Question 1

Sudler Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May.Each box of tile requires 44 kilograms of clay mix and a quarter hour of direct labour.Clay mix costs $0.50 per kilogram and employees of the company are paid $15.00 per hour.Manufacturing overhead is applied at a rate of 110% of direct labour costs.Sudler has 2,600 kilograms of clay mix in beginning inventory and wants to have 3,000 kilograms in ending inventory.What is the total amount to be budgeted in kilograms for direct materials to be purchased for the month?
A)25,520
B)25,120
C)25,920
D)26,800

Accepted Answer

The total amount to be budgeted in kilograms for direct materials to be purchased can be calculated as follows:

Total production needed = 600 boxes 
Clay mix needed per box = 44 kg 
Total clay mix needed = 600 boxes x 44 kg per box = 26,400 kg

Add the desired ending inventory to get the total clay mix needed: 
Total clay mix needed = 26,400 kg + 3,000 kg = 29,400 kg

Subtract the beginning inventory from the total clay mix needed to get the amount of clay mix to be purchased: 
Clay mix to be purchased = 29,400 kg - 2,600 kg = 26,800 kg

Therefore, the total amount to be budgeted in kilograms for direct materials to be purchased for the month is 26,800 kg. The correct answer is option C.

Question 2

Drive, Inc.determined its estimated production for the month is 300,000 units.Each unit requires 2 kilograms of material.The beginning direct materials are 1% of the current months expected needs.Ending inventory desired is 7,500 kilograms.How much are estimated direct materials purchases in kilograms?
A)601,500 kilograms
B)607,500 kilograms
C)301,500 kilograms
D)598,500 kilograms

Accepted Answer

Beginning inventory = 300,000 units x 2 kg/unit x 1% = 6,000 kgEnding inventory desired = 7,500 kgTotal materials needed = 300,000 units x 2 kg/unit = 600,000 kgEstimated direct materials purchases = Total materials needed - Beginning inventory - Ending inventory desired= 600,000 kg - 6,000 kg - 7,500 kg= 586,500 kg

Question 3

Tripod Exports, Inc.budgets on an annual basis for its fiscal year.The following beginning and ending inventory levels are planned for the fiscal year of July 1, 2019 to June 30, 2020: $\begin{array}{llcc}
 &  \underline{\text { June30,2020} } & \underline{\text {  June30,2019}} \

\text { Raw Materials  } & \text {3,000 kilos } & \text {2,000kilos  } \

\end{array}$
 Three kilos of raw materials are needed to produce each unit of finished product.If Tripod Exports plans to produce 280,000 units during the 2019-2020 fiscal year, how many kilos of materials will the company need to purchase for its production during the year?
A)841,000
B)843,000
C)840,000
D)839,000

Accepted Answer

To produce 280,000 units, Tripod Exports will need 280,000 * 3 = 840,000 kilos of raw materials. Since the company has 3,000 kilos of raw materials at the beginning of the year and plans to have 2,000 kilos at the end of the year, it will need to purchase 840,000 + 2,000 - 3,000 = 841,000 kilos of raw materials during the year.

Question 4

The direct materials budget shows: $\begin{array}{llcc}
  \text { Desired ending direct materials } & \text {  2,000 kilograms} \
 \text {  Materials purchased } & \text {  51,400 kilograms  } \
 \text {   Beginning inventory on hand} & \text {1.200 kilograms  }\
\end{array}$
 How much are the total direct materials needed for production?
A)50,600 kilograms
B)52,600 kilograms
C)52,200 kilograms
D)51,400 kilograms

Accepted Answer

Total direct materials needed for production = Materials purchased - Desired ending inventory + Beginning inventory = 51,400 - 2,000 + 1,200 = 50,600 kilograms.

Question 5

Skate Rink Company revised its sales budget to show a 15% increase in sales.As a result of this change, which other budgets would change?
A)all of its other budgets
B)only its selling and administrative expenses budget
C)its marketing budget only
D)only its production budget

Accepted Answer

If the sales budget is revised, it is likely that production, purchasing, and other budgets will need to be adjusted accordingly to meet the new sales goals. Additionally, changes in sales could affect cash flow and financing budgets as well. Therefore, all of Skate Rink Company's other budgets would need to be revisited and revised to reflect the 15% increase in sales.

