Chapter 8 Practice ECON 137A

Assume that a company provided the following information and assumptions from its master budget: Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month. What is the budgeted amount of accounts receivable balance at the end of July? A) $1,152,000 B) $1,440,000 C) $288,000 D) $1,280,000

$1,152,000

Assume that a company provided the following information and assumptions from its master budget: Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month. What are the budgeted sales for July? A) $1,440,000 B) $1,600,000 C) $288,000 D) $1,152,000

$1,440,000

Assume that a company provided the following information and assumptions from its master budget: Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month. What are the expected cash collections from customers for July? A) $1,152,000 B) $1,568,000 C) $288,000 D) $1,280,000

$1,568,000

A company's production budget indicates the following production requirements: October, 225,000 units; November 190,000 units, and December, 125,000 units. Each unit of finished goods requires 6 pounds of raw materials that cost $2.50 per pound. The company maintains raw materials inventory equal to 20% of the next month's production requirements. The company pays for 40% of its raw material purchases in the month of purchase. The remainder is paid the next month. The company's accounts payable balance at the end of November is closest to: A) $1,514,970. B) $1,806,588. C) $1,717,381. D) $1,593,000.

$1,593,000

Assume a company's budgeted unit sales and its required production in units for April are 80,000 units and 78,000 units, respectively. The direct labor-hours required per unit is 1.25 hours and the direct labor wage rate is $16.50 per hour. What is the budgeted direct labor cost for April? A) $1,608,750 B) $1,625,500 C) $1,638,500 D) $1,650,000

$1,608,750

Assume a merchandising company provides the following information from its master budget for the month of May: Sales $ 220,000 Cost of goods sold $ 80,000 Cash paid for merchandise purchases $ 75,000 Selling and administrative expenses $ 35,000 Cash paid for selling and administrative expenses $ 28,000 What is the budgeted net operating income? A) $2,000 B) $30,000 C) $117,000 D) $105,000

$105,000

Assume a merchandising company's estimated sales for January and February are $100,000 and $120,000, respectively. Its cost of goods sold is always 40% of its sales. The company always maintains ending merchandise inventory equal to 10% of next month's cost of goods sold. The company's required merchandise purchases for February are $47,600. What must be the company's estimated sales for March? A) $110,000 B) $140,000 C) $130,000 D) $100,000

$110,000

Assume a merchandising company provides the following information from its master budget for the month of May: Sales $ 117,000 Cost of goods sold $ 82,000 Selling and administrative expenses $ 16,000 Accounts receivable, May 1st $ 17,000 Accounts receivable, May 31st $ 23,000 If all of the company's sales are on account, what is the amount of cash collections from customers included in the cash budget for May? A) $100,000 B) $106,000 C) $111,000 D) $117,000

$111,000

Assume that a company provided the following information and assumptions from its master budget: Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month. Production budget: The ending finished goods inventory is always 25% of next month's unit sales. Direct materials budget: Each unit of finished goods requires 3 pounds of raw material that cost $2.00 per pound. The ending raw materials inventory is always 30% of next month's production needs. 40% of raw material purchases are paid in the current and the remainder is paid in the following month. What is the cost of raw material purchases for June? A) $114,450 B) $112,750 C) $115,950 D) $113,850

$113,850

Assume a merchandising company provides the following information from its master budget for the month of May: Sales $ 120,000 Cost of goods sold $ 80,000 Selling and administrative expenses $ 35,000 Accounts receivable, May 1st $ 15,000 Accounts receivable, May 31st $ 20,000 If all of the company's sales are on account, what is the amount of cash collections from customers included in the cash budget for May? A) $105,000 B) $110,000 C) $115,000 D) $120,000

$115,000

Assume a merchandising company provides the following information from its master budget for the month of May: Cost of goods sold $ 80,000 Cash paid for merchandise purchases $ 75,000 Selling and administrative expenses $ 35,000 Cash paid for selling and administrative expenses $ 28,000 Retained earnings, May 1 $ 18,000 Retained earnings, May 31 $ 23,000 If the company does not pay any interest or dividends, what is its budgeted sales for May? Garrison 17e Rechecks 2020-07-14 A) $2,000 B) $120,000 C) $117,000 D) $105,000

$120,000

Assume a merchandising company provides the following information from its master budget for the month of May: Sales $ 240,000 Cost of goods sold $ 82,500 Cash paid for merchandise purchases $ 77,500 Selling and administrative expenses $ 37,500 Cash paid for selling and administrative expenses $ 37,600 What is the budgeted net operating income? A) $4,900 B) $42,500 C) $134,900 D) $120,000

$120,000

Assume a merchandising company's estimated sales for January is $100,000. Its cost of goods sold is always 40% of its sales. The company always maintains ending merchandise inventory equal to 10% of next month's cost of goods sold. The company's required merchandise purchases for January are $40,800. What must be the company's estimated sales for February? A) $110,000 B) $120,000 C) $90,000 D) $80,000

$120,000

Assume a merchandising company provides the following information from its master budget for the month of May: Cost of goods sold $ 79,500 Cash paid for merchandise purchases $ 74,600 Selling and administrative expenses $ 34,500 Cash paid for selling and administrative expenses $ 26,600 Retained earnings, May 1 $ 19,600 Retained earnings, May 31 $ 26,200 If the company does not pay any interest or dividends, what is its budgeted sales for May? A) $1,300 B) $120,600 C) $116,000 D) $101,500

