Connect 12

Durango Co. maintains an ending inventory equal to 10% of next month's cost of budgeted sales. Budgeted cost of sales are $100,000 for October and $200,000 for November. Required purchases for the month of October equa

$110,000

Durango Co. maintains an ending inventory equal to 10% of next month's cost of budgeted sales. Budgeted cost of sales are $100,000 for October and $200,000 for November. Required purchases for the month of October equal

$110,000

Durango Co. maintains an ending inventory equal to 10% of next month's cost of budgeted sales. Budgeted cost of sales are $100,000 for October and $200,000 for November. Required purchases for the month of October equal ______.

$120,000

Durango Co. reported the following on the selling and administrative expense budget:Salary expense for October $100,000Salary expense for November $200,000Utilities expense for October $10,000Utilities expense for November $8,000Depreciation expense per month $30,000Salaries and utilities are paid in the month they are incurred. Budgeted cash disbursements for selling and administrative expenses for the month of November total ______.

$208,000

Assume Durango Co. had sales of $200,000 for the month of November. Sales are expected to grow 10% each month. The company collects 60% of sales in the month of sale and 40% in the month after sale. Projected cash collections for December tota

$212,000

Durango Co. pays 40% of its accounts payable in the month of purchase and 60% the following month. If $40,000 of inventory on account is purchased October and $100,000 is purchased in November, budgeted cash disbursements for inventory in November equals

$64,000

Durango Co. reported the following on the selling and administrative expense budget:Salary expense for October $50,000Salary expense for November $60,000Utilities expense for October $11,000Utilities expense for November $9,000Depreciation expense per month $40,000Salaries are paid in the month they are incurred and utilities are paid in the month after they are incurred. Budgeted cash disbursements for selling and administrative expenses for the month of November total

$71,000

Cash disbursements for inventory is $40,000, for selling and administrative expenses is $30,000, and for a capital expenditure is $20,000. Depreciation expense is $15,000. Total cash disbursements on the cash budget equal ______.

$90,000.

Durango Co. pays 90% of its accounts payable in the month of purchase and 10% the following month. If $50,000 of inventory on account is purchased October and $100,000 is purchased in November, budgeted cash disbursements for inventory in November equals ______,

$95,000

When participative budgeting is in place, upper management

- must cooperate with subordinates to ensure an effect budget - must be involved to prevent the adoption of lax standards

Durango Co. had total cash receipts of $120,000 and total cash disbursements of $112,000. The beginning cash balance was $4,000 and the desired ending cash balance is $8,000. Durango Co. can borrow money in $1,000 increments. Assuming the company currently has $15,000 of outstanding debt, how much can Durango Co. repay and still meet its desired ending cash requirement?

4,000

If 40% of credit sales are collected in the month of sale and the remaining 60% in the month after, which of the following line items from the three-month sales budget are presented on the pro forma financial statements?

60% of the last month's credit sales Total sales for the three months

Which of the following items from an inventory purchases budget are presented on the pro forma financial statements?

Accounts payable Cost of goods sold Ending inventory

Which of the following are advantages of budgeting?

Assists in performance evaluation Allows for better planning Provides advance notice of potential problems Enables better coordination across departments

Which of the following focuses on intermediate range planning?

Capital budgeting

Identify the three major sections of the cash budget.

Cash receipts Cash payments Financing section

Which of the following items are shown on the selling and administrative expense budget?

Depreciation expense Rent expense Salary expense Expected interest expense

Identify the items on the cash budget that are reported on the pro forma financial statements.

Ending cash balance Net borrowing Cash payments Cash receipts Cash for capital expenditure

Which of the following are not advantages of budgeting?

Ensures profitability Lowers accountability Increases employee's individual freedom

Which of the following items will appear on a cash budget?

Expected cash payments Expected cash collections Financing activities

Budgets help with planning, coordination, and performance evaluation, but not corrective action.

False

Regardless of the techniques used, the chief financial officer ultimately develops and is held responsible for the sales budget.

False

Which of the following are listed on the pro forma income statement?

Interest expense Gross margin Sales revenue

Which of the following are not part of the cash budget?

Sales Investing section

Where does a company record its current cash sales and collections of accounts receivable?

Schedule of cash receipts

Which of the following line items from a 3-month selling and administrative expense budget are presented on the pro forma financial statements? Salaries and utilities are paid in the month after they are incurred.

Selling and administrative expenses Salaries payable Utilities payable

Which of the following is listed on the pro forma balance sheet?

Total assets Retained earnings

Durango Co. pays 40% of its accounts payable in the month of purchase and 60% the following month. If $40,000 of inventory on account is purchased October and $100,000 is purchased in November, budgeted cash disbursements for inventory in November equals

Utilities payable Selling and administrative expenses

Which of the following line items from a 3-month selling and administrative expense budget are presented on the pro forma financial statements? Salaries are paid in the month of their occurrence and utilities are paid in the month following their occurrence.

Utilities payable Selling and administrative expenses

Which of the following items are shown on the selling and administrative expense budget?

Utility expense Salary expense Depreciation expense

Pro forma financial statements

are future oriented

Capital expenditures are reported on

both the cash budget and the pro forma cash flow statement

Using participative budgeting

fosters cooperation and motivation provides a self-imposed constraint on employees may result in more realistic targets and goals

To help ensure the budget is successful, upper-level management must ______.

have an open, honest and respectful attitude about the budget understand the effect of budget expectations on employees

Strategic planning involves

identifying the most profitable market niche determining products to develop determining the scope of the business

Capital budgeting focuses on ______ range planning.

intermediate

The development of the sales forecast is normally coordinated by the

marketing

Short-term planning is the focus of ______.

operations budgeting

adds current cash sales to collections of accounts receivable to determine total budgeted cash collecti

receipts

o plan for cash shortages, management can

refinance to change the repayment plan of past borrowings use financing activities to borrow money

To plan for cash shortages, management can

use financing activities to borrow money refinance to change the repayment plan of past borrowings

Capital budgeting involves decisions such as ______.

whether to stimulate sales whether to buy or lease equipment whether to increase the company's asset base.