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Exam 20: Master Budgets and Performance Planning

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Question 81

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The overall coordinating activity of the budget process is the responsibility of the:

A) Chief Accounting Officer.
B) Chief Executive Officer (CEO) .
C) Chief Financial Officer (CFO) .
D) Budget Committee.
E) Board of Directors.

F) A) and E)
G) A) and B)

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Question 82

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A sporting goods store budgeted August purchases of ski jackets at $140,000. The store had ski jackets costing $12,000 in its inventory at the beginning of August; and to cover part of anticipated September sales, they expect to have $25,000 of ski jackets in inventory at the end of the month of August. What is the budgeted cost of goods sold for August?

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Question 83

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The ______________________________ show the budgeted costs for direct materials, direct labor, and overhead, based on the budgeted production volume from the production budget.

Berkley Co.'s sales are 10% for cash and 90% on credit. Credit sales are collected as follows: 30% in the month of sale, 50% in the next month, and 20% in the following month. On December 31, the accounts receivable balance includes $12,000 from November sales and $42,000 from December sales. -Assume that total sales for January are budgeted to be $50,000. What are the expected cash receipts for January from the current and past sales?

Briefly describe a master budget and the sequence in which the individual budgets within the master budget are prepared.

A budget is best described as:

Activity-based budgeting is a budget system based on expected activities and their activity levels, which helps management plan for the resources required.

What is activity-based budgeting?

Berkley Co.'s sales are 10% for cash and 90% on credit. Credit sales are collected as follows: 30% in the month of sale, 50% in the next month, and 20% in the following month. On December 31, the accounts receivable balance includes $12,000 from November sales and $42,000 from December sales. -Assume that total sales for January and February are budgeted to be $50,000 and $100,000, respectively. What are the expected cash receipts for February from current and past sales?

Pecan Company had March sales and purchases of $63,000 and $47,000 respectively. The company expects April sales to increase 12% above, and purchases to stay consistent with March amounts. Twenty percent of the company's sales are for cash. Credit sales are collected twenty percent in the month of the sale and 80% in the following month. All purchases are paid for in the month following the purchase. The beginning cash balance on April 1 is $42,000. What is Pecan Company's expected cash balance on April 30^th?

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

The budgets within the master budget must be prepared in a definite sequence as dictated by GAAP.

Julia's Candy Co. reports the following information from its sales account and sales budget: $\begin{array}{lr}\text { Sales }&\text { May } & \$ 105,000 \\&\text { June } & 93,000\\\\\text { Expected }&\text { July } & \$ 90,000 \\\text { Sales: } \\&\text { August } & 110,000 \\&\text { September } & 120,000\end{array}$ Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. -Based on the information from Julia's, the total amount of cash expected to be received from customers in July is:

The master budget includes:

Kyoto, Inc. predicts the following sales in units for the coming four months: $\begin{array}{lr}&\text { April }&\text { May }&\text { June }&\text { July }\\ \text { Sales in units }&240&280&300&240\end{array}$ 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 the second quarter?

A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:

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

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