ManagerialAccounting-OP_x3x7rSO-80

Prévia do material em texto

12. 7.2 The units required in production each period are computed by which of the following methods?
A. adding budgeted sales to the desired ending inventory and subtracting beginning inventory
B. adding beginning inventory, budgeted sales, and desired ending inventory
C. adding beginning inventory to budgeted sales and subtracting desired ending inventory
D. adding budgeted sales to the beginning inventory and subtracting the desired ending inventory.
13. 7.3 The cash budget is part of which category of budgets?
A. sales budget
B. cash payments budget
C. finance budget
D. operating budget
14. 7.3 Which is not a section of the cash budget?
A. cash receipts
B. cash disbursements
C. allowance for uncollectible accounts
D. financing needs
15. 7.3 Which budget is the starting point in preparing financial budgets?
A. the budgeted income statement
B. the budgeted balance sheet
C. the capital expense budget
D. the cash receipts budget
16. 7.3 Which of the following includes only financial budgets?
A. capital asset budget, budgeted income statement, sales budget
B. production budget, capital asset budget, budgeted balance sheet
C. cash budget, budgeted balance sheet, capital asset budget
D. budgeted income statement, direct material purchases budget, cash budget
17. 7.4 Which budget evaluates the results of operations at the actual level of activity?
A. capital budget
B. cash budget
C. flexible budget
D. static budget
18. 7.4 What is the main difference between static and flexible budgets?
A. The fixed manufacturing overhead is adjusted for units sold in the flexible budget.
B. The variable manufacturing overhead is adjusted in the static budget.
C. There is no difference between the budgets.
D. The variable costs are adjusted in a flexible budget.
Questions
1. 7.1 What is a budget and what are the different types of budgets?
2. 7.1 What is the difference between budgeting and long-range planning?
3. 7.1 What are the advantages and disadvantages of the bottom-up budgeting approach?
386 Chapter 7 Budgeting
This OpenStax book is available for free at http://cnx.org/content/col25479/1.11
4. 7.1 Why might a rolling budget require more management participation than an annual budget?
5. 7.2 What information is necessary for the operating budgets?
6. 7.2 What operating budget exists for manufacturing but not for a retail company?
7. 7.3 What is the process for developing a budgeted balance sheet?
8. 7.3 Which of the financial budgets is the most important? Why?
9. 7.4 A company has prepared the operating budget and the cash budget. It is now preparing the
budgeted balance sheet. Identify the document that contains each of these balances.
A. cash
B. accounts receivable
C. finished goods inventory
D. accounts payable
E. equipment purchases
10. 7.4 Fill in the blanks: A flexible budget summarizes _______ and _______ for various volume levels by
adjusting the _______ costs for the various levels of activities. The _______ costs remain the same for all levels of
activities.
11. 7.4 What information is included in the capital asset budget?
12. 7.5 Why does budget planning typically begin with the sales forecast?
13. 7.5 What steps should be considered if a budget is to be set and later have its results evaluated?
Exercise Set A
EA1. 7.2 Blue Book printing is budgeting sales of 25,000 units and already has 5,000 in beginning inventory.
How many units must be produced to also meet the 7,000 units required in ending inventory?
EA2. 7.2 How many units are in beginning inventory if 32,000 units are budgeted for sales, 35,000 units are
produced, and the desired ending inventory is 9,000 units?
EA3. 7.2 Navigator sells GPS trackers for $50 each. It expects sales of 5,000 units in quarter 1 and a 5%
increase each subsequent quarter for the next 8 quarters. Prepare a sales budget by quarter for the first year.
EA4. 7.2 One Device makes universal remote controls and expects to sell 500 units in January, 800 in
February, 450 in March, 550 in April, and 600 in May. The required ending inventory is 20% of the next month’s
sales. Prepare a production budget for the first four months of the year.
EA5. 7.2 Sunrise Poles manufactures hiking poles and is planning on producing 4,000 units in March and
3,700 in April. Each pole requires a half pound of material, which costs $1.20 per pound. The company’s policy
is to have enough material on hand to equal 10% of the next month’s production needs and to maintain a
finished goods inventory equal to 25% of the next month’s production needs. What is the budgeted cost of
purchases for March?
Chapter 7 Budgeting 387
EA6. 7.2 Given the following information from Rowdy Enterprises’ direct materials budget, how much direct
materials needs to be purchased?
EA7. 7.2 Each unit requires direct labor of 2.2 hours. The labor rate is $11.50 per hour and next year’s direct
labor budget totals $834,900. How many units are included in the production budget for next year?
EA8. 7.2 How many units are estimated to be sold if Skyline, Inc., has a planned production of 900,000 units,
a desired beginning inventory of 160,000 units, and a desired ending inventory of 100,000 units?
EA9. 7.3 Cash collections for Wax On Candles found that 60% of sales were collected in the month of the
sale, 30% was collected the month after the sale, and 10% was collected the second month after the sale. Given
the sales shown, how much cash will be collected in January and February?
EA10. 7.3 Nonna’s Re-Appliance Store collects 55% of its accounts receivable in the month of sale and 40%
in the month after the sale. Given the following sales, how much cash will be collected in February?
EA11. 7.3 Dream Big Pillow Co. pays 65% of its purchases in the month of purchase, 30% the month after
the purchase, and 5% in the second month following the purchase. It made the following purchases at the end
of 2017 and the beginning of 2018:
EA12. 7.3 Desiccate purchases direct materials each month. Its payment history shows that 70% is paid in
the month of purchase with the remaining balance paid the month after purchase. Prepare a cash payment
schedule for March if in January through March, it purchased $35,000, $37,000, and $39,000, respectively.
