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Exam 21: Budgeting

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Question 1

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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 would be the budgeted production for February?

A) 186,000
B) 181,000
C) 222,000
D) 174,000

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Question 2

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The budgeting process is used to effectively communicate planned expectations regarding profits and expenses to the entire organization.

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Question 3

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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:

Detailed supplemental schedules based on department responsibility are often prepared for major items in the operating expenses budget.

Prepare a monthly flexible selling expense budget for PineTree Company for sales volumes of $300,000, $350,000, and $400,000, based on the following data:

A process whereby the effect of fluctuations in the level of activity is built into the budgeting system is referred to as flexible budgeting.

The financial budgets of a business include the cash budget, the budgeted income statement, and the budgeted balance sheet.

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

The budgeting process does not involve which of the following activities:

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 would be the budgeted production for March?

The first budget to be prepared is usually the sales budget.

Sweet Dreams, Inc. manufactures bedding sets. The budgeted production is for 52,000 comforters in 2012. Each comforter requires 1.5 hours to cut and sew the material. If cutting and sewing labor costs $11.00 per hour, determine the direct labor budget for 2012.

A company is preparing its their Cash Budget. The following data has been provided for cash receipts and payments. The company's cash balance at January 1st is $290,000. This company desires a minimum cash balance of $340,000. What is the amount of excess cash or deficiency of cash (after considering the minimum cash balance required) for February?

The budgeted finished goods inventory and cost of goods sold for a manufacturing company for the year 2012 are as follows: January 1 finished goods, $765,000; December 31 finished goods, $640,000; cost of goods sold for the year, $2,560,000. The budgeted costs of goods manufactured for the year is?

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called zero-based budgeting.

Cameron Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $20,000. At 8,000 units of production, a flexible budget would show:

Manicotti Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 108,000 units, and desired ending inventory is 90,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A .50 lb. per unit @ $ .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 direct material A used in production during the year is:

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

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

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 .50 lb. per unit @ $ .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 direct material B used in production during the year is: