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Exam 6: Budgeting

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Question 91

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As of January 1 of the current year, the Grackle Company had accounts receivables of $50,000. The sales for January, February, and March of 2012 were as follows: $120,000, $140,000 and $150,000. 20% of each month's sales are for cash. Of the remaining 80% (the credit sales) , 60% are collected in the month of sale, with remaining 40% collected in the following month. What is the accounts receivable balance as of March 31?

A) $72,000
B) $48,000
C) $58,720
D) $$60,000

E) All of the above
F) A) and B)

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Question 92

Multiple Choice

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The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. What would be the budgeted inventory for March 31st?

A) 46,000
B) 36,000
C) Cannot be determined from the data given
D) 42,000

E) B) and C)
F) C) and D)

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Question 93

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Based on the following production and sales data of Shingle Co. for March of the current year, prepare (a) a sales budget and (b) a production budget.

Describe a master budget and the sequence in which the individual budgets within the master budget are prepared.

Motorcycle Manufacturers, Inc. projected sales of 78,000 machines for 2012. The estimated January 1, 2012, inventory is 6,500 units, and the desired December 31, 2012, inventory is 7,000 units. What is the budgeted production (in units) for 2012?

Fashion Jeans, Inc. sells two lines of jeans; Simple Life and Fancy Life. Simple Life sells for $85.00 a pair and Fancy Life sells for $100.00 a pair. The company sells all of its jeans on credit and estimates that 60% is collected in the month of the sale, 35% is collected in the following month, and the rest is considered to be uncollectible. The estimated sales for Simple are as follows: January 20,000 jeans, February 27,500 jeans, and March 25,000 jeans. The estimated sales for Fancy are as follows: January 18,000 jeans, February 19,000, and March 20,500 jeans. What are the expected cash receipts for the month of March?

To meet projected annual sales, Greenleaf Manufacturers, Inc. needs to produce 75,000 machines for 2012. The estimated January 1, 2012, inventory is 7,000 units, and the desired December 31, 2012, inventory is 12,000 units. What are projected sales units for 2012?

Budgets are normally used only by profit-making businesses.

Magnolia, Inc. manufactures bedding sets. The budgeted production is for 55,000 comforters in 2012. Each comforter requires 7 yards of material. The estimated January 1, 2012, beginning inventory is 31,000 yards. The desired ending balance is 30,000 yards of material. If the material costs $4.00 per yard, determine the materials budget for 2012.

Yadkin Valley's April sales forecast projects that 6,000 units will sell at a price of $10.50 per unit. The desired ending inventory is 30% higher than the beginning inventory, which was 1,000 units. Budgeted purchases of units in April would be:

After the sales budget is prepared, the capital expenditures budget is normally prepared next.

Which of the following would not be used in preparing a cash budget for October?

Budget preparation is best determined in a top-down managerial approach.

The budgeted volume of production is based on the sum of (1) the expected sales volume and (2) the desired ending inventory, less (3) the estimated beginning inventory.

What is a capital expenditures budget?

Finch Company began its operations on March 31 of the current year. Finch Co. has the following projected costs: (1) 3/4 of the manufacturing costs are paid for in the month they are incurred. 1/4 is paid in the following month. (2) Insurance expense is $1,000 a month, however, the insurance is paid four times yearly in the first month of the quarter, i.e. January, April, July, and October. (3) Property tax is paid once a year in November. The cash payments for Finch Company in the month of April are:

Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem?

Production estimates for August are as follows: For each unit produced, the direct materials requirements are as follows: The number of pounds of materials A and B required for August production is:

The budget procedures used by a large manufacturer of automobiles would probably not differ from those used by a small manufacturer of paper products.

The cash budget summarizes future plans for acquisition of fixed assets.