$120,600

Assume that a merchandising company provided the following beginning and ending budgeted balance sheets for a forthcoming month: Beginning Balances Ending Balances Cash $ 30,000 $ 38,000 Accounts receivable 13,000 16,000 Inventory 20,000 18,000 Buildings and equipment 100,000 100,000 Accumulated depreciation (25,000) (30,000) Total assets $ 138,000 $ 142,000 Accounts payable $ 4,000 $ 5,000 Common stock 60,000 60,000 Retained earnings 74,000 77,000 Total liabilities and stockholders' equity $ 138,000 $ 142,000 Assume that all of the company's sales are on account and it has no uncollectible accounts. If the cash collected from customers during the period is $120,000, then how much sales must be shown on the company's budgeted income statement? Garrison 17e Rechecks 2021-11-25 A) $123,000 B) $126,000 C) $117,000 D) $114,000

$123,000

Assume that a company provided the following information and assumptions from its master budget: Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month. Production budget: The ending finished goods inventory is always 25% of next month's unit sales. Direct labor budget: The direct labor-hours required per unit is 1.50 hours. The direct labor cost per hour is $18. Manufacturing overhead budget: The variable overhead rate is $2.00 per direct labor-hour. The total fixed manufacturing overhead is $70,000, which includes $12,000 of depreciation. What is the total budgeted manufacturing overhead cost for July? A) $123,250 B) $111,250 C) $135,250 D) $127,250

$123,250

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $45,000 and $69,000, respectively. The company expects to collect 30% of its credit sales in the month of the sale and the remaining 70% in the following month. What is the expected cash collections from credit sales during the first month? A) $13,500 B) $31,500 C) $25,500 D) $49,000

$13,500

Assume a merchandising company provides the following information from its master budget for the month of May: Sales $ 131,000 Cash paid for merchandise purchases $ 85,000 Selling and administrative expenses $ 25,000 Accounts payable, May 1st $ 18,900 Accounts payable, May 31st $ 26,000 If the company maintains no beginning or ending merchandise inventory and makes all of its inventory purchases on account, what is the budgeted net operating income for May? A) $39,900 B) $26,000 C) $27,800 D) $13,900

$13,900

Assume that a company provided the following information and assumptions from its master budget: Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month. Production budget: The ending finished goods inventory is always 25% of next month's unit sales. Selling and administrative expense budget: The variable selling and administrative expense is $4.00 per unit. The total fixed selling and administrative expense is $60,000 including $11,000 of depreciation. What is the total budgeted selling and administrative expense for July? A) $129,000 C) $130,000 C) $131,000 D) $132,000

$132,000

Assume a company's sales budget for April and May is 30,000 units and 32,000 units, respectively. Its production budget for the same two months is 27,000 units and 28,800 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following months production needs. Also assume the company pays $2.50 per pound of raw material. It always pays for 50% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on March 31st is $130,000. What would be the accounts payable balance at the end of April? A) $132,850 B) $136,350 C) $128,350 D) $139,650

$136,350

Assume a company's budgeted unit sales and its required production in units for April are 98,000 units and 96,000 units, respectively. The direct labor-hours required per unit is 1.50 hours. The company's total budgeted direct labor cost for April is $2,268,000. What is the budgeted direct labor wage rate per hour for April? A) $20.27 B) $15.75 C) $15.43 D) $19.60

$15.75

Assume the following budgeted information for a merchandising company: Budgeted sales (all on credit) for November, December, and January are $250,000, $220,000, and $200,000, respectively. Cash collections related to credit sales are expected to be 75% in the month of sale, 25% in the month following the sale. The cost of goods sold is 65% of sales. Each month's ending inventory equals 20% of next month's cost of goods sold. 40% of each month's merchandise purchases are paid in the current month and the remainder is paid in the following month. Monthly selling and administrative expenses that are paid in cash in the month incurred total $20,500. Monthly depreciation expense is $20,000. The expected cash disbursements for merchandise purchases in December are: A) $232,800. B) $149,540. C) $151,320. D) $212,800.

$151,320

Assume a company's budgeted unit sales and its required production in units for April are 80,000 units and 78,000 units, respectively. The direct labor-hours required per unit is 1.25 hours. The company's total budgeted direct labor cost for April is $1,608,750. What is the budgeted direct labor wage rate per hour for April? A) $16.79 B) $16.50 C) $16.09 D) $16.00

$16.50

Assume that a company expects to produce 11,000, 12,000, and 14,000 units of finished goods in January, February, and March, respectively. Each unit of finished goods requires 4 pounds of raw material and each pound of raw material costs $3.50. The company always maintains an ending raw materials inventory equal to 25% of next month's production needs. What is the amount of expected raw materials purchases for February? A) $175,000 B) $125,000 C) $167,000 D) $129,000

$175,000

Assume a manufacturing company provides the following information from its master budget for the month of May: Unit sales 6,400 Selling price per unit $ 60 Direct materials cost per unit $ 22 Direct labor cost per unit $ 20 Predetermined overheard rate (based on direct labor dollars) 75% If the company maintains no beginning or ending inventories, what is the budgeted gross margin for May? A) $12,800 B) $19,200 C) $6,400 D) $9,200

