours to produce. Monumental has a direct labor rate of $12 per direct labor hour. The managerial accountant reported that the production budget indicates that the production schedule consists of 800 desks in September and 900 desks in October. What is the total direct labor budgeted cost together for September and October?
$6,120
Customer World provides products and services to customers and allows customers to pay by credit card. On Thursday, a customer purchased a computer for $600 and used a credit card to pay. The credit card company charges Computer World a transaction fee equal to $0.20 + 1% of the total charge. What is the transaction fee Customer World must pay on this sale?
$6.20
The managerial accountant at Hill's Development Services expects to collect 30% of its credit sales in the month after the sale and 40% two months after the sale. Assume credit sales in December were $100,000 and November sales were $90,000. November credit sales $90,000 December credit sales $100,000 What is the anticipated cash collection of credit sales for January?
$66,000
Customer World expects credit card companies to deposit funds in their business account for their sales where a customer uses a credit card to pay. If Customer World earned $80 from a sale and the transaction fee was $1.50, how much should Customer World expect the credit card company to deposit into their business account?
$78.50
Customer World expects the credit card company to deposit funds in their business account for their sales where a customer uses a credit card to pay. If Customer World earned $90 from a sale and the transaction fee was $1.25, how much should Customer World expect the credit card company to deposit into their business account?
$88.75
Speedy Runner makes running shoes and they are anticipating the incurrence of the following manufacturing overhead costs during the upcoming year: Cost Indirect materials $ 6 comma 000$6,000 Indirect Labor $ 76 comma 000$76,000 Utilities $ 42 comma 000$42,000 Insurance $ 14 comma 500$14,500 Taxes $ 9 comma 400$9,400 Depreciation on equipment $ 20 comma 000$20,000 What will Speedy Runner budget for cash disbursements related to manufacturing overhead?
147,900
Terrific Toys Company manufactures and sells children's skateboards. Each skateboard requires four bearings. For September, Terrific Toys Company has budgeted skateboard sales of 540 skateboards, while 600 skateboards are scheduled to be produced. Terrific Toys Company will begin September with 200 bearings in its beginning inventory, and estimates ending inventory for September to be 440 bearings. How many bearings should Terrific Toys Company purchase in September?
2,640
The Porch Cushion Company manufactures foam cushions. The number of cushions to be produced in the upcoming three months follows: Number of foam cushions to be produced in July 13,000 Number of foam cushions to be produced in August 19,000 Number of foam cushions to be produced in September 12,000 Each cushion requires 2 pounds of the foam used as stuffing. The company has a policy that the ending inventory of foam each month must be equal to 30% of the following month's expected production needs. How many pounds of foam does The Porch Cushion Company need to purchase in August?
33,800
Which of the following is NOT a positive attribute of budgeting?
A budget should never force a manager to plan; promote coordination and communication; or provide a benchmark for motivating employees and evaluating actual performance.
Which of the following answers describes the benefits of the financial budget?
A manager who uses this budget can compile the capital expenditure budget, the cash budget, and the budgeted balance sheet.
Which of the following is NOT true about credit card sales and budgets?
A sale is shown on the operating expense budget, two months after the sale.
Which of the following is TRUE about credit card sales and budgets?
A sale is shown on the sales budget, in the same month as the sale.
Which of the following is a benefit of budgeting which helps a manager motivate employees and evaluate performance?
Benchmarking
Which of the following is NOT a component of the direct labor budget?
Cost of goods sold
Which of the following are noncash expenses that will always result in differences between the budgeted operating expenses for a given period and the budgeted cash payments for the same period?
Depreciation expense and bad debt expense
The computation for sales revenue is ________.
Expected Number of Unit Sales × Expected Sales Price per Unit
For a Production budget and a Direct Materials budget, if a beginning inventory number is not given in the exercise, how can be determined?
It will be the ending inventory of the previous month
What is the starting point when developing the Direct Materials budget?
Production budget
What is the starting point when developing the Master Budget?
Sales budget
________ entails the planning and establishment of long-term goals which range years into the future.
Strategic planning
Which of the following is important to a manager at a merchandising company when preparing the master budget?
The length of time between sales and deposits
Which of the following is TRUE about a service company?
The operating budget of a service company has no merchandising inventory.
Which of the following is NOT important to a manager at a merchandising company when preparing the master budget?
The production budget
Which of the following is true for merchants that accept payments made by Visa, MasterCard, and other forms of "plastic"?
Transaction fees should be budgeted for in the operating expenses budget.
A merchandising company uses a master budget which includes a ________.
cost of goods sold
A merchandising company uses a master budget which includes all of the following EXCEPT a(n) ________.
direct labor budget
Safety stock is ________.
inventory kept on hand to account for increases in consumer demand
The master budget ________.
is the comprehensive planning document for the entire organization
A ________ is a lending tool the company can use to draw money as needed at a specified rate of interest, for a specified amount of time, paying on the actual amount owed instead of a closed-end note.
line of credit
The characteristics of a third-party credit card include each of the following EXCEPT ________.
there are no third-party transaction fees
The characteristics of a retail credit card include each of the following EXCEPT ________.
the card issuer assumes the credit risk
Actual or prior year budgeted data is ________.
the starting point for creating the budget
Units Needed for Sales + Desired Ending Inventory - Units in Beginning Inventory is the formula to compute ________.
units to produce
