Chapter 9 Dynamic Module

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

Which of the following is a benefit of budgeting which helps a manager motivate employees and evaluate performance?

Benchmarking

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 a component of the combined cash budget?

Depreciation as a cash expense

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

Customer World provides 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 qual to $0.20 + 1% of the total charge. What is the transaction fee Customer World must pay on this scale?

$6.20

Capital expenditure budgets

Reveal a manager's intent to invest in new property, plant, or equipment

The starting point for creating the budget is ________.

actual or prior year budgeted data

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

A merchandising company uses a master budget which includes all of the following EXCEPT a(n) ________.

direct labor budget

The computation for sales revenue is

Expected Number of Unit Sales x Expected Sales Price per Unit

Which of the following budgets is the comprehensive planning document for the entire organization?

Master budget

Benchmarking

May help a manager motivate employees and provide a measure to evaluate performance

Which of the following is NOT a component of the operating budget of a service company?

Merchandise Inventory

Inventory kept on hand to account for increases in consumer demand or machine malfunction in case of emergency is ________.

Safety stock

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

The characteristics of a retail credit card include each of the following EXCEPT

The card issuer assumes the credit risk

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 NOT an outcome of the combined cash budget?

Total liabilities and stockholders' equity

A merchandising company uses a master budget which includes a ________.

cost of goods sold

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

Strategic planning ________.

entails the planning and establishment of long-term goals which extend years into the future

Safety stock is ________.

inventory kept on hand to account for increases in consumer demand

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

The master budget ________.

is the comprehensive planning document for the entire organization

The combined cash budget ________.

merges budgeted cash collections and cash payments to project the firm's ending cash position

Expected Number of Unit Sales × Expected Sales Price per Unit = Expected Total Sales Revenue is the computation for ________.

sales revenue

Actual or prior year budgeted data is ________.

the starting point for creating the budget

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.

A budget

Should force a manager to plan, promote coordination, and provide a benchmark for motivation employees and evaluation actual performance

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

Capital expenditure budgets ________.

reveal a manager's intent to invest in new property, plant, or equipment

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

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 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

Which of the following is NOT a positive attribute of budgeting?

A budget should never force a manager to plan, promote coordination, communication, and provide a benchmark for motivation employees and evaluation 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.

The formula to compute the direct labor budget is ________.

Units to be Produced x Direct Labor per Unit x Direct Labor Cost per Hour = Total Direct Labor Cost

United Needed for Sales + Desired Ending Inventory - Units in Beginning Inventory is the formula to compute

Units to produce