$19,200

Assume a company's budgeted unit sales and its required production in units for April are 89,000 units and 87,000 units, respectively. The direct labor-hours required per unit is 1.50 hours and the direct labor wage rate is $17.25 per hour. What is the budgeted direct labor cost for April? A) $2,251,125 B) $2,286,708 C) $2,289,642 D) $2,302,875

$2,251,125

Assume a merchandising company provides the following information from its master budget for the month of May: Sales $ 120,000 Cost of goods sold $ 80,000 Cash paid for merchandise purchases $ 75,000 Selling and administrative expenses $ 35,000 Cash paid for selling and administrative expenses $ 28,000 Retained earnings, May 1 $ 18,000 If the company does not pay any interest or dividends, what is its budgeted retained earnings on May 31st? A) $20,000 B) $26,000 C) $23,000 D) $30,000

$23,000

Assume the following budgeted information for a merchandising company: Budgeted sales (all on credit) for November, December, and January are $254,000, $224,000, and $215,000, respectively. Cash collections of credit sales are expected to be 70% in the month of sale and 30% in the month following the sale. The cost of goods sold is always 65% of sales. Each month's ending inventory equals 15% of next month's cost of goods sold. 40% of each month's merchandise purchases are paid in the current month and the remainder is paid in the following month. Monthly selling and administrative expenses that are paid in cash in the month incurred total $28,000. Monthly depreciation expense is $27,500. The expected cash collections from customers in December are: A) $263,700. B) $233,000. C) $247,285. D) $221,300.

$233,000

Assume a company's sales budget for April and May is 37,000 units and 39,000 units, respectively. Its production budget for the same two months is 34,000 units and 35,000 units, respectively. Each unit of finished goods required 5 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the following months production needs. Also assume the company pays $2.30 per pound of raw material. It always pays for 60% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on March 31st is $137,000. What would be the accounts payable balance at the end of April? A) $240,980 B) $235,980 C) $228,180 D) $239,380

$235,980

Assume a merchandising company provides the following information from its master budget for the month of May: Cash balance, May 1 $ 20,000 Cash collections from customers $ 80,000 Cash disbursements for merchandise purchases $ 35,000 Cash disbursements for selling and administrative expenses $ 40,000 Depreciation included in the selling and administrative expense budget $ 5,000 Based solely on the information provided, what is the company's excess (deficiency) of cash available over disbursements at the end of May? A) $30,000 B) $15,000 C) $20,000 D) $25,000

$25,000

Assume the sales budget for April and May is 30,000 units and 32,000 units, respectively. The production budget for the same two months is 27,000 units and 28,800 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following months production needs. If the company pays $2.50 per pound of raw material, then what is the estimated cost of raw material purchases for April? A) $278,450 B) $271,950 C) $275,700 D) $272,700

$272,700

Assume that a merchandising company provided the following beginning and ending budgeted balance sheets for a forthcoming month: Beginning Balances Ending Balances Cash $ 30,000 $ 38,000 Accounts receivable 13,000 16,000 Inventory 20,000 18,000 Buildings and equipment 100,000 100,000 Accumulated depreciation (25,000) (30,000) Total assets $ 138,000 $ 142,000 Accounts payable $ 4,000 $ 5,000 Common stock 60,000 60,000 Retained earnings 74,000 77,000 Total liabilities and stockholders' equity $ 138,000 $ 142,000 Assuming the company did not pay any dividends during the period, how much net income must be shown on the company's budgeted income statement? A) $5,000 B) $3,000 C) $2,000 D) $4,000

$3,000

Assume a merchandising company's estimated sales for January, February, and March are $100,000, $120,000, and $110,000, respectively. Its cost of goods sold is always 40% of its sales. The company always maintains ending merchandise inventory equal to 10% of next month's cost of goods sold. It pays for 25% of its merchandise purchases in the month of the purchase and the remaining 75% in the subsequent month. What is the accounts payable balance at the end of January? A) $35,700 B) $30,600 C) $10,200 D) $11,900

$30,600

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale, 55% in the following month, and 5% is deemed uncollectible. What amount of accounts receivable (net) would the company report in its balance sheet at the end of the second month? A) $54,500 B) $24,000 C) $33,000 D) $51,500

$33,000

Assume the sales budget for April and May is 45,000 units and 47,000 units, respectively. The production budget for the same two months is 42,000 units and 43,000 units, respectively. Each unit of finished goods required 3 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the following months production needs. If the company pays $2.70 per pound of raw material, then what is the estimated cost of raw material purchases for April? A) $347,820 B) $340,820 C) $344,820 D) $341,820

$341,820

Assume a merchandising company's estimated sales for January, February, and March are $100,000, $120,000, and $110,000, respectively. Its cost of goods sold is always 40% of its sales. The company always maintains ending merchandise inventory equal to 10% of next month's cost of goods sold. It pays for 25% of its merchandise purchases in the month of the purchase and the remaining 75% in the subsequent month. What is the accounts payable balance at the end of February? A) $30,600 B) $11,900 C) $31,600 D) $35,700

