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Exam 8: Master Budgeting

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Question 51

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The master budget consists of a number of separate but interdependent budgets.

A) True
B) False

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Question 52

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Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase. -The October cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

A) $68,800
B) $64,960
C) $14,720
D) $50,240

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

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Question 53

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Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: o Sales are budgeted at $340,000 for November, $320,000 for December, and $310,000 for January. o Collections are expected to be 80% in the month of sale and 20% in the month following the sale. o The cost of goods sold is 75% of sales. o The company would like to maintain ending merchandise inventories equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. o Other monthly expenses to be paid in cash are $24,000. o Monthly depreciation is $15,000. o Ignore taxes. -The cost of December merchandise purchases would be:

The budgeted income statement is typically prepared before the budgeted balance sheet.

Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase. -In Acti's budgeted balance sheet at December 31,at what amount will accounts payable for raw materials be shown?

Jeanclaude Corporation produces and sells one product.The budgeted selling price per unit is $105.Budgeted unit sales for July,August,September,and October are 7,400,7,500,13,800,and 15,300 units,respectively.All sales are on credit.Regarding credit sales,40% are collected in the month of the sale and 60% in the following month. The budgeted accounts receivable balance at the end of August is closest to:

Murie Corporation makes one product and has provided the following information: The estimated net operating income (loss) for February is closest to:

Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase. -If the budgeted direct labor cost for April is $201,600,then the budgeted production of Pods for April would be:

Capes Corporation is a wholesaler of industrial goods.Data regarding the store's operations follow: o Sales are budgeted at $390,000 for November,$360,000 for December,and $340,000 for January. o Collections are expected to be 85% in the month of sale and 15% in the month following the sale. o The cost of goods sold is 80% of sales. o The company desires an ending merchandise inventory equal to 40% of the cost of goods sold in the following month.Payment for merchandise is made in the month following the purchase. o The November beginning balance in the accounts receivable account is $77,000. o The November beginning balance in the accounts payable account is $320,000. Required: a.Prepare a Schedule of Expected Cash Collections for November and December. b.Prepare a Merchandise Purchases Budget for November and December.

Porter Corporation makes and sells a single product called a Yute. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the year. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. -If the total budgeted selling and administrative expense for October is $518,520,then how many Yutes does the company plan to sell in October?

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit. b. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. c. The ending finished goods inventory equals 30% of the following month's sales. d. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $4.00 per pound. e. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. f. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours. g. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour. h. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000. -The estimated cost of goods sold for February is closest to:

Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected: 30% in the month of the sale 70% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs. -The estimated selling and administrative expense for February is closest to:

Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected: 30% in the month of the sale 70% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs. -The estimated unit product cost is closest to:

The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. -If the budgeted cash disbursements for selling and administrative expenses for April total $195,500,then how many Debs does the company plan to sell in April?

A continuous or perpetual budget is a 12-month budget that rolls forward one month (or quarter)as the current month (or quarter)is completed.

The basic idea underlying responsibility accounting is that a manager should be held responsible for those items-and only those items-that the manager can actually control to a significant extent.

A benefit from budgeting is that it forces managers to think about and plan for the future.

Coles Corporation, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows: The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. -The desired ending inventory of Material K for September is:

Acti Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year: At Acti, 40% of raw materials purchases are normally paid for in the month of purchase. The remaining 60% is paid for in the month following the purchase. -If the budgeted direct labor time for November is 7,000 hours,then the total budgeted manufacturing overhead for November is:

Coles Corporation, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows: The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. -The total cost of Material K to be purchased in August is: