CH 7 ACCT

Ruiz Co.'s budget includes the following credit sales for the current year: September, $145,000; October, $136,000; November, $120,000; December, $157,000. Credit sales are collected as follows: 15% in the month of sale, 50% in the first month after sale, and 35% in the second month after sale. How much cash can the company expect to collect in December as a result of current and past credit sales?

$131150

Ratchet Manufacturing anticipates total sales for August, September, and October of $200,000, $210,000, and $220,500 respectively. Cash sales are normally 25% of total sales and the remaining sales are on credit. All credit sales are collected in the first month after the sale. Compute the amount of accounts receivable to be reported on the company's budgeted balance sheet for August.

$150,000.

Feline Watch Company makes wrist watches out of silver metal sheets. Five hours of labor are needed to make each watch. Factory workers are paid $7 each hour. Variable manufacturing costs are $4 per labor hour. Fixed overhead costs total $5,000 each month. If Feline wanted to manufacture 500 watches in the month of September, what should it budget in overhead costs?

$15000

Hammer Time Company sells hammers that it purchases at a cost of $5. Hammer Time sells the hammers for $15. Last year, it sold 12,000 hammers. The company estimates that it can sell 5,000 more hammers than last year if it decreases the selling price to $10 per hammer. What is the budgeted sales revenue if Hammer Time implements the decrease in selling price?

$170,000

Feline Watch Company makes wrist watches out of silver metal sheets. Five hours of direct labor are needed to make each watch. Factory workers are paid $7 each hour. What are total direct labor costs to make 500 watches?

$17500

Ratchet Manufacturing's August sales budget calls for sales of 8,000 units. Each month's unit sales are expected to grow by 5%. The product selling price is $25 per unit. The expected total sales dollars for September's sales budget are:

$210,000.

Zhang Industries sells a product for $700. Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%. Compute the total budgeted sales dollars for the month ended June 30.

$288,400

Feline Watch Company makes wrist watches out of silver metal sheets. Two pounds of metal are required to make one watch. Metal costs $4 per pound. What are the direct material costs to make 500 watches?

$4000

Zhang Industries budgets production of 300 units in June and 310 units in July. Each unit requires 1.5 hours of direct labor. The direct labor rate is $14 per hour. The indirect labor rate is $21 per hour. Compute the budgeted direct labor cost for July.

$6,510.

IP Company's sales are 20% paid in cash and 80% are on credit collected in full in the month following the sale. If IP's last month's sales were $75,000 and their current month's sales are $100,000, how much cash is collected during the current month?

$80000

Webster Corporation is preparing its cash budget for April. The March 31 cash balance is $36,400. Cash receipts are expected to be $641,000 and cash payments for purchases are expected to be $608,500. Other cash expenses expected are $27,000 selling and $33,500 general and administrative. The company desires a minimum cash balance at the end of each month of $30,000. If necessary, the company borrows enough cash to meet the minimum using a short-term note. Webster's preliminary cash balance before loan activity for April is expected to be:

$8400

Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August. The direct labor requirement per unit is 0.50 hours. Labor is paid at the rate of $21 per hour. The total cost of direct labor budgeted for the month of August is:

$85050

Use the following information to determine the ending cash balance to be reported on the month ended June 30 cash budget. Beginning cash balance on June 1, $73,000. Cash receipts from sales, $413,000. Budgeted cash payments for purchases, $268,000. Budgeted cash payments for salaries, $35,000. Other budgeted cash expenses, $57,000. Cash repayment of bank loan, $32,000. Budgeted depreciation expense, $34,000.

$94,000. $73,000 + $413,000 − $268,000 − $35,000 − $57,000 − $32,000 = $94,000Depreciation expense is non-cash and as such is not included in the cash budget

Cameroon Corp. manufactures and sells electric staplers for $16 each. If 10,000 units were sold in December, and management forecasts 4% growth in sales each month, the number of units of electric stapler sales budgeted for February should be:

10,816 December sales 10,000 units January sales = 10,000 × 1.04 = 10,400 February sales = 10,400 × 1.04 = 10,816

Junior Snacks reports the following information from its sales budget: Expected sales: October: $143,000 November: 151,000 December: 187,000 All sales are on credit and are expected to be collected 40% in the month of sale and 60% in the month following sale. The total amount of cash expected to be received from customers in November is

146200

Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August. The direct materials requirement per unit is 2 ounces (oz.). The company requires to have safety stock of direct materials on hand at the end of each month to complete 20% of the units of budgeted production in the following month. There was 3,160 ounces of direct material in inventory at the start of July. The total ounces of direct materials to be purchased in July is:

15,880 oz. Budgeted ending inventory for July = 16,200 × 20% = 3,240 ounces

Schrank Company is trying to decide how many units of merchandise to order each month. Company policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. How many units must be purchased in September?

