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Exam 20: Master Budgets and Performance Planning

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Question 41

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Presented below are terms or phrases preceded by letters (a)through (j)and followed by a list of definitions 1 through 10.Match the correct definitions with the terms or phrases by placing the letter of the term or phrase in the answer space provided at the beginning of the definition. (a)Budget (b)Capital expenditure budget (c)Manufacturing budget (d)Sales budget (e)Production budget (f)Cash budget (g)Budgeted balance sheet (h)Continuous budgeting (i)Selling expense budget (j)Rolling budgets _____ (1.) A plan that lists the types and amounts of selling expenses expected during the budget period. _____ (2.) A plan that shows the predicted costs for direct materials,direct labor,and overhead costs to be incurred in manufacturing the units in the production budget. _____ (3.) An accounting report that presents predicted amounts of the company's assets,liabilities,and equity as of the end of the budget period. _____ (4.) A formal statement of future plans,usually expressed in monetary terms. _____ (5.) A plan showing the units of goods to be sold and the sales to be derived; usually the starting point in the budgeting process. _____ (6.) A plan that lists dollar amounts to be both received from disposing of plant assets and spent on purchasing additional plant assets to carry out the budgeted business activities. ______ (7.) The practice of preparing budgets for a selected number of several periods and revising those budgets as each period is completed. ______ (8.) A plan showing the number of units to be produced each month. ______ (9) A plan that shows the expected cash inflows and outflows during the budget period,including receipts from loans needed to maintain a minimum cash balance and repayments of such loans. ______ (10) A new set of budgets added to replace the ones that have lapsed as each budget period goes by.

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(1) i (2) c (3) g (4...

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Question 42

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The budgeted balance sheet is prepared with data contained in the previously prepared components of the master budget.

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Question 43

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A plan that shows the expected cash inflows and cash outflows during the budget period,including receipts from loans needed to maintain a minimum cash balance and repayments of such loans,is called a(n) :

The usual budget period is:

The master budget process usually ends with:

David,Inc.is preparing its master budget for the second quarter.The following sales and production data have been forecasted: $\begin{array}{llr} &\text { April}&\text { May }&\text {June}&\text { July }&\text {August }\\\text { Unit sales } & 400 & 500 & 520 & 480 & 540 \end{array}$ Finished goods inventory on March 31: 120 units Raw materials inventory on March 31: 450 pounds Desired ending inventory each month: Finished goods:30% of next month's sales Raw materials:25% of next month's production needs Number of pounds of raw material required per finished unit: 4 lb. Number of direct labor hours to produce each unit: 3 hours Labor rate per hour: $10 (a)How many units should be produced during April and May? (b)How many pounds of raw materials should be purchased in April? (c)What is the budgeted labor cost for April?

Indicate the order in which the following budgets would be completed (1 = first and so on) ______ (A)Cash budget ______ (B)Budgeted income statement ______ (C)Sales budget ______ (D)Production budget ______ (E)Operating expense budget

The ___________________________ is prepared by manufacturing firms and takes the place of the purchases budget prepared by merchandising firms.

Kabuki Company's policy is to have 16% of the next month's sales as desired ending inventory.Estimated sales are shown in the following table.Given this data,what are Kabuki's estimated purchases for March? $\begin{array}{llll} & \text { March } & \text { April } & \text { May } \\\text { Expected sales units } & 9,400 & 8,900 & 7,300\end{array}$

A formal statement of future plans,usually expressed in monetary terms,is a:

Reference: 20_04 Kyoto, Inc. predicts the following sales in units for the coming four months: $\begin{array}{llr}&\text { April}&\text { May}&\text { June}&\text { July }\\\text { Sales in units } &240&280&300&240\\\end{array}$ Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material B. The March 31 raw materials inventory has 200 pounds of B. Each month's ending inventory of raw materials should be 30% of the following month's production needs. -If each unit of Kyoto's product takes two hours to produce and the labor rate is expected to be $10 per hour,what is the budgeted labor cost for May?

Stritch Company is trying to decide how many units of merchandise to order each month.The company's policy is to have 20% of the next month's sales in inventory at the end of each month.Projected sales for August,September,and October are 30,000 units,20,000 units,and 40,000 units,respectively.How many units must be purchased in September?

What is a capital expenditures budget?

Lara Company has budgeted the following credit sales during the current year: September,$25,000; October,$36,000; November,$30,000; December,$32,000.Experience has shown that payment for the credit sales is received as follows: 15% in the month of sale,60% in the first month after sale,20% in the second month after sale,and 5% is uncollectible.How much cash can Lara Company expect to collect in November as a result of current and past credit sales?

A quantity of merchandise or materials over the minimum needed reduce the risk of running short is called:

Reference: 20_01 Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. -Budgeted purchases of Product B for the year would be:

The master budget is a small component of the comprehensive budget.

A budget is best described as:

Tannwin Co.sells a new product called Accountomatic and has predicted the following sales for the first four months of the current year: $\begin{array}{ccccc} & \text { Jan. } & \text { Feb. } & \text { March } & \text { April } \\\text { Sales in units } & 1,700 & 1,900 & 2,100 & 1,600\end{array}$ Ending inventory for each month should be 20% of the next month's sales,and the prior December 31 inventory is consistent with that policy.How many units should be purchased in the first quarter of the year?

Which of the following is not a benefit of following a well-designed budgeting process?