Deck 7: The Master Budget

Question 1

Greedy Company expects August sales to be $32,000. Approximately 25% of sales are cash sales. Collections are 50% in the month of sale, 40% in the month following the sale, and 5% two months following the sale. The remaining 5% is expected to be uncollectible. is the expected cash collection in August from August sales.

A) $12,000
B) $8,000
C) $20,000
D) $16,000

Answer 1

C

Question 2

Florida Company expects a total of $10,000 in sales in May, of these, $4,000 sales are expected to be for cash. Collections are 50% in the month of sale, 40% in the month following the sale, and 5% two months following the sale. The remaining 5% is expected to be uncollectible. is the estimated cash collection in May from May sales.

A) $10,000
B) $7,000
C) $4,000
D) $5,000

Answer 2

B

Question 3

The following sales budget has been prepared: $\begin{array}{lll}\text { Month } & \text { Cash Sales } & \text { Credit S ales } \\\text { September } & \$ 100,000 & \$ 200,000 \\\text { October } & 125,000 & 180,000 \\\text { November } & 130,000 & 210,000 \\\text { December } & 135,000 & 190,000\end{array}$ Collections are 50% in the month of sale, 40% in the month following the sale, and 10% two months following the sale. No uncollectible accounts are anticipated. is the expected balance of Accounts Receivable as of December 31.

A) $210,000
B) $116,000
C) $75,500
D) $190,000

Answer 3

$116,000

Question 4

detail the planned expenditures for facilities, equipment, new products, and other long- term investments.

A) Pro forma statements
B) Strategic plans
C) Capital budgets
D) Continuous budgets

Question 5

Which of the following is not a major benefit of budgeting?

A) Budgeting compels managers to think ahead.
B) Budgeting aids managers in coordinating their efforts so the objectives of the organization as a whole match the objectives of its parts.
C) Budgeting provides definite expectations that are the best framework for judging subsequent performance.
D) Budgeting allows managers to operate day to day, reacting to current events rather than planning for the future.

Question 6

The following sales budget has been prepared: $\begin{array}{lll}\text { Month } & \text { Cash Sales } & \text { Credit Sales } \\\text { September } & \$ 100,000 & \$ 200,000 \\\text { October } & 125,000 & 180,000 \\\text { November } & 207,000 & 199,000 \\\text { December } & 67,000 & 144,000\end{array}$ Collections are 50% in the month of sale, 40% in the month following the sale, and 10% two months following the sale. No uncollectible accounts are anticipated. is the expected balance of Accounts Receivable as of October 31.

A) $118,000
B) $180,000
C) $72,500
D) $110,000

Question 7

gives the expected sales under a given set of conditions.

A) A budget forecast
B) A sales prediction
C) A sales budget
D) A sales forecast

Question 8

Pancho Company has the following information: $$\begin{array} { l l } \text { Month } & \text { Budgeted Purchas es } \\\text { January } & \$ 56,800 \\\text { February } & 49,000 \\\text { March } & 30,520 \\\text { April } & 29,480 \\\text { May } & 27,680\end{array}$$ Purchases are paid for in the following manner: 10% in the month of purchase 50% in the month after purchase 40% two months after purchase
Is the estimated cash disbursement in May from April purchases.

A) $13,840
B) $14,740
C) $11,072
D) $11,792

Question 9

Oceanside Company's expected sales for April are $27,600. Information about other budgeted expenses is presented below. $\begin{array} { l } \text { Budgeted}& \text {Expensesper Month } \\\ \text {Wages }&\$2,000\\ \text { Advertising}&1,680\\ \text {Depreciation }&1,440\\ \text {Rent }&2,560\\ \text {Other }& \text { 5\% of sales} \\\end{array}$
is the expected total expenses for the month of April.