$35,700

Assume a company's sales budget for April and May is 43,000 units and 45,000 units, respectively. Its production budget for the same two months is 40,000 units and 41,000 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following months production needs. Also assume the company pays $2.60 per pound of raw material. It always pays for 50% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on March 31st is $143,000. How much cash disbursements for raw materials purchases would be shown in the company's cash budget for April? A) $351,780 B) $356,780 C) $351,030 D) $359,780

$351,780

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale and the remaining 60% in the following month. What amount of accounts receivable would the company report in its balance sheet at the end of the second month? A) $54,000 B) $24,000 C) $36,000 D) $20,000

$36,000

Assume a company is preparing a budget for its first two months of operations. During the first month it expects credit sales of $50,000. The company expects to collect 40% of its credit sales in the month of the sale and 60% in the following month. The company's cash budget for the second month shows total cash collections from credit sales of $54,000. What amount of accounts receivable would appear on the company's balance sheet at the end of the second month of operations? A) $44,000 B) $60,000 C) $36,000 D) $42,000

$36,000

Assume the following budgeted information for a merchandising company: Budgeted sales (all on credit) for November, December, and January are $250,000, $220,000, and $200,000, respectively. Cash collections related to credit sales are expected to be 75% in the month of sale, 25% in the month following the sale. The cost of goods sold is 65% of sales. Each month's ending inventory equals 20% of next month's cost of goods sold. 40% of each month's merchandise purchases are paid in the current month and the remainder is paid in the following month. Monthly selling and administrative expenses that are paid in cash in the month incurred total $20,500. Monthly depreciation expense is $20,000. The budgeted net operating income for December would be: A) $56,500 B) $28,180 C) $48,180 D) $36,500

$36,500

Assume that a merchandising company prepared the following sales budget: September $ 600,000 November $ 800,000 October $ 750,000 December $ 900,000 The following information is also available: Desired ending inventory is $20,000 plus 70% of the next month's cost of goods sold. Cost of goods sold is always 60% of sales. Merchandise purchases are paid 30% in the current month and 70% in the next month. Budgeted sales each month are 70% credit and 30% cash. 40% of credit customers pay in the current month, 50% pay in the first month after the sale, and 10% pay in the second month after the sale. What is the budgeted amount of accounts payable at the end of November? A) $176,600 B) $345,700 C) $156,600 D) $365,400

$365,400

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $53,000 and $70,000, respectively. The company expects to collect 45% of its credit sales in the month of the sale and the remaining 55% in the following month. What amount of accounts receivable would the company report in its balance sheet at the end of the second month? A) $60,650 B) $24,750 C) $38,500 D) $23,850

$38,500

Assume a merchandising company's estimated sales for January, February, and March are $100,000, $120,000, and $110,000, respectively. Its cost of goods sold is always 40% of its sales. The company always maintains ending merchandise inventory equal to 10% of next month's cost of goods sold. What are the required merchandise purchases for January? A) $44,200 B) $40,800 C) $39,200 D) $48,000

$40,800

Assume a merchandising company's estimated sales for January, February, and March are $100,000, $120,000, and $110,000, respectively. Its cost of goods sold is always 40% of its sales. The company always maintains ending merchandise inventory equal to 10% of next month's cost of goods sold. It pays for 25% of its merchandise purchases in the month of the purchase and the remaining 75% in the subsequent month. What are the cash disbursements for merchandise purchases that would appear in the company's cash budget for February? A) $45,500 B) $44,500 C) $42,500 D) $39,500

$42,500

Assume a company's sales budget for July estimates 16,100 units sold. The variable selling and administrative expense used for budgeting purposes is $5.00 per unit sold. The total budgeted cash disbursements for selling and administrative expenses in July is $130,000. The total fixed selling and administrative expenses included in the selling and administrative expense budget for July is $95,000. What is the amount of depreciation included in the selling and administrative expense budget for July? A) $45,500 B) $12,900 C) $14,500 D) $47,100

$45,500

Assume a merchandising company's estimated sales for January, February, and March are $100,000, $120,000, and $110,000, respectively. Its cost of goods sold is always 40% of its sales. The company always maintains ending merchandise inventory equal to 10% of next month's cost of goods sold. What are the required merchandise purchases for February? A) $48,400 B) $44,000 C) $47,600 D) $46,400

$47,600

Assume that a company provided the following information and assumptions from its master budget: Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month. Production budget: The ending finished goods inventory is always 25% of next month's unit sales. Direct labor budget: The direct labor-hours required per unit is 1.50 hours. The direct labor cost per hour is $18. What is the budgeted direct labor cost for July? A) $474,000 B) $479,250 C) $482,250 D) $486,000

$479,250

Assume a merchandising company provides the following information from its master budget for the month of May: Cash balance, May 1 $ 20,000 Cash collections from customers $ 80,000 Cash disbursements for merchandise purchases $ 35,000 Cash disbursements for selling and administrative expenses $ 40,000 If the company wishes to maintain a minimum cash balance of $30,000 at the end of every month, then its borrowings at the beginning of May will equal? A) $5,000 B) $0 C) $25,000 D) $20,000

