ACC 602 CH. 23 SMARTBOOK

Which of the budgeted financial statements is generally prepared last?

budgeted balance sheet

A cash budget must be prepared prior to the preparation of

budgeted balance sheets.

Which of the following budgets are typically considered financial budgets?

budgeted income statements budgeted balance sheets

Which of the following manufacturing cost estimates are necessary to prepare a production budget?

direct labor costs variable manufacturing overhead direct material costs fixed manufacturing overhead

The total quality management approach to budgeting is to set budgetary amounts at levels that represent absolute .

efficiency

Filmont Manufacturing desires inventory of 15,000 tires at the end of the upcoming quarter. Its beginning inventory is 6,000 units, and its budgeted production is 59,000 units. The company's budgeted sales for the upcoming quarter are units.

Blank 1: 50,000

Smith Corporation's budgeted production for the upcoming quarter is 60,000 units. Each unit produced is expected to require 1.25 direct labor hours, and its variable overhead application rate is $10 per direct labor hour. At this budgeted level of output, the company's average fixed manufacturing overhead cost is $5 per unit. The company's total budgeted overhead for the upcoming quarter is $.

Blank 1: 1,050,000 or 1050000

Conway Corporation's budgeted sales for the upcoming quarter are 75,000 units. The company desires 15,000 units of inventory at the end of the upcoming quarter, and its beginning inventory is 10,000 units. Each unit that the company produces requires 0.5 direct labor hours at an average rate of $30 per hour. The company's direct labor budget for the upcoming quarter is $.

Blank 1: 1,200,000

A company has $30,000 of debt outstanding. In the upcoming quarter, it budgets a total debt service cost associated with this obligation of $2,100. The annual interest percentage rate on this debt is 8%. Of the company's total debt service budget, the amount allocated to debt principal payments is $.

Blank 1: 1,500

A company has $400,000 of debt outstanding. In the upcoming quarter, it budgets a total debt service cost associated with this obligation of $25,000. Of this amount, $15,000 applies to principal payments. The annual percentage rate associated with interest on this obligation is %.

Blank 1: 10

A company's beginning income tax liability is $40,000. For the upcoming quarter, income before taxes is budgeted at $300,000, and tax payments are budgeted at $150,000. If the company's average tax rate is 40%, its budgeted ending tax liability is $.

Blank 1: 10,000

Baxter Corporation made the following budget cost estimates for the upcoming month: Direct Labor = $30 per unit Direct Materials = $50 per unit Variable Manufacturing Overhead = $20 per unit Variable Selling and Administrative Costs = $15 per unit Fixed Manufacturing Overhead = $300,000 per month Fixed Selling and Administrative Costs = $450,000 1. The variable costs necessary to prepare a production budget total $ per unit. 2. The fixed costs necessary to prepare a production budget total $ per month.

Blank 1: 100 Blank 2: 300,000

Scott Corporation's production budget for the upcoming quarter reveals total manufacturing costs of $700,000 (an average manufacturing cost of $25 per unit). The company's beginning finished goods inventory is $6,000, and its budgeted ending finished goods inventory is 500 units. 1. The company's budgeted ending finished goods inventory for the upcoming quarter is $. 2. The company's budgeted cost of goods sold for the upcoming quarter is $.

Blank 1: 12,500 Blank 2: 693,500

Guthrie Corporation's budgeted sales for the upcoming quarter are 90,000 units. The company desires 18,000 units of inventory at the end of the upcoming quarter, and its beginning inventory is 8,000 units. Each unit that the company produces requires 0.1 direct labor hours at an average rate of $15 per hour. The company's direct labor budget for the upcoming quarter is $.

Blank 1: 150,000

Hamline Corporation uses a flexible budgeting process. Its budgeted variable manufacturing costs for direct labor, direct materials, and variable overhead total $60 per unit, and its fixed manufacturing overhead costs are budgeted at $50,000 per month. At its normal level of budgeted production of 2,000 units per month, its budgeted manufacturing costs total $170,000 ((2,000 units × $60 per unit) + $50,000). In the most recent month, the company produced 1,800 units at a total manufacturing cost of $165,000. 1. The company's budgeted total monthly cost to produce 1,800 units is $. 2. In the current month, the company was over budget by $.

