Accounting Chapter 20

The formula to determine the materials to be purchased is

(units to produce times materials required for each unit) plus desired ending materials inventory minus beginning materials inventory

A company has the following budget information: Sales: $118,800; COGS: $48,500; Depreciation expense: $1,500; Interest expense: $250; Other expenses: $41,880. If the company budgets 40% for income tax expense, the amount of budgeted income tax expense will be $.

10668

A manufacturing company has budgeted direct labor hours of 600 at a variable overhead rate per direct labor hour of $20. The budgeted fixed cost is $500 per month. The total budgeted overhead cost will be $_.

12500

A company expects to sell 400 units of Product X in January and expects sales to increase by 10% per month. If Product X sells for $10 each, the total sales for the first quarter of the year will be $.

13240

A manufacturing company has budgeted direct labor hours of 940 at a direct labor hour rate of $15. The budgeted fixed cost is $950 per month. The total budgeted overhead cost will be $_.

15050

A manufacturing company has budgeted direct labor hours of 940 at a direct labor hour rate of $15. The budgeted fixed cost is $950 per month. The total budgeted overhead cost will be $_.

15050.

A company has the following budget information: Sales: $118,800; COGS: $48,500; Depreciation expense: $1,500; Interest expense: $250; Other expenses: $41,880. If the company budgets 40% for income tax expense, the budgeted net income will be $.

16002

A manufacturing company's sales budget indicates the following sales: January: $30,000; February: $20,000; March: $15,000. The company expects 80% of the sales to be on account. Credit sales are collected 30% in the month of the sale and 70% in the month following the sale. The total cash receipts collected during March will be $.

17800

A manufacturing company has budgeted production of 5,000 units for May and 4,400 units in June. Each unit requires 3 pounds of materials at a cost of $10 per pound. On May 1, there are 2,750 pounds of materials on hand. The company desires an ending materials inventory of 60% of the next month's materials requirements. The total cost of direct materials purchases for May will be $.

201700

A company's sales budget indicates the following sales: January: 25,000; February: 30,000; March: 35,000. Beginning inventory is 12,000 units and the company desires ending inventory of 45% of the next month's sales. Units to be produced in January will be .

26500.

A manufacturing company's sales budget indicates the following sales: January: $25,000; February: $30,000; March: $35,000. The company expects 70% of the sales to be on account and the remainder to be cash sales. Credit sales are collected in the month following the sale. The total cash collected during March will be $.

31500

JP Service Company has budgeted direct labor hours of 100 and direct labor cost per hour of $25 for data analysis personnel and budgeted direct labor hours of 50 and direct labor cost per hour of $30 for staff accountants. JP Service Company's cost of direct labor is $_?

4000

A merchandising company's budget includes the following data for January: Sales: $400,000; COGS: $270,000; Administrative salaries: $1,250; Sales commissions: 5% of sales; Advertising: $10,000; Salary for sales manager: $30,000; Miscellaneous administrative expenses: $5,000. The total selling expenses on the January selling expense budget will be $.

60000.

A merchandising company's budget includes the following data for January: Sales: $400,000; COGS: $270,000; Administrative salaries: $1,250; Sales commissions: 5% of sales; Advertising: $10,000; Depreciation on store equipment: $25,000; Rent on administrative building: $30,000; Miscellaneous administrative expenses: $5,000. The total general and administrative expenses on the January general and administrative expense budget will be $.

61250.

A company budgets the following direct materials purchases: April: $70,000; May $90,000; June: $60,000. All purchases are on account and the company pays 25% of purchases in the month of the purchase, 50% in the month after the purchase, and the remaining balance in the second month after the purchase. Cash payments for June for direct materials is $.

77500

Match each figure on the budgeted balance sheet to the previously prepared budget from which the figure is derived.

Accounts receivable---Sales budget Income tax payable---Income statement budget Income tax payable---Income statement budget

To calculate the units to purchase in a merchandise purchases budget, the formula is:

Budgeted sales units plus Desired ending merchandise Inv units Minus Budgeted merchandise inv units

A company budgets the following direct materials purchases: April: $70,000; May $90,000; June: $60,000. All purchases are on account and the company pays 25% of purchases in the month of the purchase and the remaining amount in the following month. Cash payments for June for direct materials is $.