$5,000

Assume a merchandising company provides the following information from its master budget for the month of May: Cash collections from customers $ 115,000 Cost of goods sold $ 80,000 Cash paid for merchandise purchases $ 75,000 Selling and administrative expenses $ 35,000 Cash paid for selling and administrative expenses $ 28,000 Accounts receivable, May 1st $ 15,000 Accounts receivable, May 31st $ 20,000 If all of the company's sales are on account, what is the budgeted net operating income for May? A) $5,000 B) $10,000 C) $15,000 D) $20,000

$5,000

Assume a merchandising company provides the following information from its master budget for the month of May: Cash collections from customers $ 115,000 Cost of goods sold $ 80,000 Selling and administrative expenses $ 35,000 Accounts receivable, May 1st $ 15,000 Accounts receivable, May 31st $ 20,000 If all of the company's sales are on account, what is the budgeted net operating income for May? A) $5,000 B) $10,000 C) $15,000 D) $20,000

$5,000

Assume that a merchandising company provided the following beginning and ending budgeted balance sheets for a forthcoming month: Beginning Balances Ending Balances Cash $ 30,000 $ 38,000 Accounts receivable 13,000 16,000 Inventory 20,000 18,000 Buildings and equipment 100,000 100,000 Accumulated depreciation (25,000) (30,000) Total assets $ 138,000 $ 142,000 Accounts payable $ 4,000 $ 5,000 Common stock 60,000 60,000 Retained earnings 74,000 77,000 Total liabilities and stockholders' equity $ 138,000 $ 142,000 Assuming the company did not sell any noncurrent assets during the period, how much depreciation expense must be included in the company's budgeted income statement? A) $5,000 B) $3,000 C) $2,000 D) $4,000

$5,000

Assume a manufacturing company provides the following information from its master budget for the month of May: Unit sales 5,000 Selling price per unit $ 40 Direct materials cost per unit $ 12 Direct labor cost per unit $ 10 Direct labor wage rate per hour $ 20 Predetermined overheard rate per direct labor-hour $ 16 If the company maintains no beginning or ending inventories, what is the budgeted gross margin for May? A) $10,000 B) $20,000 C) $30,000 D) $50,000

$50,000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale, 55% in the following month, and 5% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its cash budget for the second month? A) $54,500 B) $24,000 C) $33,000 D) $51,500

$51,500

Assume that a merchandising company prepared the following sales budget: September $ 600,000 November $ 800,000 October $ 750,000 December $ 900,000 The following information is also available: Desired ending inventory is $20,000 plus 70% of the next month's cost of goods sold. Cost of goods sold is always 60% of sales. Merchandise purchases are paid 30% in the current month and 70% in the next month. Budgeted sales each month are 70% credit and 30% cash. 40% of credit customers pay in the current month, 50% pay in the first month after the sale, and 10% pay in the second month after the sale. What are the budgeted merchandise purchases for November? A) $450,000 B) $438,000 C) $522,000 D) $550,000

$522,000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects cash sales of $29,000 and $45,500, respectively. It also expects credit sales of $55,500 and $65,500, respectively. The company expects to collect 45% of its credit sales in the month of the sale, 50% in the following month, and 5% is deemed uncollectible. What amount of cash collections would appear in the company's cash budget for the first month? A) $53,975 B) $24,975 C) $70,475 D) $45,500

$53,975

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale and the remaining 60% in the following month. What amount of cash collections from credit sales would the company include in its cash budget for the second month? A) $24,000 B) $54,000 C) $36,000 D) $44,000

$54,000

Assume a merchandising company's estimated sales for January, February, and March are $115,000, $135,000, and $125,000, respectively. Its cost of goods sold is always 45% of its sales. The company always maintains ending merchandise inventory equal to 20% of next month's cost of goods sold. It pays for 20% of its merchandise purchases in the month of the purchase and the remaining 80% in the subsequent month. What are the cash disbursements for merchandise purchases that would appear in the company's cash budget for February? A) $56,810 B) $57,810 C) $54,810 D) $51,810

$54,810

Assume the following budgeted information for a merchandising company: Budgeted sales (all on credit) for November, December, and January are $250,000, $220,000, and $200,000, respectively. Cash collections related to credit sales are expected to be 75% in the month of sale, 25% in the month following the sale. The cost of goods sold is 65% of sales. Each month's ending inventory equals 20% of next month's cost of goods sold. 40% of each month's merchandise purchases are paid in the current month and the remainder is paid in the following month. Monthly selling and administrative expenses that are paid in cash in the month incurred total $20,500. Monthly depreciation expense is $20,000. The accounts receivable balance at December 31st would be: A) $55,000 B) $117,500 C) $165,000 D) $81,300

$55,000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $48,000 and $64,000, respectively. The company expects to collect 60% of its credit sales in the month of the sale and the remaining 40% in the following month. What amount of cash collections from credit sales would the company include in its cash budget for the second month? A) $38,400 B) $57,600 C) $25,600 D) $67,200

$57,600

Assume a company is preparing a budget for its first two months of operations. During the first month it expects credit sales of $50,000. The company expects to collect 40% of its credit sales in the month of the sale and 60% in the following month. The company's cash budget for the second month shows total cash collections from credit sales of $54,000. What amount of credit sales is the company expecting for its second month of operations? A) $55,000 B) $60,000 C) $45,000 D) $40,000