Blank 1: 158,000 Blank 2: 7,000

Hart Corporation's production budget for the upcoming quarter reveals total manufacturing costs of $900,000 (an average manufacturing cost of $10 per unit). The company's beginning finished goods inventory is $300,000, and its budgeted ending finished goods inventory is 18,000 units. 1. The company's budgeted ending finished goods inventory for the upcoming quarter is $. 2. The company's budgeted cost of goods sold for the upcoming quarter is $.

Blank 1: 180,000 or 180000 Blank 2: 1,020,000 or 1020000

Welsh Corporation uses a flexible budgeting process. Its budgeted variable manufacturing costs for direct labor, direct materials, and variable overhead total $37 per unit, and its fixed manufacturing overhead costs are budgeted at $5,000 per month. At its normal level of budgeted production of 300 units per month, its budgeted manufacturing costs total $16,100 ((300 units × $37 per unit) + $5,000). In the most recent month, the company produced 400 units at a total manufacturing cost of $19,850. 1. The company's budgeted total monthly cost to produce 400 units is $. 2. In the current month, the company was over budget by $.

Blank 1: 19,800 Blank 2: 50

Batalden Corporation's budgeted production for the upcoming quarter is 75,000 units. Each unit produced is expected to require 0.1 machine-hours, and its variable overhead application rate is $6 per machine-hour. At this budgeted level of output, the company's average fixed manufacturing overhead cost is $2 per unit. The company's total budgeted overhead for the upcoming quarter is $.

Blank 1: 195,000

Dirk Manufacturing budgets that it will sell 70,000 hitches in the upcoming quarter. The company's beginning inventory is 25,000 units, and its budgeted production is 65,000 units. The company's budgeted ending inventory is units.

Blank 1: 20,000

A company's accounts receivable balance at the beginning of the current year is $100,000. The company's sales budgets for the upcoming first and second quarters report credit sales of $500,000 and $700,000, respectively. Budgeted collections on account in the first and second quarter are estimated at $450,000 and $650,000, respectively. The company's budgeted accounts receivable balance at the end of the second quarter is $.

Blank 1: 200,000

Brainard Corporation's budgeted sales for the upcoming quarter are $400,000. Its supporting budgets and schedules show a beginning finished goods inventory of $15,000, budgeted cost of goods manufactured of $185,000, and a projected ending finished goods inventory of $25,000. Its selling and administrative budget projects expenses of $148,000, its budgeted interest expense is $7,000, and its tax rate averages 40%. 1. The company's budgeted gross profit for the upcoming quarter is $. 2. The company's budgeted income before taxes for the upcoming quarter is $. 3. The company's budgeted income taxes for the upcoming quarter are $. 4. The company's budgeted net income for the upcoming quarter is $.

Blank 1: 225,000 Blank 2: 70,000 Blank 3: 28,000 Blank 4: 42,000

Cooley Corporation's production budget for the upcoming quarter reveals total manufacturing costs of $500,000 (an average manufacturing cost of $50 per unit). The company's beginning finished goods inventory is $60,000, and its budgeted ending finished goods inventory is 1,000 units. 1. The company's budgeted ending finished goods inventory for the upcoming quarter is $. 2. The company's budgeted cost of goods sold for the upcoming quarter is $.

Blank 1: 50,000 Blank 2: 510,000

Holland Corporation's budgeted sales for the upcoming quarter are $500,000. Its supporting budgets and schedules show a beginning finished goods inventory of $20,000, budgeted cost of goods manufactured of $250,000, and a projected ending finished goods inventory of $30,000. Its selling and administrative budget projects expenses of $170,000, its budgeted interest expense is $5,000, and its tax rate averages 40%. 1. The company's budgeted gross profit for the upcoming quarter is $. 2. The company's budgeted income before taxes for the upcoming quarter is $. 3. The company's budgeted income taxes for the upcoming quarter are $. 4. The company's budgeted net income for the upcoming quarter is $.

