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Exam 10: Budgetary Planning and Control

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Question 31

True/False

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The budgeted balance sheet is also called a pro-forma balance sheet.

A) True
B) False

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Question 32

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Ace Ladders has fewer units in beginning finished goods inventory than in ending finished goods inventory.The number of units sold is

A) less than the number of units produced.
B) greater than the number of units produced.
C) less than the number of units in beginning finished goods inventory.
D) greater than the number of units in ending finished goods inventory.

E) A) and B)
F) None of the above

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Question 33

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Who is responsible for the approval of the master budget?

If the number of units produced equals the number of units sold, the number of units in ending inventory will equal the number of units in beginning inventory on the production budget.

Only manufacturing firms need to prepare a production budget.

A static budget is prepared for a single anticipated level of production.

Market Leasing budgeted credit sales in the first quarter of 2018 to be as follows: $\begin{array} { l r } \text { January } & \$ 210,000 \\\text { February } & 190,000 \\\text { March } & 170,000\end{array}$ The budgeted beginning cash balance at February 1 is expected to be $14,000 and budgeted monthly cash disbursements are expected to be $198,000.Credit sales in December, 2017 are expected to be $204,000.The company expects to collect 20% of a month's sales in the month of sale and 80% in the following month.How much is the budgeted cash balance at the end of February?

A significant difference between the direct material purchases budget and the production budget is that the production budget considers

Which of the following budgets is prepared last?

Washam Company must maintain a minimum cash balance of $25,000.At the beginning of June the company's cash balance was $17,000.Budgeted cash receipts for June are $150,000 and budgeted cash disbursements are $201,000.Budgeted net income for July totals $11,000.How much will Washam Company need to borrow by the end of June?

In a top-down approach to budgeting, what occurs?

Which of the following transactions will affect the cash budget for a particular month in which each transaction occurs?

Changes in economic conditions can be one of the causes for significant deviations from the planned performance.

Which of the following contains at least one item that is not a common method companies use to estimate sales?

Walker Entertainment is a distributor of video games and expects its video game sales to be as follows for the first 4 months of 2017: $\begin{array} { l l } \text { January } & \$ 100,000 \\\text { February } & \$ 150,000 \\\text { March } & \$ 180,000 \\\text { April } & \$ 200,000\end{array}$ Walker's cost of goods sold is 70% of sales.Ending inventory is expected to equal 40% of the next month's cost of goods sold.How much are budgeted inventory purchases for February?

Bombay Cabinet Store's policy is to keep 25% of the next month's sales in ending inventory.If sales are expected to be 5,000 units in March, 5,800 units in April, and 6,000 units in May, how many units should be produced in April?

The formal documents that quantify a company's plans for achieving its goals are called

Shorstein Manufacturing Company purchases raw materials on account each month.Purchases are paid for according to the following schedule: 30% is paid in the month of the purchase 60% is paid in the month following the purchase 10% is paid in the second month following the purchase Budgeted purchases are as follows: $\begin{array} { l l } \text { March } & \$ 75,000 \\\text { April } & \$ 90,000 \\\text { May } & \$ 85,000\end{array}$ How much will be reported for Accounts Payable for material purchases as of the end of May?

Under what circumstances may a manager be motivated to defer a shipment until the next period?

Maxim Fasteners distributes giant binder clips that sell for $3 each.Maxim pays $1.20 each to buy the clips.The company has $4,000 per month in fixed costs.Policies and other information follow: -Inventory is maintained at the end of each month equal to 10% of the next month's projected sales in units. -Purchases are paid 40% in the month acquired and the balance in the month after. -All sales are on credit, and 30% are collect in the month of sale and 70% in the month after sale. -Budgeted monthly sales in units for the first five months of 2017 are as follows: $\begin{array} { l l l } \text { - January } & 6,000 \text { units } \\\text { - February } & 5,000 \text { units } \\\text { - March } & 7,000 \text { units } \\\text { - April } & 9,000 \text { units } \\\text { - May } & 8,000 \text { units }\end{array}$ Variable selling and administrative costs are $0.50 per clip and are paid in the month of incurred. How much are budgeted cash collections during April?