Chapter 9

Kam Department Store reported the following information for 2022: October November December Budgeted sales $1240000 $1160000 $1440000 All sales are on credit. Accounts receivable are collected 50% in the month of sale and 50% in the following month. What are budgeted cash receipts for November?

$1200000

Astor Manufacturing has the following budgeted sales: January $120000, February $180000, and March $150000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts for March are:

$159000.

The following information was taken from Southgate Industry's cash budget for the month of July: Beginning cash balance $480000 Cash receipts 304000 Cash disbursements 544000 If the company's policy is to maintain a minimum end of the month cash balance of $400000, the amount the company would have to borrow in July is

$160000.

Garnett Co. expects to purchase $180000 of materials in July and $210000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. What are budgeted cash disbursements for materials purchases in August?

$202500

The direct materials budget shows the following: Desired ending direct materials 18000 pounds Direct materials required for production 99000 pounds Beginning direct materials 13200 pounds The total quantity of direct materials to be purchased is

103800 pounds.

What is the proper preparation sequencing of the following budgets? 1. Budgeted Balance Sheet 2. Sales Budget 3. Selling and Administrative Budget 4. Budgeted Income Statement

2, 3, 4, 1

The direct materials budget shows the following: Units to be produced 3000 Direct materials pounds required for production 9000 Direct materials pounds to be purchased 9900 What are the direct materials per unit?

3.00 pounds

Lorie Nursery plans to sell 320 potted plants during April and 240 units in May. Lorie keeps 15% of the next month's sales as ending inventory. How many units should Lorie produce during April?

308

The following information is taken from the production budget for the first quarter: Beginning finished goods units 1200 Expected sales units 426000 Capacity in units of production facility 472000 How many units of finished goods should be produced during the quarter if the company desires 3200 finished goods units available to start the next quarter?

428000

If there were 60000 pounds of direct materials on hand on January 1, 120000 pounds are desired for inventory at January 31, and 410000 pounds are required for January production, how many pounds of direct materials should be purchased in January?

470000 pounds

Long-range planning usually encompasses a period of at least

5 years

Dolce Co. estimates its sales at 180000 units in the first quarter and that sales will increase by 18000 units for each subsequent quarter during the year. The company has, and desires, an ending finished goods inventory to 25% of the next quarter's sales. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is collected in the quarter following the sale. Cash collections for the third quarter are budgeted at

5319000

The production budget shows expected sales units are 100000. The required production units are 104000. What are the beginning and desired ending finished goods units, respectively?

6000 and 10000

Which of the following statements about budget acceptance in an organization is true?

Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process.

The single most important output from preparing financial budgets is the

Cash budget

Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable?

Department managers should only be held accountable for controllable variances for their departments

Which one of the following is not a section of a cash budget?

Investing

The starting point for preparing the master budget is the preparation of the

Sales budget

Which of the following statements about a budgeted income statement is not true?

The budgeted income statement is prepared after the financial budgets are prepared.

The effectiveness of a budget is enhanced by

an organizational structure with clearly defined lines of authority and responsibility

The projected financial position at the end of the budget period is found on the

budgeted balance sheet.

The culmination of preparing operating budgets is the preparation of the

budgeted income statement.

The direct materials and direct labor budgets provide information for preparing the

cash budget

The financial budgets include the

cash budget and the budgeted balance sheet.

It is important that budgets be accepted by

division managers, department heads, and superviors.

The cash budget reflects

expected cash receipts and cash disbursements from all sources

Long-range planning

generally encompasses a longer period of time than an annual budget.

An unrealistic budget is more likely to result when it

has been developed in a top down fashion.

Which of the following expenses would not appear on a selling and administrative expense budget?

indirect labor

A master budget consists of

interrelated financial budgets and operating budgets.

The most common budget period is

one year

A common starting point in the budgeting process is

past performance

Budgeting is usually most closely associated with which management function?

planning

In preparing a direct labor budget, the number of direct labor hours required is calculated using the

production budget.

A sales forecast

shows forecasts for the industry and for the firm.