Blank 1: 260,000 Blank 2: 85,000 Blank 3: 34,000 Blank 4: 51,000

Anthony Manufacturing budgets that it will sell 22,000 bikes in the upcoming quarter. The company desires an ending inventory of 8,000 units and has a beginning inventory of 2,000 units. The company's budgeted production is units.

Blank 1: 28,000

Hinkley Manufacturing budgets that it will sell 40,000 gliders in the upcoming quarter. The company desires an ending inventory of 5,000 units, and its budgeted production is 42,000 units. The company's beginning inventory is units.

Blank 1: 3,000

Eskola Corporation's budgeted production for the upcoming quarter is 40,000 units. Each unit requires 6 gallons of material costing $15 per gallon. The company's beginning materials inventory is 14,000 gallons, and it desires 12,000 gallons of material at the end of the upcoming quarter. The company's budgeted cost of material purchases is $.

Blank 1: 3,570,000

Hawkins Corporation uses a flexible budgeting process. Its budgeted variable manufacturing costs for direct labor, direct materials, and variable overhead total $50 per unit, and its fixed manufacturing overhead costs are budgeted at $10,000 per month. At its normal level of budgeted production of 500 units per month, its budgeted manufacturing costs total $35,000 ((500 units × $50 per unit) + $10,000). In the most recent month, the company produced 400 units at a total manufacturing cost of $29,000. 1. The company's budgeted total monthly cost to produce 400 units is $. 2. In the current month, the company was under budget by $.

Blank 1: 30,000 Blank 2: 1,000

A company's accounts receivable balance at the beginning of the current year is $400,000. The company's sales budgets for the upcoming first and second quarters report credit sales of $800,000 and $900,000, respectively. Budgeted collections on account in the first and second quarter are estimated at $850,000 and $950,000, respectively. The company's budgeted accounts receivable balance at the end of the second quarter is $.

Blank 1: 300,000

Shaub Corporation made the following budget cost estimates for the upcoming month: Direct Labor = $10 per unit Direct Materials = $20 per unit Variable Manufacturing Overhead = $5 per unit Variable Selling and Administrative Costs = $12 per unit Fixed Manufacturing Overhead = $100,000 per month Fixed Selling and Administrative Costs = $250,000 1. The variable costs necessary to prepare a production budget total $ per unit. 2. The fixed costs necessary to prepare a production budget total $ per month.

Blank 1: 35 Blank 2: 100,000

Grenfell Corporation's current payables total $80,000. Its manufacturing cost projections for material, labor, and overhead for the upcoming quarter total $250,000, and its selling and administrative costs are budgeted at $100,000. Of its total cost and expense projections, $20,000 pertain to depreciation, and $10,000 pertain to prepayments converting into expenses. After careful analysis, the company estimates that payables outstanding at the end of the upcoming quarter will total $50,000. The company's budgeted cash payments on current payables in the upcoming quarter total $.

Blank 1: 350,000

Becker Corporation's budgeted production for the upcoming quarter is 60,000 units. Each unit requires 3 gallons of material costing $2 per gallon. The company's beginning materials inventory is 4,000 gallons, and it desires 9,000 gallons of material at the end of the upcoming quarter. The company's budgeted cost of material purchases is $.

Blank 1: 370,000

Ferguson Corporation's budgeted sales for the upcoming quarter are $900,000. Its supporting budgets and schedules show a beginning finished goods inventory of $60,000, budgeted cost of goods manufactured of $480,000, and a projected ending finished goods inventory of $40,000. Its selling and administrative budget projects expenses of $250,000, its budgeted interest expense is $10,000, and its tax rate averages 40%. 1. The company's budgeted gross profit for the upcoming quarter is $. 2. The company's budgeted income before taxes for the upcoming quarter is $. 3. The company's budgeted income taxes for the upcoming quarter are $. 4. The company's budgeted net income for the upcoming quarter is $.