EA13. 7.3 What is the amount of budgeted cash payments if purchases are budgeted for $420,000 and the
beginning and ending balances of accounts payable are $95,000 and $92,000, respectively?
EA14. 7.3 Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is
collected in the month of sale, 25% is collected the month after the sale, and 5% is collected the second month
after the sale. How much cash will be collected in August if sales are estimated as $75,000 in June, $65,000 in
July, and $90,000 in August?
EA15. 7.4 Cold X, Inc. uses this information when preparing their flexible budget: direct materials of $2 per
unit, direct labor of $3 per unit, and manufacturing overhead of $1 per unit. Fixed costs are $35,000. What
would be the budgeted amounts for 20,000 and 25,000 units?
388 Chapter 7 Budgeting
This OpenStax book is available for free at http://cnx.org/content/col25479/1.11
EA16. 7.4 Using the provided budgeted information for production of 10,000 and 15,000 units, prepare a
flexible budget for 17,000 units.
EA17. 7.5 The production cost for a waterproof phone case is $7 per unit and fixed costs are $23,000 per
month. How much is the favorable or unfavorable variance if 5,500 units were produced for a total of $61,000?
B Exercise Set B
EB1. 7.2 Lovely Wedding printing is budgeting sales of 32,000 units and already has 4,000 in beginning
inventory. How many units must be produced to also meet the 6,000 units required in ending inventory?
EB2. 7.2 How many units are in beginning inventory if 32,000 units are budgeted for sales, 35,000 units are
produced, and the desired ending inventory is 9,000 units?
EB3. 7.2 Barnstormer sells airplane accessories for $20 each. It expects sales of 120,000 units inquarter 1
and a 7% increase each subsequent quarter for the next 8 quarters. Prepare a sales budget by quarter for the
first year.
EB4. 7.2 Rehydrator makes a nutrition additive and expects to sell 3,000 units in January, 2,000 in February,
2,500 in March, 2,700 in April, and 2,900 in May. The required ending inventory is 20% of the next month’s
sales, and the beginning inventory on January 1 was 600 units. Prepare a production budget for the first four
months of the year.
EB5. 7.2 Cloud Shoes manufactures recovery sandals and is planning on producing 12,000 units in March
and 11,500 in April. Each sandal requires 1.2 yards if material, which costs $3.00 per yard. The company’s policy
is to have enough material on hand to equal 15% of next month’s production needs and to maintain a finished
goods inventory equal to 20% of the next month’s production needs. What is the budgeted cost of purchases
for March?
EB6. 7.2 Given the following information from Power Enterprises’ direct materials budget, how much direct
materials needs to be purchased?
EB7. 7.2 Each unit requires direct labor of 4.1 hours. The labor rate is $13.75 per hour and next year’s
production is estimated at 75,000 units. What is the amount to be included in next year’s direct labor budget?
EB8. 7.2 How many units are estimated to be sold if Kino, Inc., has planned production of 750,000 units, a
desired beginning inventory of 30,000 units, and a desired ending inventory of 45,000 units?
Chapter 7 Budgeting 389
EB9. 7.3 Cash collections for Renew Lights found that 65% of sales were collected in the month of sale, 25%
was collected the month after the sale, and 10% was collected the second month after the sale. Given the sales
shown, how much cash will be collected in March and April?
EB10. 7.3 My Aunt’s Closet Store collects 60% of its accounts receivable in the month of sale and 35% in the
month after the sale. Given the following sales, how much cash will be collected in March?
EB11. 7.3 Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the
purchase, and 5% in the second month following the purchase. What are the cash payments if it made the
following purchases in 2018?
EB12. 7.3 Drainee purchases direct materials each month. Its payment history shows that 65% is paid in the
month of purchase with the remaining balance paid the month after purchase. Prepare a cash payment
schedule for January using this data: in December through February, it purchased $22,000, $25,000, and
$23,000 respectively.
EB13. 7.3 What is the amount of budgeted cash payments if purchases are budgeted for $190,500 and the
beginning and ending balances of accounts payable are $21,000 and $25,000, respectively?
EB14. 7.3 Earthie’s Shoes has 55% of its sales in cash and the remainder on credit. Of the credit sales, 70%
is collected in the month of sale, 15% is collected the month after the sale, and 10% is collected the second
month after the sale. How much cash will be collected in June if sales are estimated as $75,000 in April, $65,000
in May, and $90,000 in June?
EB15. 7.4 Judge’s Gavel uses this information when preparing their flexible budget: direct materials of $3
per unit, direct labor of $2.50 per unit, and manufacturing overhead of $1.25 per unit. Fixed costs are $49,000.
What would be the budgeted amounts for 33,000 and 35,000 units?
EB16. 7.4 Using the following budgeted information for production of 5,000 and 12,000 units, prepare a
flexible budget for 9,000 units.
EB17. 7.5 The production cost for UV protective sunglasses is $5.50 per unit and fixed costs are $19,400 per
month. How much is the favorable or unfavorable variance if 14,000 units were produced for a total of
$97,000?
390 Chapter 7 Budgeting
This OpenStax book is available for free at http://cnx.org/content/col25479/1.11
	Chapter 7. Budgeting
	Questions
	Exercise Set A
	Exercise Set B