Deck 9: Planning and Budgeting

Question 1

Longer planning horizons are usually used in high-level strategic business planning.

Answer 1

True

Question 2

Strategic planning is essentially a form of short-range decision making regarding day-to-day operations.

Answer 2

False

Question 3

A long-term operating plan usually covers a period of 1 year.

Answer 3

False

Question 4

Formal planning processes usually include both strategic planning and operational planning.

Question 5

The budget committee usually consists of the CEO, CFO, and Board of Directors.

Question 6

The budget period is the span of days or weeks that are set aside for preparing the budget.

Question 7

The capital expenditures budget generally covers multiple years because it involves acquiring long-term assets.

Question 8

Most companies that employ zero-based budgeting do NOT do so in all departments every year.

Question 9

The Production Budget is determined by the Direct Materials, Direct Labor, and Manufacturing Overhead Budgets.

Question 10

The Selling and Administrative Budget is prepared by determining the level of support needed to meet the Sales Budget.

Question 11

The amount of materials to be purchased is not necessarily equal to the amount to be paid for materials on the Direct Materials Budget.

Question 12

The Selling and Administrative Budget typically includes only fixed corporate expenses.

Question 13

The Capital Expenditures Budget only impacts the Cash Budget.

Question 14

If materials are purchased on account, then changes in Accounts Payable must be considered when preparing the Direct Materials Budget.

Question 15

To prepare the Budgeted Income Statement, several additional schedules and worksheets are often necessary.

Question 16

The Budgeted Balance Sheet is simply the balance sheet from the prior year, adjusted for budgeted changes.

Question 17

The Budgeted Statement of Cash Flows generally requires a different set of information than the Cash Flow Budget.

Question 18

On the Budgeted Statement of Cash Flows, cash receipts from customers are generally equal to the budgeted level of Sales.

Question 19

In SWOT analysis, Strengths are factors that are:

A) Internal and Harmful
B) Internal and Helpful
C) External and Harmful
D) External and Helpful

Question 20

In SWOT analysis, Threats are factors that are:

A) Internal and Harmful
B) Internal and Helpful
C) External and Harmful
D) External and Helpful

Question 21

In SWOT analysis, external factors that are helpful to a company are called:

A) Strengths
B) Opportunities
C) Weaknesses
D) Threats

Question 22

In SWOT analysis, internal factors that are harmful to a company are called:

A) Strengths
B) Opportunities
C) Weaknesses
D) Threats

Question 23

Which of the following are advantages of budgeting?

A) It helps management to get out of just doing things the same way and notice what can be improved.
B) It helps a company achieve their long-range goals.
C) It can be used for performance evaluation.
D) It unifies the efforts of various departments in pursuit of company objectives.
E) All of the above

Question 24

Which of the following are not advantages of budgeting?

A) It helps a company achieve their long-range goals.
B) It can be used for performance evaluation.
C) It gives greater control to lower management and lets each department define their own objectives.
D) It helps management to get out of just doing things the same way and notice what can be improved.
E) None of the above are advantages of budgeting.

Question 25

When a budget is updated at every incremental budget period, the process is called:

A) Continuous budgeting
B) Participative budgeting
C) Capital budgeting
D) Zero-based budgeting
E) None of the above

Question 26

A budget used to plan for the acquisition of long-term assets is called a:

A) Participative budget
B) Capital Expenditures budget
C) Continuous budget
D) Zero-based budget
E) None of the above

Question 27

What is the original metric that determines the levels of all budgets?

A) Planned production levels
B) Approved capital expenditures
C) Yearly cash flows
D) Forecasted sales levels
E) None of these

Question 28

What is the source of input for the Production Budget?

A) Cash budget
B) Direct materials budget
C) Direct labor budget
D) Manufacturing overhead budget
E) None of the above

Question 29

Which of the following budgets flows directly into the Budgeted Income Statement?

A) Capital expenditures budget
B) Selling and administrative budget
C) Budgeted balance sheet
D) Production budget
E) All of the above flow directly into the Budgeted Income Statement

Question 30

Which of the following are not inputs to the Cash Budget?

A) Materials purchased and paid-for from the Direct Materials Budget
B) Purchases of long-term assets from the Capital Expenditures Budget
C) Cost of goods sold from the Budgeted Income Statement
D) Rental payments from the Manufacturing Overhead Budget
E) None of the above are inputs to the Cash Budget

Question 31

Which of the following are factors that may be evaluated when preparing the sales forecast?

A) Number of full-time employees available to work
B) Expected business activities of competitors
C) Market research studies
D) Upcoming advertising campaigns
E) Three of the above

Question 32

Which of the following are considered cash disbursements?

A) Accrued interest
B) Direct materials purchased on account
C) Proceeds from stock sales
D) Tax payments
E) Sale of investments

Question 33

What can cause a difference between the Cash budget and another budget?

A) Sales made to customers on account
B) Direct materials purchased on account
C) Depreciation expense
D) Prepayments for expenses such as Rent
E) All of the above

Question 34

Which of the following would not be included on the Selling and Administrative Expense Budget?

A) Factory Rent
B) Sales Commission
C) Accounting Department salaries
D) Legal Fees
E) Depreciation on office equipment

Question 35

Which budgeted financial statement is generally prepared first?

A) Balance Sheet
B) Statement of Cash Flows
C) Income Statement
D) Statement of Retained Earnings
E) None of the above

Question 36

The balance in Materials Inventory on the Budgeted Balance Sheet is equal to:

A) Materials Purchased during the period
B) Materials Used during the period
C) Budgeted Beginning Materials Inventory
D) A minus B
E) None of the above

Question 37

The difference between the budgeted amounts of Sales and Cash Received for sales is equal to the budgeted change in:

A) Accounts Receivable
B) Accounts Payable
C) Cash
D) Retained Earnings
E) None of the Above

Question 38

Glacier Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Glacier anticipates the following sales volumes for the coming period:
If total budgeted revenue for the period is $250,000 and the sales price for Daytripper backpacks is $50, what is the budgeted sales price for Excursion backpacks?

A) $ 78
B) $125
C) $130
D) $158
E) None of the above

Question 39

Teton Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Teton anticipates the following sales volumes:
Daytripper: 2,000 backpacks in July, 2,200 backpacks in August
Excursion: 1,200 backpacks in July, 900 backpacks in August
Teton's policy is to maintain ending inventories at 5% of what is expected for the next month.
What is the budgeted level of production in July for both styles?

A) 2,210 Daytripper backpacks and 885 Excursion backpacks
B) 1,990 Daytripper backpacks and 1,215 Excursion backpacks
C) 2,000 Daytripper backpacks and 1,200 Excursion backpacks
D) 2,010 Daytripper backpacks and 1,185 Excursion backpacks
E) None of the above

Question 40

Teton Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Teton anticipates the following production volumes:
Daytripper: 2,000 backpacks in July, 2,200 backpacks in August
Excursion: 1,200 backpacks in July, 900 backpacks in August
Each Daytripper backpack requires 1 yard of 800 denier polyester fabric and each Excursion backpack requires 2 yards of 1200 denier polyester fabric. Teton's policy is to maintain ending inventories of each type of fabric at 10% of expected production needs for the next month.
What is the budgeted level of material purchases in July for both types?

A) 2,020 yards of 800 denier polyester and 2,340 yards of 1200 denier polyester
B) 1,980 yards of 800 denier polyester and 2,460 yards of 1200 denier polyester
C) 2,020 yards of 800 denier polyester and 1,140 yards of 1200 denier polyester
D) 2,000 yards of 800 denier polyester and 2,400 yards of 1200 denier polyester
E) None of the above

Question 41

Teton Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Teton anticipates the following production volumes:
Daytripper: 2,000 backpacks in July, 2,200 backpacks in August
Excursion: 1,200 backpacks in July, 900 backpacks in August
Each Daytripper backpack requires 1 hour of direct labor and each Excursion backpack requires 2.5 hours of direct labor.
If the total budgeted labor for August is 5,000 hours, how much indirect labor did Teton budget?

A) None
B) 1,550 hours
C) 550 hours
D) 1,900 hours
E) None of the above

Question 42

Mountain Trails manufactures backpacks for adventurers. Management is preparing budgets for the month, and is trying to determine the Overhead Budget amounts. Variable overhead is budgeted to be incurred at a rate of $5/direct labor hour (including utilities, indirect materials, and indirect labor). Budgeted direct labor hours are 4,500 hours for the period. Fixed overhead amounts include the following: Factory rent $5,000; Factory supervisor salary $6,000; Depreciation $8,000; Insurance $1,500; and Factory security $2,500.
What is the predetermined overhead rate (applied on the basis of direct labor hours? (Round to 3 decimal places)

A) $5.000
B) $5.111
C) $8.333
D) $13.333
E) None of the above

Question 43

High Trails manufactures backpacks for adventurers. Totals sales for the year are budgeted at 3,200 backpacks, at a price of $90 each. Variable selling expenses include commissions (3% of sales price) and delivery costs ($12/backpack). Annual fixed selling and administrative expenses include general liability insurance ($12,000), sales fleet depreciation ($180,000), administrative salaries ($360,000), and rent on the office building ($84,000). High Trails pays all costs as they are incurred.
What is the amount of cash budgeted for Selling and Administrative expenses for the year?

A) $503,040
B) $683,040
C) $419,040
D) $636,000
E) None of the above

Question 44

Valley Trails is preparing the Cash Budget for the upcoming period, and is concerned about their ability to meet their financial obligations in the short term. Following is information relating to Valley's financial performance:
Beginning-of-period balances:
Accounts Receivable: $54,000
Accounts Payable: $27,000
Accumulated Factory Depreciation: $288,000
Cash: $13,500
Estimates for end-of-period balances:
Accounts Receivable: $67,500
Accounts Payable: $18,000
Accumulated Factory Depreciation: $296,000
Budgeted activity levels for the period:
Sales: $250,000
Purchases of Direct Materials: $44,800
Direct Labor Wages: $75,000
Manufacturing Overhead: $25,000
Selling and Administrative Expenses: $42,000
Except for purchases of direct materials, all expenses are paid as incurred.
What is the budgeted ending cash balance for the period?

A) $76,700
B) $62,200
C) $70,200
D) $89,200
E) None of the above

Question 45

Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the following data:
Beginning-of-period balances:
Cash: $13,500
Accounts Receivable: $54,000
Raw Materials Inventory: $16,000
Work in Process Inventory: $60,000
Finished Goods Inventory: $24,000
Equipment (historical value): $480,000
Accumulated Depreciation: $288,000
Accounts Payable: $27,000
Estimates for end-of-period balances:
Accounts Receivable: $67,500
Raw Materials Inventory: $10,000
Work in Process Inventory: $50,000
Finished Goods Inventory: $29,000
Accumulated Depreciation: $296,000
Accounts Payable: $18,000
Budgeted activity levels for the period:
Sales: 3,125 units, at an average sales price of $80/unit
Purchases of Direct Materials: $44,800
Direct Labor Wages: $75,000
Manufacturing Overhead: $25,000
Selling and Administrative Expenses: $42,000
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. Forest Trails has planned to purchase new equipment worth $25,000, and to sell equipment for $8,000 (Original purchase price $15,000, accumulated depreciation $10,000) to help finance the purchase.
What is budgeted amount of Cost of Goods Sold for the period?

