accoubnt

The production budget is typically prepared prior to the sales budget.

f

Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period.

t

In the merchandise purchases budget, the required purchases (in units) for a period can be determined by subtracting the beginning merchandise inventory (in units) from the budgeted sales (in units) and desired ending merchandise inventory (in units).

t

The master budget consists of a number of separate but interdependent budgets.

t

The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory.

t

In a production budget, if the number of units in finished goods inventory at the end of the period is less than the number of units in finished goods inventory at the beginning of the period, then the expected number of units sold is less than the number of units to be produced during the period.

f

One disadvantage of budgeting is that budgeting makes it more difficult to coordinate the activities of the entire organization.

f

One of the weaknesses of budgets is that they are of little value in uncovering potential bottlenecks.

f

The BRS Corporation makes collections on sales according to the following schedule: 30% in month of sale 60% in month following sale 10% in second month following sale The following sales have been budgeted: Sales April $ 140,000 May $ 130,000 June $ 150,000 Budgeted cash collections in June would be: A) $137,000 B) $85,000 C) $45,000 D) $123,000

A (June sales collected in June ($150,000 × 30%) $ 45,000 May sales collected in June ($130,000 × 60%) $ 78,000 April sales collected in June ($140,000 × 10%) $ 14,000 Total cash collections in June $ 137,000)

Jeanclaude Corporation produces and sells one product. The budgeted selling price per unit is $105. Budgeted unit sales for July, August, September, and October are 7,400, 7,500, 13,800, and 15,300 units, respectively. All sales are on credit. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. The budgeted accounts receivable balance at the end of August is closest to: A) $525,000 B) $315,000 C) $472,500 D) $787,500

C (Explanation: The budgeted accounts receivable balance at the end of August is: August sales 7,500 units × $105 per unit (a) $ 787,500 Percent uncollected (b) 60 % Accounts receivable (a) × (b) $ 472,500)

43) The following information was taken from the production budget of Piwte Corporation for next quarter: Units to be produced Jan: 128,000 Feb: 140,000 Mar: 152,000 Desired ending inv. finished goods Jan: 30,000 Feb: 36,000 March: 38,000 How many units is the company expecting to sell in the month of February? A) 132,000 B) 138,000 C) 135,000 D) 134,000

D

Which of the following budgets are prepared before the sales budget? Budgeted Income Statement Direct Labor Budget A) Yes Yes B) Yes No C) No Yes D) No No

D

All of Gaylord Corporation's sales are on account. Thirty-five percent of the sales on account are collected in the month of sale, 45% in the month following sale, and the remainder are collected in the second month following sale. The following are budgeted sales data for the company: January 50k Feb 60k March 40k April 30k What is the amount of cash that should be collected in March? A) $24,000 B) $37,000 C) $41,000 D) $51,000

D (march sales collected in march: 40k * 35% = 14k, plus Feb sales collected in march: 60k * 45% = 27k, plus Jan sales collected in March: 50k * 20% = 10k)

The budgeted income statement is typically prepared before the budgeted balance sheet.

True

44) Fiwrt Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales Fiwrt (in units) for the next three months are as follows: Budgeted Unit Sales Oct: 30,000 Nov: 36,000 Dec: 34,000 Fiwrt likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales. How many mugs should Fiwrt plan on producing during the month of November? A) 35,400 mugs B) 26,800 mugs C) 36,000 mugs D) 34,300 mugs

a

Parwin Corporation plans to sell 23,000 units during August. If the company has 8,000 units on hand at the start of the month, and plans to have 9,000 units on hand at the end of the month, how many units must be produced during the month? A) 24,000 B) 22,000 C) 32,000 D) 31,000

a

When preparing a direct materials budget, the required purchases of raw materials in units equals: A) raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials. B) raw materials needed to meet the production schedule − desired ending inventory of raw materials − beginning inventory of raw materials. C) raw materials needed to meet the production schedule − desired ending inventory of raw materials + beginning inventory of raw materials. D) raw materials needed to meet the production schedule + desired ending inventory of raw materials + beginning inventory of raw materials.

a

Which of the following statements is NOT correct concerning the Cash Budget? A) It is not necessary to prepare any other budgets before preparing the Cash Budget. B) The Cash Budget should be prepared before the Budgeted Income Statement. C) The Cash Budget should be prepared before the Budgeted Balance Sheet. D) The Cash Budget builds on earlier budgets and schedules as well as additional data.

a

34) Sirignano Corporation produces and sells one product. The budgeted selling price per unit is $84. Budgeted unit sales for October, November, December, and January are 8,400, 12,000, 13,800, and 14,300 units, respectively. All sales are on credit with 40% collected in the month of the sale and 60% in the following month. The expected cash collections for November is closest to: A) $826,560 B) $705,600 C) $423,360 D) $403,200

a (October sales: 8,400 units × $84 per unit = $705,600; $705,600 × 60% = $423,360 November sales: 12,000 units × $84 per unit = $1,008,000; $1,008,000 × 40% = $403,200 Total cash collections $826,560)

40) Crocetti Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $121 Budgeted unit sales (all on credit): January 7,000 February 7,500 March 11,900 April 14,900 Credit sales are collected: 40% in the month of the sale 60% in the following month The budgeted accounts receivable balance at the end of February is closest to: A) $544,500 B) $907,500 C) $605,000 D) $363,000

a Explanation: The budgeted accounts receivable balance at the end of February is: February sales 7,500 units × $121 per unit (a) $ 907,500 Percent uncollected (b) 60 % Accounts receivable (a) × (b) $ 544,500

Frolic Corporation has budgeted sales and production over the next quarter as follows: Sales in Units July: 70,000 Aug: 83,000 Sept: ? Production in units July: 73,250 Aug: 84,750 Sept: 91,750 The company has 17,500 units of product on hand at July 1. 25% of the next month's sales in units should be on hand at the end of each month. October sales are expected to be 97,000 units. Budgeted sales for September would be (in units): A) 88,000 B) 90,000 C) 86,000 D) 84,000

b

Which of the following statements is NOT correct concerning the Manufacturing Overhead Budget? A) The Manufacturing Overhead Budget provides a schedule of all costs of production other than direct materials and labor costs. B) The Manufacturing Overhead Budget shows only the variable portion of manufacturing overhead. C) The Manufacturing Overhead Budget shows the expected cash disbursements for manufacturing overhead. D) The Manufacturing Overhead Budget is prepared after the Sales Budget.

b

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget? A) It details the required direct labor hours. B) It details the required raw materials purchases. C) It is calculated based on the sales budget and the desired ending inventory. D) It summarizes the costs of producing units for the budget period.

c

36) Budgeted sales in Acer Corporation over the next four months are given below: September 120k October 140k November 180k December 160k Thirty percent of the company's sales are for cash and 70% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 20% are collected in the second month following sale. Given these data, cash collections for December should be: A) $141,800 B) $100,500 C) $118,700 D) $161,400

d December cash sales ($160,000 × 30%) $ 48,000 December credit sales collected in December ($160,000 × 70% × 50%) 56,000 November credit sales collected in December ($180,000 × 70% × 30%) 37,800 October credit sales collected in December ($140,000 × 70% × 20%) 19,600 Total cash collections in December $ 161,400

The production budget is typically prepared before the direct materials budget.

t

The selling and administrative budget is typically prepared before the cash budget.

t