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Exam 7: Budgeting

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Question 41

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Production and sales estimates for May for the Cardinal Co. are as follows: The number of units expected to be sold in May is

A) 21,000
B) 3,700
C) 22,800
D) 18,300

E) C) and D)
F) All of the above

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Question 42

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

A) True
B) False

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Question 43

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The cash budget presents the expected inflow and outflow of cash for a specified period of time.

Goal conflict can be avoided if budget goals are carefully designed for consistency across all areas of the organization.

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 is the budgeted units of production for March?

Production estimates for July 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 July production is

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 0.50 lb. per unit @ $0.60 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 Material B used in production during the year is

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 is the budgeted units of production for February?

Jase Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $24,000. At 12,000 units of production, a flexible budget would show

Woodpecker Co. has $296,000 in accounts receivable on January 1. Budgeted sales for January are $860,000. Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month. The January cash collections from sales are

Why is the sales budget usually prepared first?

A company is preparing its cash budget.  Its cash balance on January 1 is $290,000 and it has a minimum cash requirement of $340,000. The following data has been provided: What is the amount of cash excess or deficiency (after considering the minimum cash balance required) for February?

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

Budgeting supports the planning process by encouraging all of the following activities except

The cash budget is affected by the sales budget, the various budgets for manufacturing costs and operating expenses, and the capital expenditures budget.

Truliant Co. sells a product called Withitall and has predicted the following sales for the first four months of the current year: Ending inventory for each month should be 20% of next month's sales.  How many units should be produced in February?

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

Future Technologies projected sales of 35,000 computers for this year. The estimated January 1 inventory is 3,000 units, and the desired December 31 inventory is 9,000 units. What is the budgeted production (in units) for the year?

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 and 30% in the month following the sale. The cash collections expected in October are

Willow Valley's April sales forecast projects that 7,000 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 production in April would be