A) $144,800
B) $153,800
C) $143,800
D) $155,800
E) None of the above

Question 46

Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the following data:
Beginning-of-period balances:
Cash: $13,500
Accounts Receivable: $54,000
Raw Materials Inventory: $16,000
Work in Process Inventory: $60,000
Finished Goods Inventory: $24,000
Equipment (historical value): $480,000
Accumulated Depreciation: $288,000
Accounts Payable: $27,000
Estimates for end-of-period balances:
Accounts Receivable: $67,500
Raw Materials Inventory: $10,000
Work in Process Inventory: $50,000
Finished Goods Inventory: $29,000
Accumulated Depreciation: $296,000
Accounts Payable: $18,000
Budgeted activity levels for the period:
Sales: 3,125 units, at an average sales price of $80/unit
Purchases of Direct Materials: $44,800
Direct Labor Wages: $75,000
Manufacturing Overhead: $25,000
Selling and Administrative Expenses: $42,000
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. Forest Trails has planned to purchase new equipment worth $25,000, and to sell equipment for $8,000 (Original purchase price $15,000, accumulated depreciation $10,000) to help finance the purchase.
What is budgeted amount of cash received from customers for the period?

A) $259,000
B) $236,500
C) $250,000
D) $263,500
E) None of the above

Question 47

Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the following data:
Beginning-of-period balances:
Cash: $13,500
Accounts Receivable: $54,000
Raw Materials Inventory: $16,000
Work in Process Inventory: $60,000
Finished Goods Inventory: $24,000
Equipment (historical value): $480,000
Accumulated Depreciation: $288,000
Accounts Payable: $27,000
Estimates for end-of-period balances:
Accounts Receivable: $67,500
Raw Materials Inventory: $10,000
Work in Process Inventory: $50,000
Finished Goods Inventory: $29,000
Accumulated Depreciation: $296,000
Accounts Payable: $18,000
Budgeted activity levels for the period:
Sales: 3,125 units, at an average sales price of $80/unit
Purchases of Direct Materials: $44,800
Direct Labor Wages: $75,000
Manufacturing Overhead: $25,000
Selling and Administrative Expenses: $42,000
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. Forest Trails has planned to purchase new equipment worth $25,000, and to sell equipment for $8,000 (Original purchase price $15,000, accumulated depreciation $10,000) to help finance the purchase.
What is the budgeted level of Cash Flow from Operating Activities?

A) $58,700 positive cash flow
B) $72,000 positive cash flow
C) $63,200 positive cash flow
D) $73,200 positive cash flow
E) None of the above

Question 48

Young Scholar, Inc. manufactures backpacks for students. The backpacks come in two sizes: Small, and Large. Young Scholar anticipates the following sales volumes and prices for the coming period:
What is the budgeted level of revenue for the coming period?

Question 49

Wrist Works Inc. manufactures two styles of watches. Following is information relating to these two styles:
Wrist Works' policy is to maintain ending inventories at 5% of what is expected for the next month. What is the budgeted level of production for both styles for January?

Question 50

Mighty Tow manufactures trailer hitches for personal vehicles. The company has production levels budgeted for this period of 2,000 hitches. Each hitch requires 7.5 feet of steel to manufacture.
The company has a policy of always having 250 feet of steel on hand at the end of the period, in case of excess demand. Last period orders were higher than expected, so the company ended the period with only 200 feet of steel on hand. Steel costs $10/foot, and Mighty Tow has an agreement to pay their supplier 75% of the cost of purchases in the month bought, and the remainder in the month following.
The Accounts Payable balance at the beginning of the period is $15,000.
What is the budgeted amount of cash to be paid for raw materials this month?

Question 51

Olde Clothiers manufactures vintage clothing through a labor-intensive manual process. Workers are paid $30/hour. Each sweater takes 2.5 hours to knit, and each shirt requires 1 hour of total labor to complete. Management has budgeted for 1,500 items to be produced this period, with a ratio of 3:2 of shirts to sweaters. Olde Clothiers pays wages as incurred.
What is the total amount budgeted to be paid in Direct Labor wages for the period?

Question 52

Quality Floors is small local manufacturing firm that makes carpet and vinyl floors at low cost. Management is preparing budgets for the month, and is trying to determine the Overhead Budget amounts.
Variable overhead is budgeted to be incurred at a rate of $8/direct labor hour (including utility usage, indirect materials, and indirect labor). Budgeted direct labor hours are 4,000 hours for the period. Fixed overhead amounts include the following: Rent $6,000; Factory supervisor salary $10,000; Depreciation $4,000; Insurance $2,000; and Property taxes $1,500.
What is the predetermined overhead rate (applied on the basis of direct labor hours-round to 3 decimal places)?