A) $6,240
B) $7,680
C) $7,620
D) $9,060

Question 10

All of the following are operating budgets except:

A) the budgeted income statement
B) the purchases budget
C) the capital budget
D) the cost of goods sold budget

Question 11

Continuous budgets are a common form of:

A) capital budgets
B) financial reports
C) strategic plans
D) pro forma statements

Question 12

Geneva Company has the following information: $$\begin{array} { l l } \text { Month } & \text { Budgeted Purchases } \\\text { January } & \$ 33,000 \\\text { February } & 37,000 \\\text { March } & 31,000 \\\text { April } & 27,000 \\\text { May } & 27,680\end{array}$$ Purchases are paid for in the following manner: 75% in the month of purchase 25% in the month after purchase
Is the expected balance in Accounts Payable as of April 30.

A) $27,000
B) $20,250
C) $0
D) $6,750

Question 13

Mickey Company has the following information: $$\begin{array} { l c } \text { Month } & \text { Budgeted Purchases } \\\text { January } & \$ 26,800 \\\text { February } & 29,000 \\\text { March } & 30,520 \\\text { April } & 29,480 \\\text { May } & 27,680\end{array}$$ Purchases are paid for in the following manner: $10 \%$ in the month of purch ase
$50 \%$ in the month after purch as e
$\mathbf { 4 0 } \%$ two months after purch as e is the estimated cash disbursement in March from January purchases.

A) $13,400
B) $10,720
C) $3,052
D) $12,208

Question 14

Dawn Company has the following information: $$\begin{array} { l l } \text { Month } & \text { Budgeted Purchas es } \\\text { January } & \$ 26,800 \\\text { February } & 29,000 \\\text { March } & 30,520 \\\text { April } & 29,480 \\\text { May } & 27,680\end{array}$$ Purchases are paid for in the following manner: 10% in the month of purchase 50% in the month after purchase 40% two months after purchase
Is the expected Accounts Payable balance as of May 31.

A) $11,792
B) $36,704
C) $24,912
D) $2,948

Question 15

set the overall goals and objectives of the organization.

A) Continuous budgets
B) Pro forma statements
C) Capital budgets
D) Strategic plans

Question 16

Ruby Corporation has the following sales budget for the last six months of 20X0: $$\begin{array} { l l l l } \text { July } & \$ 100,000 & \text { Octob er } & \$ 90,000 \\\text { August } & 80,000 & \text { N ovemb er } & 100,000 \\\text { September } & 110,000 & \text { D ecember } & 94,000\end{array}$$ Historically, the cash collection of sales has been as follows: 65% of sales collected in month of sale 25% of sales collected in month following sale
8% of sales collected in second month following sale 2% of sales are uncollectible
Is the expected cash collection in October.

A) $92,400
B) $99,500
C) $58,500
D) None of these answers is correct.

Question 17

is a major part of the master budget that focuses on the income statement and its supporting schedules.

A) A capital budget
B) A financial budget
C) An operating budget
D) A cash budget

Question 18

is considered a long- range planning decision.

A) Acquisition of buildings and equipment
B) Design and location of new plant(s)
C) Addition or deletion of product line(s)
D) All of these answers are correct.

Question 19

The financial budget process results in the:

A) budgeted balance sheet
B) sales budget
C) budgeted cash balance
D) budgeted statement of income

Question 20

Emerald Corporation has the following information: $\begin{array}{ll}\text { Month } & \text { Budgeted Sales } \\\text { May } & \$ 46,000 \\\text { June } & 50,000 \\\text { July } & 52,000 \\\text { August } & 48,000\end{array}$ The cost of goods sold percentage is 65% and the desired inventory level is 25% of next month's sales was the beginning inventory for May.

A) $4,025
B) $12,075
C) $7,475
D) None of these answers is correct.

Question 21

is when budgets are formulated with the active participation of all affected employees

A) Participative budgeting
B) Shared budgeting
C) Financial budgeting
D) Team budgeting

Question 22

LeBron Company has the following information: $\begin{array}{ll}\text { Month } & \text { Budgeted Purchas es } \\\text { January } & \$ 26,800 \\\text { February } & 29,000 \\\text { March } & 30,520 \\\text { April } & 29,480 \\\text { May } & 27,680\end{array}$ Purchases are paid for in the following manner: 10% in the month of purchase 50% in the month after purchase 40% two months after purchase
Is the expected balance in Accounts Payable as of March 31.

