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117.The projection of financial position at the end of the budget period is found on the a.budgeted income statement. b.cash budget. c.budgeted balance sheet. d.sales budget. 118.What is the proper preparation sequencing of the following budgets? 1.Budgeted Balance Sheet 2.Sales Budget 3.Selling and Administrative Budget 4.Budgeted Income Statement a.1, 2, 3, 4 b.2, 3, 1, 4 c.2, 3, 4, 1 d.2, 4, 1,.
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Ex. 194 In May 2016, the budget committee of Crater, Inc. assembles the following data in preparation of budgeted merchandise purchases for the month of June. 1.Expected sales: June $750,000, July $900,000. 2.Cost of goods sold is expected to be 80% of sales. 3.Desired ending merchandise inventory is 40% of the following (next) month's.
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11.Flexible budgeting relies on the assumption that unit variable costs will remain constant within the relevant range of activity. 12.Total budgeted fixed costs appearing on a flexible budget will be the same amount as total fixed costs on the master budget. 13.A flexible budget is prepared before the master budget. 14.The activity index.
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97.Comma Manufacturing budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels are planned for the fiscal year of July 1, 2016 to June 30, 2017: a.1,681,000 b.1,686,000 c.1,680,000 d.1,678,000 98.The following information is taken from the production budget for the first quarter: a.458,000 b.454,000 c.474,000 d.459,200 99.Off-Line Co. has 9,000 units in beginning.
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Ex. 170 Pitt Corp. makes and sells a single product, widgets. Two pounds of sand are needed to make one widget. Budgeted production of widgets for the next two months follows: September25,000 units October31,000 units The company wants to maintain monthly ending inventories of sand equal to 20% of the following month's production needs..
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Ex. 186 Cruises, Inc. has budgeted sales revenues as follows:    June      July    August  Credit sales$135,000$125,000$  90,000 Cash sales    90,000  255,000  195,000 Total sales$225,000$380,000$285,000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are.
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Ex. 172 Garver Industries has budgeted the following unit sales:    2017   Units January10,000 February8,000 March9,000 April11,000 May15,000 The finished goods units on hand on December 31, 2016, was 2,000 units. Each unit requires 3 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a.
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Ex. 181 Walt Bach Company has accumulated the following budget data for the year 2016. 1.Sales: 40,000 units, unit selling price $50. 2.Cost of one unit of finished goods: Direct materials 2 pounds at $5 per pound, direct labor 1.5 hours at $12 per hour, and manufacturing overhead $6 per direct labor hour. 3.Inventories.
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58.Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets? a.Direct materials cost b.Direct labor cost c.Variable manufacturing overhead d.Fixed manufacturing overhead 59.In developing a flexible budget within a relevant range of activity, a.only fixed.
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147.The primary benefits of budgeting include all of the following except it a.requires only top management to plan ahead and formalize their future goals. b.provides definite objectives for evaluating performance. c.creates an early warning system for potential problems. d.motivates personnel throughout the organization. 148.The responsibility for expressing management's budgeting goals in financial terms is performed.
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Ex. 184 Burr, Inc. provided the following information:     July    August Projected sales$220,000$260,000 Projected merchandise purchases$150,000$180,000 Burr estimates that it will collect 40% of its sales in the month of sale, 35% in the month after the sale, and 22% in the second month following the sale. Three percent of all sales are estimated to.
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BE 163 Jent Company reported the following information for 2013: OctoberNovemberDecember Budgeted sales$320,000$340,000$360,000 Budgeted purchases$120,000$128,000$144,000 ?All sales are on credit. ?Customer amounts on account are collected 40% in the month of sale and 60% in the following month. Instructions Compute the amount of cash Jent will receive during November. BE 164 Plack Company budgeted the following information for 2013: MayJuneJuly Budgeted purchases$104,000$110,000$102,000 Cost.