Question 53

Petit Patisserie is a commercial bakery that caters for commercial clients. The company's specialty is a small breakfast basket that can feed up to 3 people.
Totals sales for the month are budgeted at 3,000 baskets, at a price of $45/basket. Variable selling expenses include commissions (2% of sales price) and delivery costs ($10/basket). Fixed selling expenses included insurance ($5,000), office equipment depreciation ($3,000), administrative salaries ($20,000), and rent on the office building ($4,000).
Petit Patisserie pays all costs as they are incurred.
What is the amount of cash budgeted for Selling and Administrative expenses for the month?

Question 54

Quality Printing Inc. has a machine that is wearing out and needs to be replaced. It has a book value of $9,000, with accumulated depreciation of $71,000. The machine can be sold for 10% of the original purchase value.
In order to meet production needs, the machine needs to be replaced with a newer model that costs $100,000 and will be depreciated by $20,000 in the first year.
What is the net amount that will be spent on Equipment in the coming period?

Question 55

Red Suspenders Co. is preparing the Cash Budget for the upcoming period, and is concerned about their ability to meet their financial obligations in the short term. Following is information relating to Red Suspenders' financial performance:
Except for purchases of direct materials, all expenses are paid as incurred. What is the budgeted ending cash balance for the period?

Question 56

Use the following information to complete Exercises below:
Public Manufacturing Company (PMC) is preparing their budgeted financial statements for the coming year, and has accumulated the following data:
During the period, PMC plans to sell an asset with an historical cost of $30,000 and a current book value of $10,000 for an estimated $8,000 cash.
-What is the budgeted Cost of Goods Sold for the period?

Question 57

Use the following information to complete Exercises below:
Public Manufacturing Company (PMC) is preparing their budgeted financial statements for the coming year, and has accumulated the following data:
During the period, PMC plans to sell an asset with an historical cost of $30,000 and a current book value of $10,000 for an estimated $8,000 cash.
-What is the budgeted cash received from customers?

Question 58

Use the following information to complete Exercises below:
Public Manufacturing Company (PMC) is preparing their budgeted financial statements for the coming year, and has accumulated the following data:
During the period, PMC plans to sell an asset with an historical cost of $30,000 and a current book value of $10,000 for an estimated $8,000 cash.
-What is the amount of the budgeted change to Owners Equity (assuming no dividends are planned and ignoring taxes)?

Question 59

Use the following information to complete Exercises below:
Public Manufacturing Company (PMC) is preparing their budgeted financial statements for the coming year, and has accumulated the following data:
During the period, PMC plans to sell an asset with an historical cost of $30,000 and a current book value of $10,000 for an estimated $8,000 cash.
-What is budgeted level of Cash Flow from Operating Activities?

Question 60

Happy Eating manufactures lunchboxes for students. The lunchboxes come in two sizes: Small, and Medium. Happy Eating anticipates the following sales volumes and prices for the coming period:
Small: 5,000 lunchboxes, selling price $10 each
Medium: 3,000 lunchboxes, selling price $25 each
What is the budgeted level of revenue for the coming period?

Question 61

Case-up Inc. manufactures 2 styles of cell phone cases. Following is information relating to these two styles:
Plastic case: Expected Sales this month 450 units, Expected Sales next month 380 units
Leather case: Expected Sales this month 300 units, Expected Sales next month 350 units
Case-up's policy is to maintain ending inventories at 10% of what is expected for the next month. What is the budgeted level of production for both styles?

Question 62

Cappin' manufactures personalized baseball caps for companies. The company has production levels budgeted for this period of 5,000 caps. Each cap requires 1 yard of fabric to manufacture. The company has a policy of always having 300 yards of fabric on hand at the end of the period, in case of excess demand. Last period orders were higher than expected, so the company ended the period with only 175 yards of fabric on hand. Fabric costs $8/yard, and Cappin' has an agreement to pay their supplier 75% of the cost of purchases in the month bought, and the remainder in the month following. The Accounts Payable balance at the beginning of the period is $15,000.
What is the budgeted amount of cash to be paid for raw materials this month?