A) $18,312
B) $2,900
C) $39,068
D) $30,520

Question 23

A sales forecast is:

A) a prediction of sales under a given set of conditions
B) the same as a sales budget that will generate a desired level of sales
C) the result of decisions to create conditions
D) All of these answers are correct.

Question 24

Angle Company's expected sales for April are $27,600. Information about other budgeted expenses is presented below. $\begin{array}{ll}\text { Budgeted } & \text { Expenses per Month } \\\text { Wages } & \$ 2,000 \\\text { Advertising } & 1,680 \\\text { Depreciation } & 1,440 \\\text { Rent } & 2,560 \\\text { Other } & 5 \% \text { of sales }\end{array}$ is a noncash expense.

A) Depreciation
B) Rent
C) Advertising
D) All of these answers are correct.

Question 25

What is the sequence of steps used in preparing the master budget?

A) Output from financial budgets is used to prepare the operating budgets.
B) Output from operating budgets is used to prepare the financial budgets.
C) Operating and financial budgets are prepared independently at the end of the budgeting process.
D) Operating and financial budgets are prepared independently at the beginning of the budgeting process.

Question 26

Silver Corporation has the following information: $\begin{array}{ll}\text { Month } & \text { Budgeted Sales } \\\text { May } & \$ 46,000 \\\text { June } & 50,000 \\\text { July } & 52,000 \\\text { August } & 48,000\end{array}$ The cost of goods sold percentage is 65% and the desired inventory level is 25% of next month's sales is the desired beginning inventory for August.

A) $4,200
B) $7,800
C) $8,450
D) None of these answers is correct.

Question 27

Hull Company has budgeted sales of 7,000 units, target ending finished goods inventory of 1,000 units, and a beginning finished goods inventory of 300 units. should be produced.

A) 5,700 units
B) 7,700 units
C) 8,300 units
D) 6,300 units

Question 28

The operating budget process results in the:

A) budgeted cash balance
B) sales budget
C) budgeted statement of income
D) budgeted balance sheet

Question 29

Preparing the master budget begins by establishing:

A) the expected cash
B) a targeted balance sheet
C) the expected sales
D) a targeted income statement

Question 30

The following sales budget has been prepared: $\begin{array}{lll}\text { Month } & \text { Cash Sales } & \text { Credit } \text { Sales } \\\text { September } & \$ 123,000 & \$ 210,000 \\\text { October } & 125,000 & 180,000 \\\text { November } & 167,000 & 260,000 \\\text { December } & 189,000 & 190,000\end{array}$ Collections are 50% in the month of sale, 40% in the month following the sale, and 10% two months following the sale. No uncollectible accounts are anticipated. is the estimated cash collection in October from October sales

A) $295,000
B) $215,000
C) $125,000
D) None of these answers is correct.

Question 31

Des Moines Manufacturing Company has the following information: $\begin{array}{ll}\text { Month } & \text { Budgeted Sales } \\\text { January } & \$ 76,000 \\\text { February } & 85,000 \\\text { March } & 92,000 \\\text { April } & 79,000\end{array}$ $\begin{array}{ll}\text { Budgeted } & \text { Expenses per Month } \\\text { Wages } & \$ 15,000 \\\text { Advertising } & 12,000 \\\text { Depreciation } & 3,000 \\\text { Other } & 4 \% \text { of sales }\end{array}$ All cash expenses are paid as incurred. is the expected total cash disbursements for expenses in January.

A) $33,040
B) $30,000
C) $30,040
D) $28,200

Question 32

Mustang Company has the following data: $$\begin{array} { l l } \text { Month } & \text { Budgeted Sales } \\\text { January } & \$ 108,000 \\\text { February } & 132,000 \\\text { March } & 144,000 \\\text { April } & 120,000\end{array}$$ The average mark- up on products is 40%, and the inventory at the end of December was $19,000. Desired inventory levels are 30% of next month's sales at cost. _ is the desired ending inventory for April.

A) $43,200
B) $25,920
C) $17,280
D) None of these answers is correct.

Question 33

is an important factor considered by sales forecasters.