Blank 1: 400,000 Blank 2: 140,000 Blank 3: 56,000 Blank 4: 84,000

Lybeck Corporation's budgeted production for the upcoming quarter is 90,000 units. Each unit produced is expected to require 0.5 direct labor hours, and its variable overhead application rate is $4 per direct labor hour. At this budgeted level of output, the company's average fixed manufacturing overhead cost is $3 per unit. The company's total budgeted overhead for the upcoming quarter is $.

Blank 1: 450,000

Nevis Corporation's current payables total $60,000. Its manufacturing cost projections for material, labor, and overhead for the upcoming quarter total $300,000, and its selling and administrative costs are budgeted at $190,000. Of its total cost and expense projections, $15,000 pertain to depreciation, and $5,000 pertain to prepayments converting into expenses. After careful analysis, the company estimates that payables outstanding at the end of the upcoming quarter will total $70,000. The company's budgeted cash payments on current payables in the upcoming quarter total $.

Blank 1: 460,000

Mennaga Corporation's current payables total $100,000. Its manufacturing cost projections for material, labor, and overhead for the upcoming quarter total $500,000, and its selling and administrative costs are budgeted at $200,000. Of its total cost and expense projections, $150,000 pertain to depreciation, and $20,000 pertain to prepayments converting into expenses. After careful analysis, the company estimates that payables outstanding at the end of the upcoming quarter will total $130,000. The company's budgeted cash payments on current payables in the upcoming quarter total $.

Blank 1: 500,000

Benfer Corporation's budgeted sales for the upcoming quarter are $800,000. Its supporting budgets and schedules show a beginning finished goods inventory of $30,000, budgeted cost of goods manufactured of $310,000, and a projected ending finished goods inventory of $50,000. Its selling and administrative budget projects expenses of $320,000, its budgeted interest expense is $15,000, and its tax rate averages 40%. 1. The company's budgeted gross profit for the upcoming quarter is $. 2. The company's budgeted income before taxes for the upcoming quarter is $. 3. The company's budgeted income taxes for the upcoming quarter are $. 4. The company's budgeted net income for the upcoming quarter is $.

Blank 1: 510,000 Blank 2: 175,000 Blank 3: 70,000 Blank 4: 105,000

Swift Corporation's budgeted sales for the upcoming quarter are 100,000 units. The company desires 5,000 units of inventory at the end of the upcoming quarter, and its beginning inventory is 10,000 units. Each unit that the company produces requires 0.25 direct labor hours at an average rate of $24 per hour. The company's direct labor budget for the upcoming quarter is $.

Blank 1: 570,000

Hunt Corporation's budgeted production for the upcoming quarter is 25,000 units. Each unit requires 4 pounds of material costing $6 per pound. The company's beginning materials inventory is 3,000 pounds, and it desires 8,000 pounds of material at the end of the upcoming quarter. The company's budgeted cost of material purchases is $.

Blank 1: 630,000

Sebeka Corporation's current payables total $200,000. Its manufacturing cost projections for material, labor, and overhead for the upcoming quarter total $700,000, and its selling and administrative costs are budgeted at $300,000. Of its total cost and expense projections, $175,000 pertain to depreciation, and $30,000 pertain to prepayments converting into expenses. After careful analysis, the company estimates that payables outstanding at the end of the upcoming quarter will total $145,000. The company's budgeted cash payments on current payables in the upcoming quarter total $.

Blank 1: 850,000

Different types of budgets cover different time periods. For instance, budgets may cover a decade or more, whereas budgets generally cover a fiscal year or less.

Blank 1: capital Blank 2: expenditures Blank 3: operating

A company's beginning income tax liability plus its budgeted income tax minus its budgeted income tax for the period equals its budgeted ending income tax liability.

Blank 1: expense Blank 2: payments

A is one that can be adjusted easily to show budgeted revenue, costs, and cash flow at different levels of activity.

Blank 1: flexible Blank 2: budget

The master budgeting process helped NTI to better understand why it was profit rich, yet cash poor. In particular, the process gave the company advanced warning that excessive cash was being tied up in and .

Blank 1: inventories or inventory Blank 2: receivables

An operating cycle reflects the amount of time that cash is tied up in and accounts before converting back to cash.

