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Exam 8: Budgeting and Planning

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Question 61

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Boxwood Inc. has forecast purchases on account to be $620,000 in March, $740,000 in April, $840,000 in May, and $980,000 in June. Seventy percent of purchases are paid for in the month of purchase, the remaining 30% are paid in the following month. What is the budgeted Accounts Payable balance for June 30?

A) $588,000
B) $686,000
C) $294,000
D) $252,000

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Question 62

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Crest Products expects the following sales of its single product: Crest desires an ending finished goods inventory to be equal to 30% of the next month's sales needs. August 1 inventory is projected to be 7,800 units. Each finished unit requires 2 units of component X and 11 units of component Z. August 1 materials inventory includes 5,000 units of component X and 184,000 units of component Z. Crest desires to maintain a component X inventory equal to 10% of next month's production needs and a component Z inventory equal to 70% of next month's production needs. a. Prepare a production budget for Crest for as many months as is possible. b. Prepare a raw materials purchases budget for both Component X and Component Z for the months of August through October.

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Question 63

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Budgeted production is calculated by:

Crystal, Inc. has prepared the following budgets for March. In March, budgeted production is 1,000 units, budgeted sales is 1,200 units, and raw materials inventory will stay constant. What is budgeted cost of goods sold for March?

Gertrude Products expects the following sales of its single product: Gertrude desires an ending finished goods inventory to be equal to 10% of the next month's sales needs. July 1 inventory is projected to be 800 units. Each unit requires 5 pounds of Chemical A and 14 pounds of Chemical B. Gertrude desires to maintain a Chemical A inventory equal to 20% of next month's production needs and a Chemical B inventory equal to 100% of next month's production needs. a. Prepare a production budget for Gertrude for as many months as is possible. b. Prepare a raw materials purchases budget for both Chemical A and Chemical B for the months of July through September. B. July 1 materials inventory includes 8,600 pounds of Chemical A and 76,000 pounds of Chemical

A detailed plan that translates the company's objectives into financial terms, identifying the resources and expenditures that will be required over the planning horizon is a:

Meadow Company produces hand tools. A sales budget for the next four months is as follows: March 10,000 units, April 13,000, May 16,000 and June 21,000. Meadow Company's ending finished goods inventory policy is 10% of the following month's sales. March 1 beginning inventory is projected to be 1,400 units. How many units will be produced in March?

A short-term objective is:

Ivory Inc. has forecast purchases on account to be $310,000 in March, $370,000 in April, $420,000 in May, and $490,000 in June. Seventy percent of purchases are paid for in the month of purchase, the remaining 30% are paid in the following month. What are budgeted cash payments for June?

Control is a forward-looking process while planning is a backward-looking one

How might the budgeting process be used ethically within an organization?

Marlow Company produces hand tools. A production budget for the next four months is as follows: March 10,300 units, April 13,300, May 16,500, and June 21,800. Marlow Company's ending finished goods inventory policy is 10% of the following month's sales. Marlow plans to sell 16,000 units in May. What is budgeted ending inventory for March?

Larken has forecast sales for the next three months as follows: July 4,000 units, August 6,000 units, September 7,500 units. Larken's policy is to have an ending inventory of 40% of the next month's sales needs on hand. July 1 inventory is projected to be 1,500 units. Monthly manufacturing overhead is budgeted to be $17,000 plus $6 per unit produced. What is budgeted manufacturing overhead for August?

Participative budgeting allows employees throughout the organization to have input into the budget-setting process

The starting point for preparing the master budget is the:

Meadow Company produces hand tools. A sales budget for the next four months is as follows: March 10,000 units, April 13,000, May 16,000 and June 21,000. Meadow Company's ending finished goods inventory policy is 10% of the following month's sales. What is budgeted ending finished goods inventory for May?

Budgeted cost of goods manufactured reflects:

Grover has forecast sales to be $125,000 in February, $135,000 in March, $150,000 in April, and $140,000 in May. The average cost of goods sold is 70% of sales. All sales are on made on credit and sales are collected 60% in the month of sale, and 40% the month following. What are budgeted cash receipts in March?

Arbor Co. has forecast sales to be $400,000 in May, $475,000 in June, $575,000 in July and $700,000 in August. Forty percent of sales are made in cash, the remainder is on credit. Credit sales are collected 60% in the month of sale, the remaining the following month. What are budgeted cash collections for July?

Cherry Inc. has forecast its sales for the coming months as follows: Cherry maintains finished goods inventory equal to 40% of the next month's sales requirements. April 1 inventories were 74 standard units and 72 deluxe. Required: Prepare a production schedule for April through June.