A) Estimates made by the sales force
B) Past patterns of sales
C) General economic conditions
D) All of these answers are correct.

Question 34

Collections of cash from customers would appear on the .

A) operating expense budget
B) sales budget
C) cash budget
D) None of these answers is correct.

Question 35

Fun4u Corporation, a wholesaler, has a sales budget for next month of $300,000. Cost of units sold is expected to be 40% of sales. All units are paid for in the month following purchase. The beginning inventory of units is $10,000, and an ending amount of $12,000 is desired. Beginning accounts payable is $76,000. The ending balance in accounts payable for next month will be:

A) $78,000
B) $120,000
C) $118,000
D) $122,000

Question 36

are components of a master budget.

A) A cash budget and an activity budget
B) An operating budget and a financial budget
C) A continuous budget and a static budget
D) A strategic plan and an operating budget

Question 37

The most important advantage of a spreadsheet is that:

A) spreadsheets are inexpensive to prepare and easy to interpret
B) spreadsheets can be used to make a financial planning model of the organization
C) spreadsheets are easy to prepare and use
D) spreadsheets eliminate arithmetic errors

Question 38

A major drawback of using historical results for judging current performance is that:

A) inefficiencies may be concealed in the past performance
B) results may refer to a different manager
C) past results may be incorrect
D) All of these answers are correct.

Question 39

The master budget quantifies targets for all of the following except:

A) markets
B) sales
C) production
D) cost- driver activity

Question 40

Howe Company has a production schedule of 11,000 units and a budgeted sales volume of 10,000 units for the current year. In addition, 2,000 units are in beginning finished goods inventory. are expected to be in ending finished goods inventory.

A) 3,000 units
B) 13,000 units
C) 9,000 units
D) 5,000 units

Question 41

Budgets are generally more effective if they are:

A) understood and accepted by affected managers
B) supported by top management
C) created with the active participation of all affected employees
D) All of these answers are correct.

Question 42

Fun4u Corporation, a wholesaler, has a sales budget for next month of $400,000. Cost of units sold is expected to be 40% of sales. All units are paid for in the month following purchase. The beginning inventory of units is $10,000, and an ending amount of $12,000 is desired. Beginning accounts payable is $76,000. The cost of units sold for next month is expected to be:

A) $220,000
B) $160,000
C) $172,000
D) $162,000

Question 43

Ankeny Manufacturing Company has the following information: $\begin{array}{ll}\text { Month } & \text { Budgeted Sales } \\\text { January } & \$ 76,000 \\\text { February } & 85,000 \\\text { March } & 92,000 \\\text { April } & 79,000\end{array}$

$\begin{array}{lc}\text { Budgeted } & \text { ExpensesperMonth } \\\text { Wages } & \$ 15,000 \\\text { Advertising } & 12,000 \\\text { Depreciation } & 3,000 \\\text { Other } & 4 \% \text { of sales }\end{array}$ All cash expenses are paid as incurred. is the expected total expenses for the month of April.

A) $33,680
B) $30,000
C) $3,160
D) $33,160

Question 44

are sometimes called rolling budgets.

A) Capital budgets
B) Strategic plans
C) Continuous budgets
D) Pro forma statements

Question 45

The following sales budget has been prepared: $$\begin{array} { l l l } \text { Month } & \text { Cash Sales } & \text { Credit Sales } \\\text { September } & \$ 167,000 & \$ 123,000 \\\text { October } & 225,000 & 180,000 \\\text { November } & 330,000 & 210,000 \\\text { December } & 135,000 & 190,000\end{array}$$ Collections are 50% in the month of sale, 40% in the month following the sale, and 10% two months following the sale. No uncollectible accounts are anticipated. is the estimated cash collection in December.

A) $197,000
B) $332,000
C) $325,000
D) $135,000

Question 46

Pro forma statements are most closely associated with the:

A) master budget
B) strategic plan
C) operating budget
D) financial budget

Question 47

Bronze Corporation has the following information: $\begin{array}{ll}\text { Month } & \text { Budgeted Sales } \\\text { May } & \$ 46,000 \\\text { June } & 50,000 \\\text { July } & 52,000 \\\text { August } & 48,000\end{array}$ The cost of goods sold percentage is 65% and the desired inventory level is 25% of next month's sales is the expected total purchases budgeted for June.