Question 63

Spinning Wheel manufactures leather accessories through a labor-intensive manual process. Workers are paid $10/hour. Each handbag takes 2 hours to sew, and each wallet requires 0.5 hours of total labor to complete. Management has budgeted for 1,000 items to be produced this period, with a ratio of 1:3 of handbags to wallets.
What is the total amount budgeted to be paid in Direct Labor wages for the period?

Question 64

Fancy Drapes is a small local manufacturing firm that makes curtains and blinds at low cost. Management is preparing budgets for the month, and is trying to determine the Overhead Budget amounts. Variable overhead is budgeted to be incurred at a rate of $7/direct labor hour (including utility usage, indirect materials, and indirect labor). Budgeted direct labor hours are 2,500 hours for the period. Fixed overhead amounts include the following: Rent $4,000; Factory supervisor salary $4,000; Depreciation $1,500; Insurance $2,500; and Property taxes $2,000.
What is the predetermined overhead rate (applied on the basis of direct labor hours)?

Question 65

Cherry Florals is a florist that caters for weddings. The company's specialty is bouquets for brides and bridesmaids. Total sales for the month are budgeted at 2,000 bouquets, at a price of $45/bouquet. Variable selling expenses include commissions (1% of sales price) and delivery costs ($10/bouquet). Fixed selling expenses included insurance ($1,000), office equipment depreciation ($2,500), shop assistants' salaries ($20,000), and rent on the shop space ($5,000). Cherry Florals pays all costs as they are incurred.
What is the amount of cash budgeted for Selling and Administrative expenses for the month?

Question 66

Hare Construction Inc. has a machine that is wearing out and needs to be replaced. It has a book value of $8,000, with accumulated depreciation of $48,000. The machine can be sold for 10% of the original purchase value.
In order to meet production needs, the machine needs to be replaced with a newer model that costs $60,000, and will be depreciated by $5,000 in the first year.
What is the net amount that will be spent on Equipment in the coming period?

Question 67

Rising Sparks Co. is preparing the Cash Budget for the upcoming period, and is concerned about their ability to meet their financial obligations in the short term. Following is information relating to Rising Spark's financial performance:
Beginning-of-period balances:
Accounts Receivable: $4,000
Accounts Payable: $2,500
Accumulated Factory Depreciation: $4,000
Cash: $3,500
Estimates for end-of-period balances:
Accounts Receivable: $3,000
Accounts Payable: $2,000
Accumulated Factory Depreciation: $5,000
Budgeted activity levels for the period:
Sales: $15,000
Purchases of Direct Materials: $8,000
Direct Labor Wages: $4,000
Manufacturing Overhead: $4,500
Selling and Administrative Expenses: $3,000
Except for purchases of direct materials, all expenses are paid as incurred.
What is the budgeted ending cash balance for the period?

Question 68

Use the following information to answer Exercises below
Inventive Creations Co. (ICC) is preparing their budgeted financial statements for the coming year, and has accumulated the following data:
Beginning-of-period balances:
Cash: $55,000
Accounts Receivable: $30,000
Raw Materials Inventory: $20,000
Work in Process Inventory: $100,000
Finished Goods Inventory: $10,000
Equipment (historical value): $250,000
Accumulated Depreciation: $125,000
Accounts Payable: $25,000
Estimates for end-of-period balances:
Accounts Receivable: $40,000
Raw Materials Inventory: $15,000
Work in Process Inventory: $80,000
Finished Goods Inventory: $7,000
Accumulated Depreciation: $120,000
Accounts Payable: $20,000
Budgeted activity levels for the period:
Sales: 15,000 units, at a sales price of $175/unit
Purchases of Direct Materials: $300,000
Direct Labor Wages: $150,000
Manufacturing Overhead: $1,000,000
Selling and Administrative Expenses: $900,000
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. ICC has planned to purchase new equipment worth $30,000, and to sell equipment for $8,000 (Original purchase price $25,000, accumulated depreciation $15,000) to help finance the purchase.
-What is the budgeted Cost of Goods Sold for the period?