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MULTIPLE CHOICE QUESTIONS 38.What is budgetary control? a.Another name for a flexible budget b.The degree to which the CFO controls the budget c.The use of budgets in controlling operations d.The process of providing information on budget differences to lower level managers 39.A major element in budgetary control is a.the preparation of long-term plans. b.the comparison of actual results.
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11.The longer the budget period, the more reliable the estimates of future outcomes. 12.The budget committee has the responsibility for coordinating the preparation of the budget. 13.The budget is developed within the framework of a sales forecast. 14.Budgeting and long-range planning are two terms that describe the same process. 15.Long-range plans are used more.
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EXERCISES Ex. 169 Delta Manufacturing has budgeted the following unit sales: 2016  Units April25,000 May40,000 June60,000 July45,000 Of the units budgeted, 40% are sold by the Coastal Division at an average price of $15 per unit and the remainder are sold by the Central Division at an average price of $12 per unit. Instructions Prepare separate sales budgets for each.
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BE 167 Beal, Inc. provided the following information: MarchAprilMay Projected merchandise purchases$65,000$75,000$80,000 Beal pays 40% of merchandise purchases in the month purchased and 60% in the following month. General operating expenses are budgeted to be $20,000 per month of which depreciation is $2,000 of this amount. Beal pays operating expenses in the month.
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127.Correy Inc. reported the following information for 2016: a.$220,000 b.$490,000 c.$450,000 d.$440,000 128.Correy Company reported the following information for 2016: a.$96,000 b.$144,000 c.$204,000 d.$102,400 129.Petal Co. reported the following information for 2016: a.$900,000 b.$540,000 c.$465,000 d.$435,000 130.Bean Manufacturing reported the following information for 2016: a.$404,000 b.$148,000 c.$188,000 d.$444,000 131.During September, the capital expenditure budget indicates a $420,000 purchase of equipment. The ending September cash balance from operations is budgeted to.
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Ex. 177 For each item given, identify the budget in which it will appear. If an item will appear on more than one budget, then indicate as many budgets as are relevant. Budget Code: DMDirect Materials Budget DLDirect Labor Budget PProduction Budget SSales Budget CCash Budget BBSBudgeted Balance Sheet BISBudgeted Income Statement SASelling and Administrative Expense Budget MOHManufacturing Overhead Budget ___________1.Ending cash.
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Ex. 176 Pulham Company is preparing its direct labor budget for 2016 from the following production budget based on a calendar year: Quarter Units 160,000 230,000 345,000 475,000 Each unit requires 2 hours of direct labor. The union contract provides for a 10% increase in wage rate to $11 per hour on October 1. Instructions .
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137.Which one of the following budgets would be prepared for a manufacturer but not for a merchandiser? a.Direct labor budget b.Cash budget c.Sales budget d.Budgeted income statement 138.The formula for determining budgeted merchandise purchases is budgeted a.production + desired ending inventory – beginning inventory. b.sales + beginning inventory – desired ending inventory. c.cost of goods sold + desired.
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Ex. 183 In September 2016, the budget committee of Jason Company assembles the following data: 1.Expected Sales October$1,800,000 November1,700,000 December1,600,000 2.Cost of goods sold is expected to be 60% of sales. 3.Desired ending merchandise inventory is 20% of the next month's cost of goods sold. 4.The beginning inventory at October 1 will be the desired amount. Instructions Prepare the budgeted.
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MATCHING 208.Match the items below by entering the appropriate code letter in the space provided. A.Budget              F.              Production budget B.Financial budgets              G.              Cash budget C.Budget committee              H.              Long-range planning D.Master budget              I.              Direct materials budget E.Sales forecast              J.              Sales budget ____              1.A selection of strategies to achieve long-term goals. ____              2.An estimate of expected sales for the budget.
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S-A E  212 What is participative budgeting? What are its potential benefits? What are its potential shortcomings? S-A E  213(Ethics) Ashley Finn is a new production manager. After a great deal of effort, including considerable market research, she completes her budget and submits it to her boss, Keith Payne. Without even looking at.
