Accounting Exam Chapter 21

Pell Manufacturing is preparing its direct labor budget for May. Projections for the month are that 33,400 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $12, what is the total budgeted direct labor cost for May?

$1,202,400. (33,400*3*12)

The following information was taken from Southgate Industry's cash budget for the month of July: Beginning cash balance $300,000 Cash receipts 190,000 Cash disbursements 340,000 If the company has a policy of maintaining a minimum end of the month cash balance of $250,000, the amount the company would have to borrow is

$100,000. (300,000+190,000-340,000=150,000; 250k-150k=100k)

On January 1, Kale Company has a beginning cash balance of $42,000. During the year, the company expects cash disbursements of $340,000 and cash receipts of $290,000. If Kale requires an ending cash balance of $40,000, the company must borrow

$48,000. (42000+290000-340000=(8000); 40000+8000=48000)

The production budget shows expected unit sales of 32,000. Beginning finished goods units are 5,600. Required production units are 33,600. What are the desired ending finished goods units?

7,200 (5,600+33,600-32,000=x, x=7,200)

Why are budgets useful in the planning process?

They help communicate goals and provide a basis for evaluation.

The budget that is often considered to be the most important financial budget is the

cash budget

The most common budget period is

one year

The starting point in preparing a master budget is the preparation of the

sales budget

The direct materials budget details

the quantity of direct materials to be purchased. 2. the cost of direct materials to be purchased.