A) $40,950
B) $17,500
C) $32,500
D) $32,825

Question 48

Dubuque Corporation has the following information: $\begin{array}{ll}\text { Month } & \text { Budgeted Purchases } \\\text { August } & \$ 35,000 \\\text { September } & 38,000 \\\text { October } & 43,500 \\\text { November } & 36,500 \\\text { December } & 46,000\end{array}$ Purchases are paid for in the following manner: 40% in the month of purchase 50% in the month after purchase 10% two months after purchase
Is the estimated cash disbursement in December from October purchases.

A) $4,350
B) $18,400
C) $21,750
D) $17,400

Question 49

Viking Company has the following data: $$\begin{array} { l l } \text { Month } & \text { Budgeted Sales } \\\text { January } & \$ 108,000 \\\text { February } & 132,000 \\\text { March } & 144,000 \\\text { April } & 120,000\end{array}$$ The average mark- up on products is 40%, and the inventory at the end of December was $19,000. Desired inventory levels are 30% of next month's sales at cost. _ is the desired ending inventory for February.

A) $25,920
B) $86,400
C) $43,200
D) $17,280

Question 50

is generally prepared as the first step in preparing the operating budgets.

A) An operating expense budget
B) A purchases budget
C) A sales budget
D) A budgeted income statement

Question 51

Stillwater Manufacturing Company has the following information: $\begin{array}{ll}\text { Month } & \text { Budgeted Sales } \\\text { January } & \$ 76,000 \\\text { February } & 85,000 \\\text { March } & 92,000 \\\text { April } & 79,000\end{array}$ $\begin{array}{lc}\text { Budgeted } & \text { Expensesper Month } \\\text { Wages } & \$ 15,000 \\\text { Advertising } & 12,000 \\\text { Depreciation } & 3,000 \\\text { Other } & 4 \% \text { of sales }\end{array}$ All cash expenses are paid as incurred is the expected total cash disbursements for expenses in March.

A) $33,680
B) $30,680
C) $30,000
D) None of these answers is correct.

Question 52

The following sales budget has been prepared: $\begin{array}{lll}\text { Month } & \text { Cash Sales } & \text { Credit Sales } \\\text { September } & \$ 100,000 & \$ 200,000 \\\text { October } & 125,000 & 180,000 \\\text { November } & 130,000 & 210,000 \\\text { December } & 135,000 & 190,000\end{array}$ Collections are 50% in the month of sale, 40% in the month following the sale, and 10% two months following the sale. No uncollectible accounts are anticipated. is the estimated cash collection in November.

A) $130,000
B) $197,000
C) $327,000
D) $340,000

Question 53

Brock Company expects to produce 19,000 units. Beginning finished goods inventory is 2,000 units and expected sales are 18,000 units. Expected ending finished goods inventory is:

A) 3,000 units
B) 4,000 units
C) 39,000 units
D) 5,000 units

Question 54

All of the following are operating budgets except:

A) the cash budget
B) the operating expenses budget
C) the sales budget
D) the budgeted income statement

Question 55

Budgets generate negative feelings if:

A) they are used to point out managers' failings and used primarily to limit spending
B) they are used primarily to limit spending
C) they are congruent with rewards
D) they are used to point out managers' failings

Question 56

The following sales budget has been prepared: $$\begin{array} { l l l } \text { Month } & \text { Cash Sales } & \text { Credit Sales } \\\text { Septemb er } & \$ 99,000 & \$ 250,000 \\\text { October } & 225,000 & 180,000 \\\text { November } & 310,000 & 210,000 \\\text { December } & 94,000 & 170,000\end{array}$$ Collections are 50% in the month of sale, 40% in the month following the sale, and 10% two months following the sale. No uncollectible accounts are anticipated. is the expected balance of Accounts Receivable as of November 30.

