Ch. 7

A manufacturing company's sales budget indicates the following sales: January: $25,000; February: $30,000; March: $35,000. The company expects 70% of the sales to be on credit and the remainder to be cash sales. Credit sales are collected in the month following the sale. The total cash collected during March will be $

31500

A merchandising company's budget includes the following data for January: Sales: $400,000; COGS: $270,000; Administrative salaries: $1,250; Sales commissions: 5% of sales; Advertising: $10,000; Salary for sales manager: $30,000; Miscellaneous administrative expenses: $5,000. The total selling expenses on the January selling expense budget will be $

60000

A merchandising company's budget includes the following data for January: Sales: $400,000; COGS: $270,000; Administrative salaries: $1,250; Sales commissions: 5% of sales; Advertising: $10,000; Depreciation on store equipment: $25,000; Rent on administrative building: $30,000; Miscellaneous administrative expenses: $5,000. The total general and administrative expenses on the January general and administrative expense budget will be $

61250

A company budgets the following direct materials purchases: April: $70,000; May $90,000; June: $60,000. All purchases are on account and the company pays 25% of purchases in the month of the purchase, 50% in the month after the purchase, and the remaining balance in the second month after the purchase. Cash payments for June for direct materials is $

77500

most companies prepare a(n) ______ budget that is separated into _____ budgets

annual quarterly or monthly

the budget which shows predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is the:

budgeted balance sheet

The budget which shows predicted amounts of sales and expenses for the budget period is the:

budgeted income statement

the formula to compute the units to purchase in a merchandise purchase budget is:

budgeted unit sales + desired ending merchandise inventory units - beginning merchandise inventory units

The reporting of expected cash receipts and cash payments related to the sale and purchase of plant assets is reported on the ______ expenditures budget.

capital

The ____ budget shows the expected cash receipts and cash payments during the budget period

cash

the _____ function requires that management evaluate operations against some norm.

control

budgeting is used by management to ensure that activities of all departments work toward the company's overall goals. This aspect of budgeting is called:

coordinate

the primary purpose of using short-term budgets is to:

evaluate performance and take necessary corrective action

a manufacturing company would typically prepare all of the following budgets except:

merchandise inventory budget

what items are included on the capital expenditures budget

plant asset purchases sale of plant assets

a quantity of inventory that provides protection against lost sales cause by unfulfilled demands from customers is called

safety stock

the general and administrative budget includes all of the following EXCEPT: - insurance expense on the administrative building taxes on the administrative building - administrative salaries - sales commissions - depreciation on the administrative building

sales commissions

A budget which estimates the types of selling expenses expected during the budget period is called a

selling expense budget

True or False: A production budget is unique in that it does not show costs; it is always expressed in units of product

true

True or False: Depreciation on non-manufacturing assets and property taxes are considered general and administrative expenses and, therefore are included on the general and administrative expense budget

true

The ABC company prepared a cash budget for the month. The company has outstanding loans and desires a minimum cash balance of $10,000. If the company has a preliminary cash balance of $25,000, the company should

use $15,000 to repay loans

potential negative outcomes of budgeting include:

1. budgetary slack 2. unethical behavior 3. unnecessary spending

budgeted financial statements include:

1. budgeted income statement 2. budgeted balance sheet

budgeted performance considers all of the following in relation to a benchmark:

1. company factors 2. industry factors 3. Economic factors

Identify the benefits of budgeting:

1. focuses on future opportunities 2. motivates employees 3. assists in the control function

characteristics of budgets include:

1. formal statement of a company's plans 2. typically cover a month, quarter or one year 3. expressed in dollars

match each figure on the budgeted balance sheet to the previously prepared budget from which the figure is derived: 1. accounts receivable 2. income tax payable 3. bank loan payable

1. sales budget 2. income statement budget 3. cash budget

match each item on the budgeted income statement to the previously prepared budget from which the figure is derived 1. Sales 2. Sales Commission Expense 3. Depreciation expense on office 4. interest expense

1. sales budget 2. selling expense budget 3. general and administrative expense budget 4. cash budget

List the individual budgets of the master budget in the order of which they are prepared, with the first on top

1. sales budget 2. production budget 3. direct materials, direct labor, Factory overhead budgets 4. cash budgets

budgeting guidelines that help insure budgeting is a positive motivating force include:

1. the opportunity to explain differences between actual and budgeted amounts 2. participatory budgeting 3. attainable goals

LA Company has a beginning cash balance of $6,000, cash receipts of $12,000, cash payments of $7,200 and an outstanding loan balance of $1,500. Their preliminary cash balance is $

10800

A company expects to sell 400 units of Product X in January and expects sales to increase by 10% per month. If Product X sells for $10 each, the total sales for the first quarter of the year will be $

13240

A manufacturing company expects to sell 12,000 units in August and 15,000 units in September. The company desires to have an ending finished goods inventory of 80% of the next month's sales. If beginning finished goods inventory on August 1 is 8,000 units, then the company should produce _____ units in August.

16000

A merchandising company's sales budget indicates the following sales: January: $25,000; February: $30,000; March: $35,000. Sales personnel are paid a salary plus commission. Salaries are expected to be $5,000 per month and the commission is 10% of sales. Additionally, advertising is expected to be $600 per month. The total selling expenses for the quarter will be $

25800

HN Company had a beginning cash balance of $50,000; cash payments of $15,000 and a loan balance with the bank of $7,000. If HN has an agreement with the bank that they will maintain a minimum cash balance of $30,000, their ending cash balance is $

30000