ACCT Ch. 8
Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period.
True
Seventy percent of Pitkin Corporation's sales are collected in the month of sale, 20% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data for the company: Budgeted Sales Jan. $200,000 Feb. $300,000 March $350,000 April $250,000 Total budgeted cash collections in April would be:
$275,000 February sales ($300,000 × 10%)$30,000 March sales ($350,000 × 20%)$70,000 April sales ($250,000 × 70%)$175,000 Total cash collections$275,000
Parwin Corporation plans to sell 23,000 units during August. If the company has 8,000 units on hand at the start of the month, and plans to have 9,000 units on hand at the end of the month, how many units must be produced during the month?
24,000 August Budgeted unit sales 23,000 Add desired ending finished goods inventory 9,000 Total needs 32,000 Less beginning finished goods inventory 8,000 Required production in units 24,000
Control involves developing goals and preparing various budgets to achieve those goals.
False
One disadvantage of budgeting is that budgeting makes it more difficult to coordinate the activities of the entire organization.
False
One of the weaknesses of budgets is that they are of little value in uncovering potential bottlenecks.
False
The cash budget is the starting point in preparing the master budget.
False
The production budget is typically prepared prior to the sales budget.
False
The selling and administrative expense budget lists all costs of production other than direct materials and direct labor.
False
A benefit from budgeting is that it forces managers to think about and plan for the future.
True
A continuous or perpetual budget is a 12-month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed.
True
In the manufacturing overhead budget, the non-cash charges (such as depreciation) are deducted from the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead.
True
In the merchandise purchases budget, the required purchases (in units) for a period can be determined by subtracting the beginning merchandise inventory (in units) from the budgeted sales (in units) and desired ending merchandise inventory (in units).
True
The budgeted income statement is typically prepared before the budgeted balance sheet.
True
The budgeted variable selling and administrative expense is calculated by multiplying the budgeted unit sales by the variable selling and administrative expense per unit.
True
The master budget consists of a number of separate but interdependent budgets.
True
The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory.
True
The selling and administrative budget is typically prepared before the cash budget.
True
Which of the following budgets are prepared before the sales budget? Budgeted Income Statement A. yes b. yes c. no d. no direct labor budget a. yes b. no c. yes d. no
d. no no
The usual starting point for a master budget is:
the sales forecast or sales budget