A) $123,000
B) $77,500
C) $210,000
D) None of these answers is correct.

Question 57

Unit sales of Product X are currently 10,000, while unit sales of Product Y are double those of Product X. The company's sales forecast will be , assuming sales of Product X increase by 10% and those of Product Y go up by 4,000 units.

A) 11,000 and 24,000 units, respectively
B) 10,000 and 20,000 units, respectively
C) 11,000 and 22,000 units, respectively
D) None of these answers is correct.

Question 58

All of the following are financial budgets except:

A) the cash budget
B) the budgeted balance sheet
C) the capital budget
D) the purchases budget

Question 59

Aluminum Company's expected sales for April are $27,600. Information about other budgeted expenses is presented below. $\begin{array} { l } \text { Budgeted}& \text {Expensesper Month } \\\ \text {Wages }&\$2,000\\ \text { Advertising}&1,680\\ \text {Depreciation }&1,440\\ \text {Rent }&2,560\\ \text {Other }& \text { 5\% of sales} \\\end{array}$
All cash expenses are paid as incurred is the total expected cash disbursements for expenses in April.

A) $7,680
B) $7,620
C) $6,240
D) $9,060

Question 60

The financial budget includes:

A) only the capital budget and the cash budget
B) the cash budget, the budgeted statement of cash flows, and the retained earnings budget
C) the capital budget, the cash budget, and the budgeted balance sheet
D) only the capital budget and the budgeted balance sheet

Question 61

Arrival Hotels operates a 100- room property in a location popular for "spring breakers". Occupancy rates average 97% in March and 90% in April. The average room rental is $150 per night. Expected sales for April are:

A) $418,500
B) $450,000
C) $405,000
D) $436,500

Question 62

Continuous budgets are constructed by:

A) adding a new goal as a current goal is achieved
B) adding a year in the future as the current year just ended is dropped
C) adding a new cost object as a current cost object is eliminated
D) adding a month in the future as the month just ended is dropped

Question 63

Sapphire Company has the following data: $\begin{array}{lc}\text { Month } & \text { Budgeted Sales } \\\text { January } & \$ 108,000 \\\text { February } & 132000 \\\text { March } & 144,000 \\\text { April } & 120,000\end{array}$ The gross profit rate is 40% and the inventory at the end of December was $19,000. Desired inventory levels are 30% of next month's sales at cost. is the expected total purchases budgeted for February.

A) $105,120
B) $81,360
C) $79,200
D) None of these answers is correct.

Question 64

All of the following are financial budgets except:

A) the capital budget
B) the cash budget
C) the budgeted income statement
D) the budgeted balance sheet

Question 65

Pueblo Manufacturing Company has the following information: $\begin{array}{ll}\text { Month } & \text { Budgeted Sales } \\\text { January } & \$ 76,000 \\\text { February } & 85,000 \\\text { M arch } & 92,000 \\\text { April } & 79,000\end{array}$

$\begin{array}{ll}\text { Budgeted } & \text { Expens esperMonth } \\\text { W ages } & \$ 15,000 \\\text { Advertising } & 12,000 \\\text { Depreciation } & 3,000 \\\text { Other } & 4 \% \text { of sales }\end{array}$ All cash expenses are paid as incurred. is the expected total expenses budgeted for the month of January.

A) $30,000
B) $33,040
C) $31,200
D) $30,040

Question 66

Important factors considered by sales forecasters include all of the following except:

A) marketing research studies
B) competitors' activities
C) the desired level of sales
D) past patterns of sales

Question 67

is influenced by sales.

A) Depreciation expense
B) Rent expense
C) Commission expense
D) Insurance expense

Question 68

A common form of master budget that adds a month in the future as the month just ended is dropped

Question 69

Georgia Company has the following information: $$\begin{array} { l l } \text { Month } & \text { Budgeted Purchases } \\\text { January } & \$ 25,000 \\\text { February } & 19,000 \\\text { March } & 33,000 \\\text { April } & 27,000 \\\text { May } & 27,680\end{array}$$ Purchases are paid for in the following manner: 75% in the month of purchase 25% in the month after purchase
Is the total estimated cash disbursement in March for the purchase of merchandise.