Question 6

The production budget shows that expected unit sales are 86,000 for May and 87,000 for June.The company desires to have units on hand at the end of the month equal to 10% of next month's sales.How many units should the company produce during May?
A)86,100
B)94,600
C)85,900
D)94,700

Accepted Answer

The company wants to have 10% of next month's sales on hand at the end of the month. Next month's sales are expected to be 87,000 units. So, the company wants to have 10% of 87,000 units, or 8,700 units, on hand at the end of May. The company has 0 units on hand at the beginning of May. So, the company needs to produce 86,000 units in May to meet expected sales and have 8,700 units on hand at the end of the month.

Question 7

Jason Company determined that the budgeted cost of producing a product is $1.20 per unit.On June 1, there were 11,000 units on hand.The sales department budgeted sales of 320,000 units in June.The company desires to have 8,000 units on hand on June 30.How much is the budgeted cost of goods manufactured for June?
A)$380,400
B)$317,000
C)$323,000
D)$387,600

Accepted Answer

The budgeted cost of goods manufactured for June can be calculated as follows: Budgeted production = (Budgeted sales + Desired ending inventory) - Beginning inventory = (320,000 + 8,000) - 11,000 = 317,000 units. Then, the budgeted cost of goods manufactured = Budgeted production * Budgeted cost per unit = 317,000 units * $1.20/unit = $380,400.

Question 8

Green Plants plans to sell 160 potted plants during April and 120 units in May.Green Plants keeps 15% of the next month's sales as ending inventory.How many units should Green Plants produce during April?
A)154
B)166
C)160
D)178

Accepted Answer

Green Plants should produce 154 units during April. This is because they need to have 15% of May's sales (120 units) on hand as ending inventory, which is 18 units. Adding this to the 160 units they plan to sell in April gives a total of 178 units that they need to have available. Since they already have 15% of May's sales on hand (18 units), they need to produce 178 - 18 = 154 units during April.

Question 9

Which of the following is correct regarding the manufacturing overhead budget?
A)The manufacturing overhead budget should include all costs of marketing and advertising.
B)The budget should show only indirect materials and indirect labour.
C)Manufacturing overhead costs should be broken down by cost behaviour.
D)Total budgeted manufacturing overhead should be calculated using a predetermined overhead rate.

Accepted Answer

Manufacturing overhead costs should be broken down by cost behaviour to better understand and manage fixed and variable costs.

Question 10

Which of the following is needed to prepare a sales budget?
A)the sales forecast
B)number of units of finished goods in inventory
C)the production capacity of the organization
D)estimated cost of goods sold

Accepted Answer

The sales forecast is a crucial component in preparing a sales budget as it provides an estimate of the amount of revenue that the organization expects to generate. Options B, C, and D are not directly related to the preparation of a sales budget.

Question 11

Sargent.Com plans to sell 2,000 purple lawn chairs during May, 1,900 in June, and 2,000 during July.The company keeps 15% of the next month's sales as ending inventory.How many units should Sargent.Com produce during June?
A)1,915
B)2,200
C)1,885
D)not enough information to determine

Accepted Answer

For June, Sargent.Com plans to sell 1,900 units but also needs to keep 15% of July's sales (2,000 units) as ending inventory, which is 300 units (15% of 2,000). Therefore, they need to have 1,900 + 300 = 2,200 units available in June. However, they already plan to have 15% of June's sales (1,900 units) as ending inventory for May, which is 285 units. So, the total production for June should be 2,200 - 285 = 1,915 units.

Question 12

The following information is taken from the production budget for the first quarter:  How many finished goods units should be produced during the quarter if the company desires 800 units available to start the next quarter?
A)114,500
B)113,500
C)118,500
D)114,800

Accepted Answer

The answer of The following information is taken from the...