Cash disbursement for June will include:>25% of June's purchase = $ 60000 x 25% = $ 15000>75% of May's purchase = $ 90000 x 75% = $ 67500 Total Cash disbursement for June= $ 15000 + 67500= $ 82,500

Budgeted performance considers all of the following in relation to a benchmark: (Select all that apply).

Industry factors Economic factors Company factors

A manufacturing company would typically prepare all of the following budgets except:

Merchandise inventory budget

A merchandising company's sales budget indicates the following sales: January: $25,000; February: $30,000; March: $35,000. Sales personnel are paid a salary plus commission. Salaries are expected to be $5,000 per month and the commission is 10% of sales. Additionally, advertising is expected to be $600 per month. The total selling expenses for the quarter will be $.

Salaries for the quarter = $5,000*3 = $15,000 Commissions for the quarter = ($25,000 + $30,000 + $35,000) * 10% = $9,000 Advertising for the quarter = $600 * 3 = $1,800 The total selling expenses for the quarter = Salaries + Commissions + Advertising = $15,000 + $9,000 + $1,800 = $25,800

Which of the following items would be included on the capital expenditures budget? (Check all that apply.)

Sale of plant assets Plant asset purchases

List the individual budgets of the master budget in the order in which they are prepared, with the first on top.

Sales budget Production budget Various expense budget Capital expenditures budget Cash budget

A manufacturing company has units to produce of 940 units for the month. Each unit requires 3.5 hours of labor to produce. The cost of direct labor is $15 per hour. The total cost of direct labor for the month will be $.

The total cost of direct labor for the month will be: = 940 units × 3.5 × $15 = $49,350

Direct materials are $15 per unit; direct labor is $7 per unit and variable overhead costs are $2 per unit. If total product costs are $27, what are fixed costs per unit?

Total cost per unit = Direct Material cost per unit + Direct labor cost per unit + variable Overhead cost per unit + Fixed cost per unit 3$

If direct materials per unit are $20, direct labor per unit is $10, variable overhead per unit is $2, and fixed overhead per unit is $1, total product cost per unit is $

Total product cost per unit = Direct materials per unit + Direct labor per unit + Variable overhead per unit + Fixed overhead per unit = $20 + $10 + $2 + $1 = $33

True or false: Depreciation on non-manufacturing assets and property taxes are considered general and administrative expenses and, therefore, are included on the general and administrative expense budget.

True

A company expects to sell 500 units during the second quarter and 550 units in the third quarter. Currently, during the second quarter, they have 46 units in beginning inventory. If they desire ending inventory of 10% of the next quarter's sales, units will need to be produced in the second quarter.

Units to be produced in the second quarter = (550 x 10%) + 500 - 46 = 509 units

Most companies prepare a(n) ______ budget that is separated into ______ budgets

annual; quarterly or monthly

To is to use the control function to evaluate business operations against some norm.

benchmark or evaluate

A(n) is a formal statement of a company's plans in dollars

budget

A(n) is a formal statement of a company's plans in dollars.

budget

The budget which shows predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is the:

budgeted balance sheet

The formula to compute the budgeted direct labor cost for a service firm is:

budgeted direct labor hours times direct labor cost per hour

The formula to compute the units to purchase in a merchandise purchases budget is:

budgeted sales units plus desired ending merchandise inventory units minus beginning merchandise inventory units

All of the following are guidelines that should be followed for budgets to be a positive motivating force except:

budgets should be prepared using a top-down approach

The reporting of expected cash receipts and cash payments related to the sale and purchase of plant assets is reported on the expenditures budget.

capital

The primary purpose of using short-term budgets is to:

evaluate performance and take necessary corrective action

Budgeting guidelines that help insure budgeting is a positive motivating force include: (Check all that apply.)

participatory budgeting. attainable goals. the opportunity to explain differences between actual and budgeted amounts.

The first step in preparing the master budget is planning the budget.

sales

Characteristics of budgets include: (Check all that apply.)

typically cover a month, quarter or one year. expressed in dollars. formal statement of a company's plans.

The formula to compute the budgeted direct labor cost is

units to produce times direct labor required per unit times direct labor cost per hour