Blank 1: inventory or inventories Blank 2: receivable

For a manufacturing company, a(n) is the average time period between the purchase of raw materials and the conversion of those materials into cash.

Blank 1: operating Blank 2: cycle

A debt service budget reports anticipated payments of debt plus accrued .

Blank 1: principal Blank 2: interest

An advantage of the budget approach is that it stabilizes the planning horizon at a full-year ahead. Under the year or calendar year approaches, the planning period shortens as the year progresses.

Blank 1: rolling Blank 2: fiscal

The master budgeting process helped NTI to coordinate the activities of its production department to better meet the needs of its department. It also helped the company's department better coordinate material acquisitions activities with the demands of the production department.

Blank 1: sales Blank 2: purchasing

Which of the following statements is/are true about budgets?

Budgeting is an essential step in financial planning. Budgets are formal written plans for achieving financial goals. Budgets play an important role in controlling costs.

Which of the following statements about budgeted income taxes is/are true?

If an ending tax liability exceeds the beginning liability, tax expenses during the period exceeded tax payments. If a beginning tax liability exceeds the ending liability, tax payments during the period exceeded tax expenses.

Which of the following statements is/are true regarding the behavioral approach of establishing budgetary amounts?

Managers will be motivated to perform if they view the budget as a fair basis for evaluating a responsibility center's performance. Budgetary amounts should be set at reasonably achievable levels.

Which of the following are benefits of the budgeting process?

Objective measures of performance evaluation. Unambiguous assignments of decision-making responsibilities. Effective coordination among departments and other operating units. Enhanced management awareness of the external economic environment.

Which of the following statements is/are true regarding the selection and implementation of a budgeting approach?

The budgeting approach should reflect the goals and philosophies of top management. Managers should understand both the intent and the purpose of the budgeting process. Managers should participate actively in the budgeting process.

A flexible budget is useful when levels of activity differ substantially from budgeted levels.

actual

NTI will likely use the master budgeting process for evaluating management performance by comparing budgeted amounts to performance.

actual

True or false: A selling and administrative expense budget report only fixed selling and administrative costs.

false

True or false: Cash budget estimates are identical to operating budget estimates.

false

True or false: The preparation of a cash flow forecast is generally the first step taken in the master budgeting process.

false

True or false: Unlike large organizations, very small businesses rarely benefit from preparing formal written plans for their future operations.

false

Elements of a master budget that are shared with external parties, such as investors and creditors, are commonly referred to as budgets.

financial

The budgeting process is often referred to as financial because of its forward-looking focus.

forecasting

Surprisingly, being profit rich, yet cash poor often stems from rapid .

growth

The basic premise of the total quality management approach to budgeting is that organizations should strive for constant .

improvement

A company that is profit rich, yet cash poor can experience

liquidity measures that fall short of industry averages negative operating cash flow. profitability measures that exceed industry averages.

Which of the following are considered elements of a selling and administrative expense budget?

marketing budget administrative expense budget research and development budget

The budget consists of a number of related budgets that collectively summarize all of the planned activities of an organization.

master

Elements of a master budget that are internal working budgets used primarily by managers, such as sales budgets and production budgets, are commonly referred to as budgets.

operating

Budgets provide a yardstick by which management's can be measured and evaluated.

performance

Being profit rich, yet cash poor is often attributed to

rapid growth

Elements of a master budget that are organized by responsibility center are generally referred to as budgets.

responsibility

Most organizations use a(n) budget approach, whereby a new quarter or month is added to the end of the budget as the current quarter or month draws to a close.

rolling

Which of the following budgets are typically considered operating budgets?

sales budgets selling and administrative expense budgets production budgets

Which of the following costs are considered fixed selling and administrative expenses?

sales salaries insurance costs on delivery vehicles

Which of the following costs and expenses are NOT financed with payables in the current period?

the expiration of prepayments depreciation expense

Amounts included in the Prepayments for Insurance and Depreciation do not call for future __ of cash.

true

True or false: The selling and administrative expense budget is indirectly reflected in the budgeted balance sheet through the following accounts: Cash, Retained Earnings, Prepayments, and Other Current Payables.

true