$60,000

Assume a merchandising company's estimated sales for January, February, and March are $112,000, $132,000, and $122,000, respectively. Its cost of goods sold is always 60% of its sales. The company always maintains ending merchandise inventory equal to 30% of next month's cost of goods sold. It pays for 20% of its merchandise purchases in the month of the purchase and the remaining 80% in the subsequent month. What is the accounts payable balance at the end of February? A) $56,640 B) $15,480 C) $57,760 D) $61,920

$61,920

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $48,000 and $80,000, respectively. The company expects to collect 60% of its credit sales in the month of the sale, 35% in the following month, and 5% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its cash budget for the second month? A) $68,800 B) $48,000 C) $28,000 D) $64,800

$64,800

Assume that a company provided the following information and assumptions from its master budget: Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month. Production budget: The ending finished goods inventory is always 25% of next month's unit sales. Direct materials budget: Each unit of finished goods requires 3 pounds of raw material that cost $2.00 per pound. The ending raw materials inventory is always 30% of next month's production needs. 40% of raw material purchases are paid in the current and the remainder is paid in the following month. What is the budgeted accounts payable balance at the end of June? A) $46,310 B) $56,410 C) $66,310 D) $68,310

$68,310

Assume that a merchandising company provided the following beginning and ending budgeted balance sheets for a forthcoming month: Beginning Balances Ending Balances Cash $ 30,000 $ 38,000 Accounts receivable 13,000 16,000 Inventory 20,000 18,000 Buildings and equipment 100,000 100,000 Accumulated depreciation (25,000) (30,000) Total assets $ 138,000 $ 142,000 Accounts payable $ 4,000 $ 5,000 Common stock 60,000 60,000 Retained earnings 74,000 77,000 Total liabilities and stockholders' equity $ 138,000 $ 142,000 Assuming the company paid a $4,000 dividend during the period, how much net income must be shown on the company's budgeted income statement? A) $5,000 B) $3,000 C) $7,000 D) $4,000

$7,000

Assume a company's direct labor budget for July estimates 10,000 labor-hours to meet the month's production requirements. The variable manufacturing overhead rate used for budgeting purposes is $3.00 per direct labor-hour. The total budgeted cash disbursements for manufacturing overhead in July is $82,000. The total fixed manufacturing overhead included in the manufacturing overhead budget for July is $60,000. What is the amount of depreciation included in the manufacturing overhead budget for July? A) $22,000 B) $52,000 C) $3,000 D) $8,000

$8,000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects cash sales of $30,500 and $34,000, respectively. It also expects credit sales of $50,500 and $60,500, respectively. The company expects to collect 30% of its credit sales in the month of the sale, 60% in the following month, and 10% is deemed uncollectible. What amount of cash collections would appear in the company's cash budget for the second month? A) $77,400 B) $82,450 C) $96,800 D) $18,150

$82,450

Assume a company's direct labor budget for July estimates 10,000 labor-hours to meet the month's production requirements. The variable manufacturing overhead rate used for budgeting purposes is $3.25 per direct labor-hour. The budgeted fixed manufacturing overhead for July is $60,000 including $9,000 of depreciation. What is the amount of budgeted cash disbursements for manufacturing overhead for July? A) $101,500 B) $91,500 C) $83,500 D) $89,500

$83,500

A company's production budget indicates the following production requirements: October, 210,000 units; November 175,000 units, and December, 110,000 units. Each unit of finished goods requires 5 pounds of raw materials that cost $1.50 per pound. The company maintains raw materials inventory equal to 25% of the next month's production requirements. The company pays for 30% of its raw material purchases in the month of purchase. The remainder is paid the next month. The company's accounts payable balance at the end of November is closest to: A) $778,252. B) $1,034,678. C) $942,914. D) $833,438.

$833,438

Assume the following budgeted information for a merchandising company: Budgeted sales (all on credit) for November, December, and January are $250,000, $220,000, and $200,000, respectively. Cash collections related to credit sales are expected to be 75% in the month of sale, 25% in the month following the sale. The cost of goods sold is 65% of sales. Each month's ending inventory equals 20% of next month's cost of goods sold. 40% of each month's merchandise purchases are paid in the current month and the remainder is paid in the following month. Monthly selling and administrative expenses that are paid in cash in the month incurred total $20,500. Monthly depreciation expense is $20,000. The accounts payable balance at December 31st would be:\ A) $66,160 B) $84,240 C) $76,180 D) $56,160

$84,240

Assume a company's direct labor budget for October estimates 10,000 labor-hours to meet the month's production requirements. The variable manufacturing overhead rate used for budgeting purposes is $3.00 per direct labor-hour. The budgeted fixed manufacturing overhead for October is $60,000 including $8,000 of depreciation. What is the total budgeted manufacturing overhead for October? A) $98,000 B) $90,000 C) $82,000 D) $88,000

$90,000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects cash sales of $30,000 and $40,000, respectively. It also expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale, 55% in the following month, and 5% is deemed uncollectible. What amount of cash collections would appear in the company's cash budget for the second month? A) $89,000 B) $91,500 C) $93,000 D) $24,000