Question 13

At January 1, 2020, Ceatric, Inc.has beginning inventory of 10,000 boogie boards.Ceatric estimates it will sell 7,000 units during the first quarter of 2020 with a 7% increase in sales each quarter.Ceatric's policy is to maintain an ending inventory equal to 14% of the next quarter's sales.Each surfboard costs $95 and is sold for $130.How much is budgeted sales revenue for the third quarter of 2020?
A)$80,143
B)$910,000
C)$1,041,859
D)$280,500.50

Accepted Answer

First, we need to calculate the number of boogie boards that need to be produced and sold in each quarter:

- Q1: 7,000 units
- Q2: 7,490 units (7% increase from Q1)
- Q3: 8,036.3 units (7% increase from Q2)
- Q4: 8,640.9 units (7% increase from Q3)

Next, we can calculate the ending inventory for each quarter:

- Q1: 7,000 x 0.14 = 980 units
- Q2: 7,490 x 0.14 = 1,048.6 units
- Q3: 8,036.3 x 0.14 = 1,125.87 units

Since Ceatric wants to maintain ending inventory equal to 14% of the next quarter's sales, Q3's ending inventory will be the beginning inventory for Q4.

- Q4: 8,640.9 + 1,125.87 - 7,490 = 2,276.77 units

Now, we can calculate the total number of units that need to be produced and sold in 2020:

- Total: 7,000 + 7,490 + 8,036.3 + 8,640.9 - 10,000 = 21,167.2 units

Finally, we can calculate the budgeted sales revenue for the third quarter:

- Q3 sales revenue = 8,036.3 x $130 = $1,044,319

Therefore, the best choice is C, $1,041,859.

Question 14

Nextel Company showed the following on its direct materials budget for June: $\begin{array}{llcc}
  \text {  Units to be produced} &25,000\
 \text { Total kilograms needed for production } &10,000\
 \text { Total kilograms of materials to be purchased }& 9,000\
\end{array}$
 The materials cost $2 per kilogram.How much is the cost of direct materials per unit?
A)$0.80
B)$0.72
C)$1.52
D)$5.00

Accepted Answer

The cost of direct materials per unit is calculated by dividing the total cost of materials by the number of units produced. Total cost = 10,000 kg * $2/kg = $20,000. Cost per unit = $20,000 / 25,000 units = $0.80.

Question 15

Spirit, Inc.budgeted sales are 433,000 units for January and 420,000 units for February.The company's policy requires maintaining units on hand at the end of each month equal to 8% of next month's budgeted unit sales.How many units should the company produce in January?
A)442,700 units
B)423,300 units
C)466,600 units
D)431,960 units

Accepted Answer

Step 1: Calculate the units to be kept on hand at the end of January
8% of February's budgeted sales = 0.08 x 420,000 = 33,600 units

Step 2: Calculate the total units needed in January
Total units needed in February = Budgeted sales in February + units on hand in February
Total units needed in February = 420,000 + 33,600 = 453,600 units

Step 3: Calculate the units to be produced in January
Units to be produced in January = Total units needed in February - units on hand in January
Units to be produced in January = 453,600 - (0.08 x 433,000) = 431,960 units

Therefore, the best choice is D: 431,960 units.

Question 16

Surprise Company's sales budget showed expected sales of 13,400 widgets.Beginning finished goods contained 1,200 widgets.The company determined that 14,100 units should be produced.How many widgets will the company have on hand at the end of the year?
A)500
B)1,200
C)1,900
D)700

Accepted Answer

The company has to produce 14,100 widgets, and at the beginning, they already have 1,200 widgets. Therefore, the total number of widgets available is:

1,200 (Beginning finished goods) + 14,100 (Expected production) = 15,300 widgets

However, the sales budget only shows an expected sales volume of 13,400 widgets. Therefore, the number of widgets that the company will have on hand at the end of the year is:

15,300 (total available) - 13,400 (expected sales) = 1,900 widgets

So the correct answer is C) 1,900.

