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Exam 21: Budgeting

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Question 41

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Laurie Inc.'s static budget for 10,000 units of production includes $60,000 for direct materials, $44,000 for direct labor, fixed utilities costs of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production would show

A) the same cost structure in total
B) direct materials of $72,000, direct labor of $52,800, fixed utilities of $5,000, and supervisor salaries of $25,000
C) total variable costs of $159,800
D) direct materials of $60,000, direct labor of $52,800, fixed utilities of $6,000, and supervisor salaries of $25,000

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

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Question 42

Multiple Choice

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Match each phrase that follows with the term a-f) it describes.. -a plan showing the number of units to be produced each month

A) budget
B) capital expenditures budget
C) sales budget
D) production budget
E) cash budget
F) budgeted balance sheet

G) A) and C)
H) C) and E)

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Question 43

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In preparing flexible budgets, the first step is to identify the fixed and variable components of the various costs and expenses being budgeted.

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

Heedy Company is trying to decide how many units of merchandise to produce each month. The company 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 produced in September?

Describe at least five benefits of budgeting.

Match the phrase that follows with the term a-e) it describes. -begins by estimating the quantity of sales

The total direct materials purchases assuming no beginning or ending inventory of material) of Materials A and B required for August production is

Good Eats Inc. manufactures flatware sets. The budgeted production is for 80,000 sets this year. Each set requires2.5 hours to polish the material. If polishing labor costs $15.00 per hour, determine the direct labor cost budget for polishing for the year.

Magnolia, Inc. manufactures bedding sets. The budgeted production is for 55,000 comforters this year. Each comforter requires 7 yards of material. The estimated January 1 beginning inventory is 31,000 yards with the desired ending balance of 30,000 yards of material. If the material costs $4.00 per yard, determine the materials budget for the year.

Match each phrase that follows with the term a-e) it describes. -actions to achieve budgeted goals

The master budget is an integrated set of budgets that tie together a company's operating, financing and investing activities into an integrated plan for the coming year.

A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future is called continuous budgeting.

For March, sales revenue is $1,000,000; sales commissions are 5% of sales; the sales manager's salary is $80,000; advertising expenses are $65,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $2,100 plus 1% of sales. Total selling expenses for the month of March are

Supervisor salaries and indirect factory wages would normally appear in the direct labor cost budget.

Production and sales estimates for April are as follows: The number of units expected to be manufactured in April is

Budgets are normally used only by profit-making businesses.

For April, sales revenue is $700,000; sales commissions are 5% of sales; the sales manager's salary is $98,000; advertising expenses are $90,000; shipping expenses total 2% of sales; and miscellaneous selling expenses are $2,100 plus 1/2 of 1% of sales. Total selling expenses for the month of April are

Doran Technologies produces a single product. Expected manufacturing costs are as follows: Estimate manufacturing costs for production levels of 25,000 units, 30,000 units, and 35,000 units per month.

Sleep Tight, Inc. manufactures bedding sets. The budgeted production is for 52,000 comforters this year. Each comforter requires 1.5 hours to cut and sew the material. The cost of cutting and sewing labor is $12.50 per hour. Determine the direct labor budget for this year.