BUA 202 Chapter 8 Review

The WRT Corporation makes collections on sales according to the following schedule: 25% in month of sale 65% in month following sale 5% in second month following sale 5% uncollectible Budgeted cash collections in June would be: A. $27,500 B. $98,500 C. $71,000 D. $115,500

B. $98,500

Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales at Fab (in units) for the next three months are as follows: Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales. How many mugs should Fab plan on producing during the month of November? A. 23,200 mugs B. 26,800 mugs C. 25,900 mugs D. 34,300 mugs

B. 26,800 mugs

Harrti Corporation has budgeted for the following sales: Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown? A. $680,000 B. $612,000 C. $826,500 D. $214,500

C. $826,500

The following are budgeted data: Two pounds of material are required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. Purchases of raw materials for May should be: A. 39,200 pounds B. 52,000 pounds C. 36,800 pounds D. 38,000 pounds

C. 36,800 pounds

Frodic Corporation has budgeted sales and production over the next quarter as follows: The company has 4,000 units of product on hand at July 1. 10% of the next month's sales in units should be on hand at the end of each month. October sales are expected to be 71,500 units. Budgeted sales for September would be (in units): A. 65,000 B. 61,000 C. 55,000 D. 57,000

C. 55,000

Which of the following budgets are prepared before the production budget? A) Yes, Yes B) Yes, No C) No, Yes D) No, No A. Option A B. Option B C. Option C D. Option D

C. Option C

Which of the following is NOT an objective of the budgeting process? A. To communicate management's plans throughout the entire organization. B. To provide a means of allocating resources to those parts of the organization where they can be used most effectively. C. To uncover potential bottlenecks before they occur. D. To ensure that the company continues to grow.

D. To ensure that the company continues to grow.

Trumbull Corporation budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Experience indicates that none of the sales on account will be collected in the month of the sale, 60% will be collected the month after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September would be: A. $169,800 B. $147,960 C. $197,880 D. $194,760

A. $169,800

The Khaki Corporation has the following budgeted sales data: The regular pattern of collection of credit sales is 40% in the month of sale, 50% in the month following sale, and the remainder in the second month following the month of sale. There are no bad debts. The budgeted accounts receivable balance on February 28 would be: A. $250,000 B. $210,000 C. $175,000 D. $215,000

A. $250,000

Morie Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.75 direct labor-hours. The direct labor rate is $8.10 per direct labor-hour. The production budget calls for producing 2,000 units in March and 2,300 units in April. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 1,760 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months? A. $28,512.00 B. $26,406.00 C. $28,228.50 D. $26,122.50

A. $28,512.00

The budget method that maintains a constant twelve-month planning horizon by adding a new month on the end as the current month is completed is called: A. a continuous budget. B. a capital budget. C. an operating budget. D. a master budget.

A. a continuous budget.

The manufacturing overhead budget at Amrein Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 4,900 direct labor-hours will be required in August. The variable overhead rate is $9.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $96,040 per month, which includes depreciation of $7,350. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. $88,690 B. $134,750 C. $46,060 D. $142,100

B. $134,750

JT Department Store expects to generate the following sales for the next three months: JT's cost of gods sold is 60% of sales dollars. At the end of each month, JT wants a merchandise inventory balance equal to 20% of the following month's expected cost of goods sold. What dollar amount of merchandise inventory should JT plan to purchase in August? A. $257,400 B. $352,800 C. $314,600 D. $327,800

B. $352,800

When preparing a production budget, the required production equals: A. budgeted sales + beginning inventory + desired ending inventory. B. budgeted sales - beginning inventory + desired ending inventory. C. budgeted sales - beginning inventory - desired ending inventory. D. budgeted sales + beginning inventory - desired ending inventory.

B. budgeted sales - beginning inventory + desired ending inventory.

Budgeted sales in Acer Corporation over the next four months are given below: Twenty-five percent of the company's sales are for cash and 75% 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 15% are collected in the second month following sale. The remainder accounts receivables are uncollectible. Given these data, cash collections for December should be: A. $103,875 B. $98,125 C. $136,375 D. $119,500

C. $136,375

Milano Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.50 direct labor-hours. The direct labor rate is $9.80 per direct labor-hour. The production budget calls for producing 6,400 units in October and 6,300 units in November. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months? A. $30,870 B. $31,360 C. $62,230 D. $31,115

C. $62,230

Which of the following might be included as a disbursement on a cash budget? A) Yes, Yes B) Yes, No C) No, Yes D) No, No A. Option A B. Option B C. Option C D. Option D

C. Option C

All the following are considered to be benefits of participative budgeting, except for: A. Individuals at all organizational levels are recognized as being part of a team; this results in greater support for the organization. B. The budget estimates are prepared by those in directly involved in activities. C. When managers set their own targets for the budget, top management need not be concerned with the overall profitability of operations. D. Managers are held responsible for reaching their goals and cannot easily shift responsibility by blaming unrealistic goals set by others.

C. When managers set their own targets for the budget, top management need not be concerned with the overall profitability of operations.

Laurey Inc. is working on its cash budget for May. The budgeted beginning cash balance is $45,000. Budgeted cash receipts total $129,000 and budgeted cash disbursements total $124,000. The desired ending cash balance is $60,000. To attain its desired ending cash balance for May, the company needs to borrow: A. $110,000 B. $0 C. $60,000 D. $10,000

D. $10,000

The direct labor budget is based on: A. the desired ending inventory of finished goods. B. the beginning inventory of finished goods. C. the required materials purchases for the period. D. the required production for the period.

D. the required production for the period.