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Ex. 190 The beginning cash balance is $20,000. Sales are forecasted at $700,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $500,000. Accounts receivable from previous accounting periods totaling $12,000.
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48.When budgeted and actual results are not the same amount, there is a budget a.error. b.difference. c.anomaly. d.by-product. 49.Top management’s reaction to a difference between budgeted and actual sales often depends on a.whether the difference is favorable or unfavorable. b.whether management anticipated the difference. c.the materiality of the difference. d.the personality of the top managers. 50.If costs are not responsive.
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COMPLETION STATEMENTS               196.A _________________ is a formal written statement of management's plans expressed in financial terms.               197.A budget is a primary means of ________________ agreed upon objectives throughout the business organization.               198.Effective budgeting is dependent on an _________________________ in which authority and responsibility are clearly defined.               199.The budget should have.
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Ex. 185 Casa Development, Inc. has budgeted sales revenues as follows: Budgeted Sales Revenues January$55,000 February75,000 March90,000 April80,000 May60,000 June35,000 Past experience has indicated that 80% of sales each month are on credit and that collection of credit sales occurs as follows:  60% in the month of sale, 30% in the month following the sale, and 5% in the.
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TRUE-FALSE STATEMENTS 1.Budget reports comparing actual results with planned objectives should be prepared only once a year. 2.If actual results are different from planned results, the difference must always be investigated by management to achieve effective budgetary control. 3.Certain budget reports are prepared monthly, whereas others are prepared more frequently depending on the.
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21.A manufacturing overhead budget is not needed if the company develops a predeter-mined overhead rate to apply overhead. 22.The manufacturing overhead budget generally has separate sections for variable, mixed, and fixed costs. 23.A production budget should be prepared before the sales budget. 24.The direct materials budget contains both quantity and cost data. 25.The budgeted.
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S-A E  214(Communication) At Boulder Industries, budgets are the responsibility of everyone. Each department collaborates in determining its expected needs, and sales personnel determine the likely sales volume. Bart Gray, one of the production managers, believes in building plenty of slack into everything, including his estimates of ending inventory of work.
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Ex. 192 Hagen Company's budgeted sales and direct materials purchases are as follows. Budgeted SalesBudgeted D.M. Purchases January$300,000$60,000 February330,00070,000 March350,00080,000 Hagen's sales are 40% cash and 60% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Hagen's.
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Ex. 173 Benet Company has budgeted the following unit sales:        2017                 2016          Quarter  UnitsQuarter  Units  1105,000190,000 260,000 375,000 4120,000 The finished goods inventory on hand on December 31, 2015 was 21,000 units. It is the company's policy to maintain a finished goods inventory at the end of each quarter equal to 20% of the next quarter's anticipated sales. Instructions Prepare a.
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MULTIPLE CHOICE QUESTIONS 37.Why are budgets useful in the planning process? a.They provide management with information about the company's past performance. b.They help communicate goals and provide a basis for evaluation. c.They guarantee the company will be profitable if it meets its objectives. d.They enable the budget committee to earn their paycheck. 38.A budget a.is a substitute.
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Ex. 189 The management of Ocean Industries estimates that credit sales for August, September, October, and November will be $540,000, $750,000, $840,000, and $480,000, respectively. Experience has shown that collections are made as follows: In month of sale25% In first month after sale60% In second month after sale10% Instructions Determine the collections from customers in October.
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57.The budget committee would not normally include the a.research director. b.treasurer. c.sales manager. d.external auditor. 58.The budget committee in a company is often headed by the a.president. b.controller. c.treasurer. d.budget director. 59.Long-range planning a.generally presents more detailed information than an annual budget. b.generally encompasses a longer period of time than an annual budget. c.is usually more accurate than an annual budget. d.is prepared on.
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Ex. 179 Shep Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first quarter of 2016, the following data are developed: 1.Sales:  20,000 units; unit selling price:$30 2.Variable costs per dollar of sales: Sales commissions6% Delivery expense2% Advertising4% 3.Fixed costs per quarter: Sales salaries$24,000 Office salaries19,000 Depreciation6,000 Insurance2,000 Utilities1,000 Instructions Prepare a selling and administrative expense.
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77.The production budget shows expected unit sales are 100,000. The required production units are 104,000. What are the beginning and desired ending finished goods units, respectively? a.10,0006,000 b.6,00010,000 c.4,00010,000 d.10,0004,000 78.The production budget shows that expected unit sales are 48,000. The total required units are 54,000. What are the required production units? a.6,000 b.9,000 c.12,000 d.Cannot be determined from.
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Ex. 187 Clay Co.’s projected sales are as follows: August$400,000 September$450,000 October$550,000 Clay estimates that it will collect 30% in the month of sale, 50% in the month after the sale, and 18% in the second month following the sale. Two percent of all sales are estimated to be bad debts. Instructions How much are Clay Co.'s.
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SHORT-ANSWER ESSAY QUESTIONS S-A E  209 (a)What is a budget? (b)How does a budget contribute to good management? S-A E  210 Budgeting can be an important management tool if implemented properly. Identify several positive results when budgets are used properly. Since budgets affect people, identify several negative aspects if budgets are not implemented properly. S-A E .
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Ex. 171 Butler Manufacturing manufactures two products, (1) Regular and (2) Deluxe. The budgeted units to be produced are as follows: Units of Product 2016Regular Deluxe  Total July10,00015,00025,000 August6,00010,00016,000 September9,00014,00023,000 October8,00012,00020,000 It takes 2 pounds of direct materials to produce the Regular product and 5 pounds of direct materials to produce the Deluxe product. It is the company's.
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67.Which of the following is not an operating budget? a.Direct labor budget b.Sales budget c.Production budget d.Cash budget 68.Which of the following is not a financial budget? a.Capital expenditure budget b.Cash budget c.Manufacturing overhead budget d.Budgeted balance sheet 69.Which of the following is done to improve the reliability of the sales forecast? a.Employ financial planning models b.Lengthen the planning horizon to more.
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BRIEF EXERCISES BE 159 Wynn, Inc. manufactures beanies. The budgeted units to be produced and sold are below: Expected ProductionExpected Sales August3,5002,900 September2,8003,900 It takes 18 yards of yarn to produce a beanie. The company's policy is to maintain yarn at the end of each month equal to 5% of next month's production needs and to.
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87.Which one of the following is not needed in preparing a production budget? a.Budgeted unit sales b.Budgeted raw materials c.Beginning finished goods units d.Ending finished goods units 88.A company budgeted unit sales of 204,000 units for January, 2017 and 240,000 units for February 2017. The company has a policy of having an inventory of units.
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47.It is important that budgets be accepted by a.division managers only. b.department heads only. c.supervisors only. d.All of these answers are correct. 48.Which of the following statements about budget acceptance in an organization is true? a.The most widely accepted budget by the organization is the one prepared by top management. b.The most widely accepted budget by the.
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21.Cost centers, profit centers, and investment centers can all be classified as responsibility centers. 22.More costs become controllable as one moves down to each lower level of managerial responsibility. 23.In a responsibility accounting reporting system, as one moves up each level of responsibility in an organization, the responsibility reports become more summarized.
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BE 168 The beginning cash balance is $15,000. Sales are forecasted at $800,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $475,000. Accounts Receivable from previous accounting periods totaling $9,000.
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Ex. 180 Thread Company is preparing its manufacturing overhead budget for 2016. Relevant data consist of the following. Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000. Direct labor: Time is 1 hour per unit. Variable overhead costs per direct labor hour: Indirect materials $0.80; indirect labor $1.20; and maintenance $0.50. Fixed overhead costs.
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