A) $22,500
B) $39,000
C) $29,500
D) $24,750

Question 70

The master budget includes forecasts for all of the following except:

A) sales
B) cash disbursements
C) number of employees
D) balance sheets

Question 71

Platinum Corporation has the following information: $$\begin{array} { l l } \text { Month } & \text { Budgeted Sales } \\\text { May } & \$ 46,000 \\\text { June } & 50,000 \\\text { July } & \mathbf { 5 2 , 0 0 0 } \\\text { August } & \mathbf { 4 8 , 0 0 0 }\end{array}$$ The cost of goods sold percentage is 65% and the desired inventory level is 25% of next month's sales. is the expected total purchases budgeted for July.

A) $41,600
B) $33,800
C) $33,150
D) None of these answers is correct.

Question 72

Systematically varying budget data input to determine the effects of each change on the budget is called:

A) resource analysis
B) financial analysis
C) sensitivity analysis
D) operating analysis

Question 73

Cedar Rapids Corporation has the following information: $\begin{array}{lr}\text { Month } & \text { Budgeted Purchases } \\\hline \text { August } & \$ 35,000 \\\text { September } & 38,000 \\\text { October } & 43,500 \\\text { November } & 36,500 \\\text { December } & 46,000\end{array}$ Purchases are paid for in the following manner: 40% in the month of purchase 50% in the month after purchase 10% two months after purchase
Is the estimated cash disbursement in September from August purchases.

A) $10,500
B) $7,000
C) $19,000
D) $17,500

Question 74

The following sales budget has been prepared: $\begin{array}{lll}\text { Month } & \text { Cash Sales } & \text { Credit Sales } \\\text { September } & \$ 100,000 & \$ 200,000 \\\text { October } & 125,000 & 180,000 \\\text { November } & 130,000 & 210,000 \\\text { December } & 135,000 & 190,000\end{array}$ Collections are 50% in the month of sale, 40% in the month following the sale, and 10% two months following the sale. No uncollectible accounts are anticipated. is the estimated cash collection in September from September sales.

A) $200,000
B) $300,000
C) $100,000
D) $272,000

Question 75

Financial planning models:

A) focus on the budgeted balance sheet
B) are extremely accurate, thus lessening the need for management judgment
C) allow managers to assess the predicted impacts of various alternatives before final decisions are selected
D) attempt to answer "How come?" questions

Question 76

Felon Company expects a total of $20,000 sales in June. Of these, credit sales are expected to be $12,000. Collections are 50% in the month of sale, 40% in the month following the sale, and 5% two months following the sale. The remaining 5% is expected to be uncollectible. is the estimated cash collection in June from June sales.

A) $14,000
B) $17,200
C) $20,000
D) $9,200

Question 77

Drake Company has the following information: $$\begin{array} { l l } \text { Month } & \text { Budgeted Purchases } \\\text { January } & \$ 26,800 \\\text { February } & 29,000 \\\text { March } & 30,520 \\\text { April } & 29,480 \\\text { May } & 27,680\end{array}$$ Purchases are paid for in the following manner: 10% in the month of purchase 50% in the month after purchase 40% two months after purchase
Is the total estimated cash disbursement in May from the purchase of merchandise.

A) $29,716
B) $13,840
C) $25,632
D) $27,680

Question 78

Sensation Hotels operates a 100- room property in a location popular for "spring breakers". Occupancy rates average 95% in March and 80% in April. The average room rental is $150 per night. Expected sales for March are:

A) $427,500
B) $441,750
C) $418,500
D) $372,000

Question 79

are mathematical models of the master budget that can react to any set of assumption about sales, costs, and product mix.

A) Budgeting analysis models
B) Accounting models
C) Futuring models
D) Financial planning models

Question 80

For next year, Iverson Company has budgeted sales of 30,000 units, target ending finished goods inventory of 1,000 units, and a beginning finished goods inventory of 800 units. All other inventories are zero. should be produced.

A) 31,800 units
B) 30,000 units
C) 30,200 units
D) 29,800 units