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Exam 10: Static and Flexible Budgets

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Question 71

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Use the following information for the next 4 questions. TNR Corporation is preparing its budgeted income statement for the month of August. Budgeted sales are $18,000. Cost of goods sold is twice the amount of operating costs, and operating costs plus cost of goods sold equals 40% of net income. Return on sales (net income / sales) is anticipated to be 50%. TNR does not have any nonoperating items on its income statement. -TNR's budgeted gross margin is

A) $3,600
B) $15,600
C) $14,400
D) None of the above

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Question 72

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Cash payments on account for February are

A) $30,960
B) $12,384
C) $30,120
D) $25,344

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Question 73

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Cash receipts for April will be

A budget that reflects a range of operations is called a

Use the following information for the next 5 questions. Kelita, Inc., projects sales for its first three months of operation as follows: Inventory on October 1 is $40,000. Subsequent beginning inventories should be 40% of that month's cost of goods sold. Goods are priced at 140% of their cost. 50% of purchases are paid for in the month of purchase; the balance is paid in the following month. It is expected that 50% of credit sales will be collected in the month following sale, 30% in the second month following the sale, and the balance the third month. A 5% discount is given if payment is received in the month following sale. -What is the projected cost of goods sold for October?

A flexible budget reflects a range of operations.

To prepare a cash budget, managers plan I. Cash receipts II. Cash disbursements III. Short-term borrowing or investments

Participative budgeting involves customers and managers at all levels in the organization.

When an organization's actual revenues are greater than its budgeted revenues, the difference is referred to as a favorable variance.

TFS' budgeted cost of goods available for sale for the next fiscal year will be

Use the following information for the next 4 questions. (CPA) The Dilly Company marks up all merchandise at 25% of gross purchase price. All purchases are made on account with terms of 1/10, (1% discount if paid in 10 days) net/60 (full amount due within 60 days) . Purchase discounts, which are recorded as miscellaneous income, are always taken. Normally, 60% of each month's purchases are paid for in the first month after purchase, whereas the other 40% are paid during the first 10 days of the first month after purchase. Inventories of merchandise at the end of each month are kept at 30% of the next month's forecasted cost of good sold. Terms for sales on account are 2/10 (2% discount if paid within 10 days) , net/30 (full amount due in 30 days) . Cash sales are not subject to discount. Fifty percent of each month's sales on account are collected during the month of sale, 45% are collected in the succeeding month, and the remainder is usually uncollectible. Seventy percent of the collections in the month of sale are subject to discount, and 10% of the collections in the succeeding month are subject to discount (2%) . Forecasted sales data and cost of sales for selected months are as follows: -Assuming that all of the beginning inventory for December is sold, forecasted gross purchases for January are

The research and development cost variance could be explained by

To address the difference between budgeted cash receipts and budgeted cash disbursements, managers also budget which of the following?

The difference between a static budget and a flexible budget is that

A firm expects credit sales for the week to amount to $3,000, accounts receivable to increase by $200, and accounts payable to decrease by $500. Given this information, what will be the effect on cash?

Use the following information for the next 5 questions. Kelita, Inc., projects sales for its first three months of operation as follows: Inventory on October 1 is $40,000. Subsequent beginning inventories should be 40% of that month's cost of goods sold. Goods are priced at 140% of their cost. 50% of purchases are paid for in the month of purchase; the balance is paid in the following month. It is expected that 50% of credit sales will be collected in the month following sale, 30% in the second month following the sale, and the balance the third month. A 5% discount is given if payment is received in the month following sale. -What is the projected cost of purchases for October?

The cost of ending finished goods inventory of round tables for 20x1 is

What will be the ending cash balance for January?

Which of the following correctly describes budgeted direct materials purchases?

Use the following information for the next 2 questions. Taft Corporation collects cash from customers as follows: 60% in the month of sale, 20% in the month after sale, 19% in the second month after sale, and 1% is never collected. Bad debts are written off annually in December. Budgeted sales are all on credit and amount to: -What is the budgeted amount of accounts receivable at the end of August?