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Exam 6: Budgeting

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Question 31

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Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A .50 lb. per unit @ $ .60 per pound Material B 1.00 lb. per unit @ $1.70 per pound Material C 1.20 lb. per unit @ $1.00 per pound The dollar amount of direct material B used in production during the year is:

A) $1,057,400
B) $1,193,400
C) $1,026,800
D) $1,224,000

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

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Question 32

Multiple Choice

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Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 30% in the month following the sale. The cash collections in November are:

A) $317,750
B) $389,750
C) $490,000
D) $410,000

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

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Question 33

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The first budget to be prepared is usually the production budget.

Cuisine Inc. manufactures flatware sets. The budgeted production is for 80,000 sets in 2012. Each set requires 2.5 hours to polish the material. If polishing labor costs $15.00 per hour, determine the direct labor budget for 2012.

The budget that needs to be completed first when preparing the master budget is the:

The budgeting process is used to effectively communicate planned expectations regarding profits and expenses to the entire organization.

Bob and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production would show:

Crow Manufacturers, Inc. projected sales of 75,000 bicycles for 2012. The estimated January 1, 2012, inventory is 5,000 units, and the desired December 31, 2012, inventory is 8,000 units. What is the budgeted production (in units) for 2012?

The first budget to be prepared is usually the sales budget.

Production and sales estimates for June are as follows: The budgeted total sales for June is:

Which of the following budgets is not directly associated with the production budget?

The flexible budget is, in effect, a series of static budgets for different levels of activity.

For March, sales revenue is $1,000,000; sales commissions are 5% of sales; the sales manager's salary is $80,000; advertising expenses are $75,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $2,100 plus 1% of sales. Total selling expenses for the month of March are:

Warmfeet manufactures comforters. Assume the estimated inventories on January 1, 2012, for finished goods, work in process, and materials were $39,000, $33,000 and $27,000 respectively. Also assume the desired inventories on December 31, 2012, for finished goods, work in process, and materials were $42,000, $35,000 and $21,000 respectively. Direct material purchases were $575,000. Direct labor was $212,000 for the year. Factory overhead was $156,000. Prepare a cost of goods sold budget for Warmfeet, Inc.

Detailed supplemental schedules based on department responsibility are often prepared for major items in the operating expenses budget.

Match the following terms with the best definition given.

If the expected sales volume for the current period is 9,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is:

The first budget customarily prepared as part of an entity's master budget is the:

The master budget of a small manufacturer would normally include all necessary component budgets except the capital expenditures budget.

The sales budget is derived from the production budget.