DSM Ch 9

The Paper Mill expects to sell 6,000 reams of paper in October and 8,000 in November for $6 each. What is the total sales revenue for the sales budget during October and November?

$36,000 October; $48,000 November

Which of the following is NOT true about credit card sales and budgets?

A sale is shown on the operating expense budget, two months after the sale.

Which of the following is NOT a component of the direct labor budget?

Cost of goods sold

Which of the following budgets is the comprehensive planning document for the entire organization?

Master budget

Which of the following is NOT a component of the operating budget of a service company?

Merchandise Inventory

A merchandising company uses a master budget which includes all of the following EXCEPT a(n) ________.

direct labor budget

A manager can project the collection of cash and forecast an organization's budgeted balance sheet by using a(n) ________.

financial budget

Safety stock is ________.

inventory kept on hand to account for increases in consumer demand

The master budget ________.

is the comprehensive planning document for the entire organization

A ________ is a lending tool the company can use to draw money as needed at a specified rate of interest, for a specified amount of time, paying on the actual amount owed instead of a closed-end note.

line of credit

Benchmarking ________.

may help a manager motivate employees and provide a measure to evaluate performance

The combined cash budget ________.

merges budgeted cash collections and cash payments to project the firm's ending cash position

Capital expenditure budgets ________.

reveal a manager's intent to invest in new property, plant, or equipment

Actual or prior year budgeted data is ________.

the starting point for creating the budget

The managerial accountant at Monumental Industries reported an upcoming sale of desks. Each desk requires .60 direct labor hours to produce. Monumental has a direct labor rate of $14 per direct labor hour to produce the product. The managerial accountant reported that the production budget indicates that the production schedule consists of 800 desks in January and 1,000 desks in February. What is the total direct labor budgeted cost together for January and February?

$15,120

Customer World provides products and services to customers and allows customers to pay by credit card. On Thursday, a customer purchased a computer for $600 and used a credit card to pay. The credit card company charges Computer World a transaction fee equal to $0.20 + 1% of the total charge. What is the transaction fee Customer World must pay on this sale?

$6.20

The managerial accountant at Hill's Development Services expects to collect 30% of its credit sales in the month after the sale and 40% two months after the sale. Assume credit sales in December were $100,000 and November sales were $90,000. November credit sales $90,000 December credit sales $100,000 What is the anticipated cash collection of credit sales in January from November and December sales?

$66,000

The computation for sales revenue is ________.

Expected Number of Unit Sales × Expected Sales Price per Unit

Which of the following is important to a manager at a merchandising company when preparing the master budget?

The length of time between sales and deposits

Strategic planning ________.

The process of creating long-range (one to five years), broad goals for the organization and determining what resources will be needed to accomplish those goals.

Which of the following is NOT an outcome of the combined cash budget?

Total liabilities and stockholders' equity

Which of the following represents the formula to compute the total units to produce in the production budget?

Units Needed for Sales + Desired Ending Inventory - Units in Beginning Inventory