Managerial Accounting Chapter 9

Which one of the following is an input that is needed in order to budget a service company?

Determining expected billing time for each staff member. Correct! This is an input used to determine estimated service revenue.

Which of the following are correct statements about a budget?

It is a formal written statement of management's plans for a specified future time period. It becomes an important basis for evaluating performance. It promotes efficiency and serves as a deterrent to waste and inefficiency. All of these options are correct statements is the right answer

Which one of the following budgets would not be prepared for a merchandising company?

Production budget.

Scan Design provided the following budgeted information for April through July: April May June July Projected sales $104,000 $123,000 $115,000 $132,000 Projected merchandise purchases $82,000 $92,000 $78,000 $66,000 The cash balance on June 1 is $12,000. The company pays 40% of merchandise purchases in the month purchased and 60% in the following month. General operating expenses are budgeted to be $31,000 per month of which depreciation is $3,000 of this amount. Management pays operating expenses in the month incurred. The company makes loan payments of $4,000 per month of which $600 is interest and the remainder is principal. How much are budgeted cash disbursements for June?

$118,400 Payment is made for merchandise purchased during the current month and for the portion of merchandise acquired during the previous month that has not been paid. Disbursements include payments for all amounts in addition to merchandise purchases. Budgeted cash disbursements for purchases: Cash paid for June purchases ($78,000 x 40%) $ 31,200 Cash paid for May purchases ($92,000 x 60%) 55,200 Budgeted cash paid for purchases 86,400 Budgeted cash payments for operating expenses ($31,000 - $3,000) 28,000 Budgeted cash payment for loan ($4,000 - $600) 3,400 Budgeted cash payment for interest 600 Total budgeted cash disbursements for June $118,400 Note that depreciation is not subtracted because it is not a cash flow.

The formula for the production budget is budgeted sales in units plus

desired ending finished goods units less beginning finished goods units.

Direct materials inventories are kept in pounds in Byrd Company, and the total pounds of direct materials needed for production is 9,500. If the beginning inventory is 1,000 pounds and the desired ending inventory is 2,200 pounds, the total pounds to be purchased are

10,700 Pounds to be purchased = amount needed for production + the desired ending inventory - the beginning inventory = 10,700 (9,500 + 2,200 - 1,000).

Tomy Toys is planning to sell 200 action figures and to produce 190 action figures in July. Each action figure requires 100 grams of plastic and a half hour of direct labor. The cost of the plastic used in each action figure is $5 per 100 grams. Employees of the company are paid at a rate of $15.00 per hour. Manufacturing overhead is applied at a rate of 120% of direct labor costs. Tomy Toys has 90,000 grams of plastic in its beginning inventory and wants to have 80,000 grams in its ending inventory. What is the amount of budgeted direct labor cost for the month of July?

1425 Units to be Produced (190) x Direct Labor per Unit (.5 hours) x Direct Labor Cost per Hour ($15) = Total Direct Labor Cost ($1,425).

At the beginning of the year, Opal Company has a cash balance of $23,000. During the year, the company expects cash disbursements of $160,000, and cash receipts of $140,000. If Opal Company requires an ending cash balance of $20,000, how much must the company borrow?

17000 Beginning Cash Balance ($23,000) + Cash Receipts ($140,000) = Total Available Cash ($163,000) - Cash Disbursements ($160,000) = Excess of Available Cash Over Cash Disbursements ($3,000). Desired Ending Cash Balance ($20,000) - Excess of Available Cash Over Cash Disbursements ($3,000) = Borrowings ($17,000).

Expected direct materials purchases in Read Company are $70,000 in the first quarter and $90,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are

78,000 Budgeted cash payments for the second quarter = purchases for the first quarter, or $42,000 ($70,000 X 60%) + 40% of the purchases for the second quarter, or $36,000 ($90,000 X 40%). The total is $78,000 ($36,000 + $42,000).

Which of the following lists includes only financial budgets?

Budgeted balance sheet, cash budget, and the capital expenditures budget.

Operating budgets include all of the following except the

capital expenditure budget

The cash budget contains sections for each of the following except

capital expenditures

In the direct materials budget, the quantity of direct materials to be purchased is computed by adding direct materials required for production to

desired ending direct materials less beginning direct materials

Compared to budgeting, long-range planning generally has the

longer time period

Microtech plans to sell 2,000 computers in April; 1,900 in May; and 2,000 in June. The company keeps 15% of the next month's sales as ending inventory. How many units should Microtech produce in May?

not 2,200 or 1885 not sure what right answer is, could be insufficient information or 1915 Budgeted Sales Units-May (1,900) + Desired Ending Inventory-May (.15 x 2,000) - Beginning Inventory-May (.15 x 1,900) = Required Production Units (Note: Beginning Inventory- May = Ending Inventory-April = .15 x 1,900).

The direct labor budget and the manufacturing overhead budget are prepared directly from the

production budget.

Each of the other budgets in the master budget depends on the

sales budget

The budgeted income statement is

the end-product of the operating budgets.

The essentials of effective budgeting do not include

top-down budgeting.

The formula for computing the direct labor budget is to multiply the direct labor cost per hour by the

total required direct labor hours