Question 17

In what order are the following budgets prepared? IS. budgeted income statement 
P.production budget 
SA.selling and administrative budge 
MP.materials purchases budget
A)SA, P, MP, IS
B)P, MP, IS, SA
C)P, MP, SA, IS
D)MP, P, SA, IS

Accepted Answer

Typically, the order of budget preparation is as follows: 
1) Sales Budget (SA) - predicts the expected sales revenue for the period 
2) Production Budget (P) - determines the number of units that need to be produced to meet the sales demand and maintain inventory levels 
3) Materials Purchase Budget (MP) - estimates the quantity and cost of raw materials needed for production 
4) Income Statement Budget (IS) - summarizes the expected revenues and expenses for the period.

Therefore, the correct order is P, MP, SA, IS. Choice C follows the correct order, while the other options do not.

Question 18

The production budget shows expected unit sales are 1,800.The required production units are 1,700.Which of the following represents possible inventory balances? $\quad $ $\quad $ $\quad $$\begin{array}{llcc}\underline{\text { Beginning Units}} &\underline{\text {Ending Units }}\end{array}$
a)  $\quad $ $\quad $$\quad $ $\quad $ $\quad $200 $\quad $ $\quad $ $\quad $ $\quad $ $\quad $100
b)  $\quad $ $\quad $$\quad $ $\quad $ $\quad $100  $\quad $ $\quad $$\quad $ $\quad $ $\quad $200
c)  $\quad $ $\quad $$\quad $ $\quad $ $\quad $200  $\quad $ $\quad $$\quad $ $\quad $ $\quad $200
d)  $\quad $ $\quad $$\quad $ $\quad $ $\quad $0  $\quad $ $\quad $$\quad $ $\quad $ $\quad $100

Accepted Answer

The answer of The production budget shows expected unit sales...

Question 19

Why is the sales budget the single most important source in preparing budgets?
A)All the other budgets depend on it.
B)It enables the company to determine the unit cost of products.
C)It is the best determination of profitability of a company.
D)It is the only budget that requires estimates.

Accepted Answer

The sales budget serves as the foundation for all other budgets. Without accurate sales forecasts, budgets for production, purchasing, marketing, and other areas cannot be developed effectively. Therefore, the sales budget is critical for ensuring that all other budgets are aligned with the company's overall sales goals and objectives.

Question 20

Of the following items, which one is found as the bottom amount on an individual budget?
A)total variable costs
B)required production units
C)cost of production
D)financing needed

Accepted Answer

The answer of Of the following items, which one is...

Quiz 10: Budgetary Planning

Skate Rink Company revised its sales budget to show a 15% increase in sales.As a result of this change, which other budgets would change?

The production budget shows that expected unit sales are 86,000 for May and 87,000 for June.The company desires to have units on hand at the end of the month equal to 10% of next month's sales.How many units should the company produce during May?

Green Plants plans to sell 160 potted plants during April and 120 units in May.Green Plants keeps 15% of the next month's sales as ending inventory.How many units should Green Plants produce during April?

Which of the following is correct regarding the manufacturing overhead budget?

Which of the following is needed to prepare a sales budget?

Sargent.Com plans to sell 2,000 purple lawn chairs during May, 1,900 in June, and 2,000 during July.The company keeps 15% of the next month's sales as ending inventory.How many units should Sargent.Com produce during June?

The following information is taken from the production budget for the first quarter: How many finished goods units should be produced during the quarter if the company desires 800 units available to start the next quarter?

Spirit, Inc.budgeted sales are 433,000 units for January and 420,000 units for February.The company's policy requires maintaining units on hand at the end of each month equal to 8% of next month's budgeted unit sales.How many units should the company produce in January?

Surprise Company's sales budget showed expected sales of 13,400 widgets.Beginning finished goods contained 1,200 widgets.The company determined that 14,100 units should be produced.How many widgets will the company have on hand at the end of the year?

In what order are the following budgets prepared? IS. budgeted income statement P.production budget SA.selling and administrative budge MP.materials purchases budget

Why is the sales budget the single most important source in preparing budgets?

Of the following items, which one is found as the bottom amount on an individual budget?