$91,500

Assume a company's budgeted unit sales and its required production in units for April are 80,000 units and 78,000 units, respectively. The budgeted direct labor wage rate is $16.50 per hour. The company's total budgeted direct labor cost for April is $1,608,750. What is the budgeted direct labor-hours required per unit? A) 1.35 hours B) 1.32 hours C) 1.25 hours D) 1.22 hours

1.25 hours

Assume a company's budgeted unit sales and its required production in units for June are 80,000 units and 78,000 units, respectively. The budgeted direct labor wage rate is $16.50 per hour. The company's total budgeted direct labor cost for June is $1,608,750. What is the budgeted direct labor-hours required per unit? A) 1.35 hours B) 1.32 hours C) 1.25 hours D) 1.22 hours

1.25 hours

Assume the sales budget for April and May is 30,000 units and 32,000 units, respectively. The production budget for the same two months is 27,000 units and 28,800 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 15% of the following month's production needs. How many pounds of raw material need to be purchased in April? A) 111,380 B) 108,780 C) 109,080 D) 110,280

109,080

Assume that a company provided the following information and assumptions from its master budget: Sales budget: Unit sales in June, July, and August are 20,000, 18,000, and 17,000, respectively. The selling price per unit is $80. All sales are on account. 20% of sales are collected in the month of sale and 80% are collected in the next month. Production budget: The ending finished goods inventory is always 25% of next month's unit sales. What is the required production in units for June? A) 21,000 units B) 19,000 units C) 20,500 units D) 19,500 units

19,500 units

Assume a company's estimated sales is 20,000 units. Its desired ending finished goods inventory is 4,000 units, and its beginning finished goods inventory is 2,000 units. What is the required production in units? A) 22,000 units B) 18,000 units C) 26,000 units D) 14,000 units

22,000 units

Assume that a company plans to sell 200,000 units of its only product in July and anticipates each month's unit sales to be 5% greater than the prior month. The desired monthly ending finished goods inventory is 60% of the next month's estimated unit sales. What is the required production in units for the month of September? A) 229,320 units B) 218,320 units C) 218,400 units D) 227,115 units

227,115 units

Assume a company's estimated unit sales and required production for January are 25,300 units and 25,100 units, respectively. The company always maintains ending finished goods inventory equal to 10% of next month's unit sales. What is the estimated unit sales in February? A) 21,300 units B) 23,794 units C) 21,794 units D) 23,300 units

23,300 units

Assume a company's estimated sales for January, February, and March are 25,000 units, 26,000 units, and 24,000 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next month's unit sales. What is the required production in units for February? A) 25,750 units B) 26,750 units C) 26,300 units D) 25,700 units

25,700 units

Assume a company's estimated unit sales and required production for January are 25,000 units and 25,150 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next month's unit sales. What is the estimated unit sales in February? A) 23,000 units B) 27,000 units C) 24,000 units D) 26,000 units

26,000 units

Assume a company's estimated sales is 30,000 units. Its desired ending finished goods inventory is 7,500 units, and its beginning finished goods inventory is 2,500 units. What is the required production in units? A) 35,000 units B) 27,500 units C) 40,000 units D) 20,000 units

35,000 units

Assume a company's estimated sales for January, February, and March are 36,000 units, 37,000 units, and 35,000 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next month's unit sales. What is the required production in units for January? A) 36,850 units B) 35,850 units C) 36,150 units D) 41,550 units

36,150 units

Which of the following statements is false with respect to the sales budget including a schedule of expected cash collections? A) Estimating cash collections also enables managers to estimate accounts receivable on the balance sheet. B) Although the estimated amounts of sales and cash collections may differ from one another on a month-to-month or quarterly basis, these two estimates must equal each other on an annual basis. C) Estimating sales ultimately impacts the estimated ending retained earnings on the balance sheet. D) Estimating cash collections plays a role in preparing a cash budget.

Although the estimated amounts of sales and cash collections may differ from one another on a month-to-month or quarterly basis, these two estimates must equal each other on an annual basis.

Which of the following equations is used in a merchandise purchases budget? A) Budgeted cost of goods sold + desired ending merchandise inventory − beginning merchandise inventory = Required purchases B) Budgeted cost of goods sold − desired ending merchandise inventory + beginning merchandise inventory = Required purchases C) Budgeted cost of goods sold − desired beginning merchandise inventory + ending merchandise inventory = Required purchases D) Budgeted cost of goods sold + desired beginning merchandise inventory − ending merchandise inventory = Required purchases

Budgeted cost of goods sold + desired ending merchandise inventory − beginning merchandise inventory = Required purchases

Which of the following statements is false? A) Budgets force managers to think about and plan for the future. B) Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance. C) Budgets enable each department to function independently from other departments. D) Budgets communicate management's plans throughout the organization.

Budgets enable each department to function independently from other departments.

Which of the following equations is false with respect to the direct materials budget? A) Units of raw materials to be purchased × unit cost of raw materials = cost of raw material purchases B) Units of raw materials needed to meet production + desired units of ending raw materials inventory − units of beginning raw materials inventory = units of raw materials to be purchased C) Required production in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production D) Estimated sales in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production

Estimated sales in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production

Which of the following statements is false with respect to the manufacturing overhead budget? A) It excludes depreciation because it is not a cash flow. B) It estimates the cash disbursements for overhead that appear in the cash budget. C) It includes estimated variable overhead and estimated fixed overhead. D) It impacts the budgeted cost of goods sold reported on the income statement.