24000

Webster Corporation's budgeted sales for February are $325,000. Webster pays sales representatives a commission of 6% of sales dollars. The company pays a sales manager a monthly salary of $4,400 and expects advertising expense of $2,000 per month. Compute the total budgeted selling expenses for February.

25900

Ruiz Co. provides the following unit sales forecast for the next three months: January 3,000 February 4,200 March 5,000 The company wants to end each month with ending finished goods inventory equal to 10% of the next month's sales. Finished goods inventory on December 31 is 300 units. The budgeted production units for February are:

4280

Feline Watch Company makes wrist watches out of silver metal sheets. Feline sold 200 watches in the month of June. It projects July and August sales to be 400 and 600 respectively. The company`s policy is to have 50% of next month`s sales in inventory. If the June ending inventory of watches is 200, how many watches must be produced in July?

500

Bengal Co. provides the following unit sales forecast for the next three months: July 5,000 August 5,700 September 5,560 The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales. Finished goods inventory on June 30 is 1,250 units. The budgeted production units for August are:

5665 Given that, Sales units for July = 5,000 Sales units for august = 5,700 Sales units for September = 5,560 Desired ending inventory for august = 25% of sales in September = 25% × 5,560 = 1390 Units Desired ending inventory for July = 25% of sales in august = 25% × 5,700 = 1425 Units The Desired ending inventory for July is beginning inventory for august. Therefore, Beginning inventory for august = 1425 Units So, Budgeted production units for August: = Sales units for august + Desired ending inventory for august - Beginning inventory for august = (5,700 + 1390 - 1425) units = 5665 units

A budget is best described as:

A formal statement of a company's future plans usually expressed in monetary terms.

In a company that employs continuous budgeting on a quarterly basis and has an accounting period that ends December 31 of each year, what period would the first revision and update to the January through December 2017 budget cover?

April 2017-March 2018

Which of the following items would be included in an activity-based budget?

Auditing Financial reporting Cost accounting

Place the following steps in the correct order as they relate to the budgetary control process:

Develop budget from planned objectives. Compare actual results to budgeted amounts and analyze differences. Take corrective and strategic actions. Establish new objectives and a new budget.

Which of the following budgets is not a budget that a manufacturer would include in its master budget?

Merchandise purchases budget.

In preparing financial budgets:

The budgeted balance sheet is usually prepared last.

Which of the following statements about budgeting is false?

The master budget should only be prepared by top management.

Telecom Company is preparing its annual budgeted income statement. What is the best place to locate the amount of interest expense for the year?

cash budget

All of the following items would be included in a General and Administrative Expense Budget except

depreciation on factory equipment

All of the following items would be included in a General and Administrative Expense Budget

depreciation on nonmanufacturing assets. insurance on nonmanufacturing assets. taxes on nonmanufacturing assets.

A potential negative outcome of budgeting is that

employees may understate sales budgets and overstate expenses.

All of the following items would be included in a Selling Expense Budget except

factory overhead

Telecom Company is preparing its budgeted balance sheet for the end of the year. Assuming that no dividends were declared during the year, what is the best place to locate ending retained earnings?

from the current year's net income plus the previous year's retained earnings balance.

All of the following are components of the master budget except

income

In a cash budget, the beginning cash balance plus budgeted cash receipts minus budgeted cash payments equals

preliminary cash balance

When preparing a master budget for a manufacturing company, which of the following budgets should be prepared second?

production

A rolling budget is updated on a _____ basis.

quarterly

All of the following are components of the master budget

sales productions cash

All of the following items would be included in a Selling Expense Budget

sales commissions. marketing expenses. advertising. delivery expenses.