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Exam 9: Budgeting

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Question 41

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A cash budget by quarters for the Carney Company is given below (note that some data are missing) . Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.) ; these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars. -What is the cash disbursed for purchases during the second quarter (item c) ,in thousands of dollars?

A) $9.
B) $13.
C) $21.
D) $55.

E) None of the above
F) A) and B)

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Question 42

Multiple Choice

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A cash budget by quarters for the Carney Company is given below (note that some data are missing) . Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.) ; these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars. -What is the borrowing required during the first quarter to meet the minimum cash balance (item b) ,in thousands of dollars?

A) $0.
B) $3.
C) $7.
D) $10.

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

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Question 43

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There are various budgets within the master budget.One of these budgets is the production budget.Which of the following best describes the production budget?

TabComp Inc.is a retail distributor for MZB-33 computer hardware and related software.TabComp prepares annual sales forecasts,of which the first six months of the coming year are presented below: Cash sales account for 25% of TabComp's total sales, 30% of the total sales are paid by bank credit card, and the remaining 45% are on open account (TabComp's own charge accounts). The cash and bank credit card sale payments are received in the month of the sale. Bank credit card sales are subject to a 4% discount, which is deducted immediately. The cash receipts for sales on open account are 70% in the month following the sale and 28% in the second month following the sale; the remaining are uncollectible. TabComp's month-end inventory requirements for computer hardware units are 30% of the next month's sales. The units must be ordered two months in advance due to long lead times quoted by the manufacturer. Required: a) Calculate the cash that TabComp can expect to collect during April. Show all of your calculations. b) Determine the number of computer hardware units that should be ordered in January. Show all of your calculations.

A sales budget is given below for one of the products manufactured by the Key Co.: The inventory of finished goods at the end of each month should equal 20% of the next month's sales. However, on December 31, the finished goods inventory totalled only 4,000 units. Each unit of product requires three specialized electrical switches. Since the production of these specialized switches by Key's suppliers is sometimes irregular, the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs. This requirement had been met on January 1 of the current year. Required: Prepare a budget showing the quantity of switches to be purchased each month for January, February, and March, and in total for the quarter.

The Tobler Company has budgeted production for next year as follows: Four kilograms of raw materials are required for each unit produced.At the start of the year,raw materials on hand total 4,000 kilograms.The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs.What would be the budgeted purchases of raw materials in the third quarter?

KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given. Sales are collected 80% in the month of the sale and the balance in the month following the sale. (There are no bad debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month following the purchase. The operating expenses are paid in the month of the sale. -What should be the amount of cash collected during the month of June?

Walsh Company expects sales of Product W to be 60,000 units in April,75,000 units in May,and 70,000 units in June.The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales.Due to excessive production during March,there were 25,000 units of Product W in the ending inventory on March 31.Given this information,what should be Walsh Company's production of Product W for the month of April?

The following costs appear in Malgorzata Company's flexible budget at an activity level of 15,000 machine-hours: What would be the flexible budget amounts at an activity level of 12,000 machine hours if indirect material is a variable cost and factory rent a fixed cost? What would be the flexible budget amounts at an activity level of 12,000 machine hours if indirect material is a variable cost and factory rent a fixed cost?

On March 31,Streuling Enterprises,a merchandising firm,had an inventory of 38,000 units,and it had accounts receivable totalling $85,000.Sales,in units,have been budgeted as follows for the next four months: Streuling's board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month's budgeted sales. The selling price is $2 per unit. One-third of sales are paid for by customers in the month of the sale; the balance is collected in the following month. Required: a) Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June. b) Prepare a schedule of expected cash collections for each of the months April, May, and June.

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below: The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost) . All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred. -In a budget of cash disbursements for March,what would be the total cash disbursements?

Pardise Company plans the following beginning and ending inventory levels (in units) for July: Two units of raw material are needed to produce each unit of finished product. -If Pardise Company plans to sell 480,000 units during July,what would be the number of units it would have to manufacture during July?

Which of the following best describes a typical participative budget?

The LFM Company makes and sells a single product: Product T. Each unit of Product T requires 1.3 hours of labour at a labour rate of $9.10 per hour. LFM Company needs to prepare a Direct Labour Budget for the second quarter of next year. -The company has budgeted to produce 25,000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 500 and 700 units,respectively.What would be the budgeted direct labour costs incurred in June?

The LaGrange Company had the following budgeted sales for the first half of the current year: The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled: Collections on sales: 60% in month of sale 30% in month following sale 10% in second month following sale The accounts receivable balance on January 1 of the current year was $70,000, of which $50,000 represents uncollected December sales and $20,000 represents uncollected November sales -What would be the total cash collected by LaGrange Company during January?

The following is a summarized master budget that Winnipeg Company prepared for January: -What total sales volume variance did Winnipeg Company report for January?

Windsor Limited makes and sells a single product. The company employs a flexible budgeting system that covers a relevant range from 20,000 units to 25,000 units and a just in time inventory system. Budget data for April, based on 22,000 units, are as follows: -What is the company's master budget operating income (loss) for April?

The following is a summarized master budget that Winnipeg Company prepared for January: -What was the flexible budget operating income (loss) for Winnipeg Company for January?

Friden Company has budgeted sales and production over the next quarter as follows: On April 1,the company has 20,000 units of product on hand.A minimum of 20% of the next month's sales needs (in units) must be on hand at the end of each month.July sales are expected to be 140,000 units.What would be the budgeted sales for June (in units) ?

The Willsey Merchandise Company has budgeted $40,000 in sales for the month of December.The company's cost of goods sold is 30% of sales.If the company has budgeted to purchase $18,000 in merchandise during December,what is the budgeted change in inventory levels over the month of December?