It excludes depreciation because it is not a cash flow.

Which of the following statements is false with respect to the selling and administrative expense budget? A) It excludes depreciation expense because selling and administrative expenses are period costs and not product costs. B) It estimates the cash disbursements for selling and administrative expenses that appear in the cash budget. C) It includes estimated variable and fixed selling and administrative expenses. D) It impacts the budgeted net operating income reported on the income statement.

It excludes depreciation expense because selling and administrative expenses are period costs and not product costs.

Which of the following statements is false with respect to a cash budget? A) It includes cash paid for selling and administrative costs. B) It includes cash paid for manufacturing overhead costs. C) It excludes dividends because they are subtracted from retained earnings on the balance sheet. D) It excludes sales and instead reports cash collections from customers.

It excludes dividends because they are subtracted from retained earnings on the balance sheet.

Which of the following statements is false with respect to the manufacturing overhead budget? A) It includes depreciation even though it is not a cash flow. B) It estimates the cash disbursements for overhead that appear in the cash budget. C) It includes estimated variable overhead and estimated fixed overhead. D) It flows through to cost of goods sold on the income statement for merchandising companies.

It flows through to cost of goods sold on the income statement for merchandising companies.

Which of the following statements is false with respect to a budgeted income statement? A) Its interest expense flows from the financing section of the cash budget. B) Its net income will impact the ending retained earnings balance shown on the balance sheet. C) Its cost of goods sold is derived from the corresponding dollar amount shown in the production budget. D) Its selling and administrative expenses may include depreciation expense even though it is not a cash flow.

Its cost of goods sold is derived from the corresponding dollar amount shown in the production budget.

Which of the following statements is false with respect to the production budget? A) It does not include dollar figures. B) Its estimate of required production (in units) will equal the estimated unit sales for a company that does not maintain any beginning or ending finished goods inventory. C) Its estimate of required production (in units) is included in the variable portion of the selling and administrative expense budget. D) Its estimate of required production (in units) appears in the direct materials budget.

Its estimate of required production (in units) is included in the variable portion of the selling and administrative expense budget.

Which of the following statements is false with respect to a budgeted income statement? A) Its net income should equal the net cash flows from the cash budget. B) Its net income will impact the ending retained earnings balance shown on the balance sheet. C) Its interest expense flows from the financing section of the cash budget. D) Its selling and administrative expenses may include depreciation expense.

Its net income should equal the net cash flows from the cash budget.

Which of the following statements is true? A) Planning involves developing goals and preparing various budgets to achieve those goals. B) Planning involves gathering feedback that enables organizations to make modifications as circumstances change. C) The definition of planning states that managers should be held responsible for those items—and only those items—that the manager can actually control. D) Planning is usually done independent from the budgeting process.

Planning involves developing goals and preparing various budgets to achieve those goals.

Which of the following equations is used to prepare a direct labor budget? A) Required production in units of raw materials × Direct labor-hours per unit = Total direct labor-hours needed B) Required production in units × Direct labor-hours per unit = Total direct labor-hours needed C) Estimated sales in units of finished goods × Direct labor-hours per unit = Total direct labor-hours needed D) Required production to meet ending inventory needs × Direct labor-hours per unit = Total direct labor-hours needed

Required production in units × Direct labor-hours per unit = Total direct labor-hours needed

Which of the following statements is true with respect to a budgeted balance sheet? A) The accounts receivable balance includes the uncollected credit sales from the most recently completed month plus the expected cash collections from credit sales that were made two months ago. B) The ending cash balance on the balance sheet equals the net income on the income statement. C) The accounts payable balance includes the expected cash payments for material purchases that were made during the most recently completed month. D) The ending cash balance on the balance sheet equals the ending cash balance on the cash budget.

The ending cash balance on the balance sheet equals the ending cash balance on the cash budget.

Which of the following is not one of the sections within a cash budget? A) The financing section B) The investing section C) The cash receipts section D) The cash disbursements section

The investing section

Which of the following estimates is not used in preparing a sales budget including a schedule of expected cash collections? A) The number of units produced B) The selling price per unit C) The number of units sold D) The credit sales collection pattern

The number of units produced

Which of the following is not an advantage of using self-imposed budgets? A) They recognize individuals at all levels of the organization as members of the team whose views are valued by top management. B) They generally increase motivation by allowing people to participate in setting their own goals. C) They are often more accurate than estimates prepared by top managers because front-line workers have more intimate knowledge of day-to-day operations. D) They are often more accurate than estimates prepared by top managers because front-line workers bring a broad strategic perspective to the budgeting process.

They are often more accurate than estimates prepared by top managers because front-line workers bring a broad strategic perspective to the budgeting process.

Which of the following statements is true regarding master budgets? A) Generally speaking, they are prepared for manufacturing companies, but not merchandising companies. B) They usually include a cash budget and a budgeted income statement, but not a budgeted balance sheet. C) Most companies exclude selling and administrative expenses from the master budget because they are period expenses. D) They can be used to estimate a company's need to borrow money in the future.

They can be used to estimate a company's need to borrow money in the future.