Question 69

Use the following information to answer Exercises below
Inventive Creations Co. (ICC) is preparing their budgeted financial statements for the coming year, and has accumulated the following data:
Beginning-of-period balances:
Cash: $55,000
Accounts Receivable: $30,000
Raw Materials Inventory: $20,000
Work in Process Inventory: $100,000
Finished Goods Inventory: $10,000
Equipment (historical value): $250,000
Accumulated Depreciation: $125,000
Accounts Payable: $25,000
Estimates for end-of-period balances:
Accounts Receivable: $40,000
Raw Materials Inventory: $15,000
Work in Process Inventory: $80,000
Finished Goods Inventory: $7,000
Accumulated Depreciation: $120,000
Accounts Payable: $20,000
Budgeted activity levels for the period:
Sales: 15,000 units, at a sales price of $175/unit
Purchases of Direct Materials: $300,000
Direct Labor Wages: $150,000
Manufacturing Overhead: $1,000,000
Selling and Administrative Expenses: $900,000
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. ICC has planned to purchase new equipment worth $30,000, and to sell equipment for $8,000 (Original purchase price $25,000, accumulated depreciation $15,000) to help finance the purchase.
-What is the budgeted cash received from customers?

Question 70

Use the following information to answer Exercises below
Inventive Creations Co. (ICC) is preparing their budgeted financial statements for the coming year, and has accumulated the following data:
Beginning-of-period balances:
Cash: $55,000
Accounts Receivable: $30,000
Raw Materials Inventory: $20,000
Work in Process Inventory: $100,000
Finished Goods Inventory: $10,000
Equipment (historical value): $250,000
Accumulated Depreciation: $125,000
Accounts Payable: $25,000
Estimates for end-of-period balances:
Accounts Receivable: $40,000
Raw Materials Inventory: $15,000
Work in Process Inventory: $80,000
Finished Goods Inventory: $7,000
Accumulated Depreciation: $120,000
Accounts Payable: $20,000
Budgeted activity levels for the period:
Sales: 15,000 units, at a sales price of $175/unit
Purchases of Direct Materials: $300,000
Direct Labor Wages: $150,000
Manufacturing Overhead: $1,000,000
Selling and Administrative Expenses: $900,000
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. ICC has planned to purchase new equipment worth $30,000, and to sell equipment for $8,000 (Original purchase price $25,000, accumulated depreciation $15,000) to help finance the purchase.
-What is the amount of the budgeted change to Owners Equity (assuming no dividends are planned and ignoring taxes)?

Question 71

Use the following information to answer Exercises below
Inventive Creations Co. (ICC) is preparing their budgeted financial statements for the coming year, and has accumulated the following data:
Beginning-of-period balances:
Cash: $55,000
Accounts Receivable: $30,000
Raw Materials Inventory: $20,000
Work in Process Inventory: $100,000
Finished Goods Inventory: $10,000
Equipment (historical value): $250,000
Accumulated Depreciation: $125,000
Accounts Payable: $25,000
Estimates for end-of-period balances:
Accounts Receivable: $40,000
Raw Materials Inventory: $15,000
Work in Process Inventory: $80,000
Finished Goods Inventory: $7,000
Accumulated Depreciation: $120,000
Accounts Payable: $20,000
Budgeted activity levels for the period:
Sales: 15,000 units, at a sales price of $175/unit
Purchases of Direct Materials: $300,000
Direct Labor Wages: $150,000
Manufacturing Overhead: $1,000,000
Selling and Administrative Expenses: $900,000
All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. ICC has planned to purchase new equipment worth $30,000, and to sell equipment for $8,000 (Original purchase price $25,000, accumulated depreciation $15,000) to help finance the purchase.
-What is budgeted level of Cash Flow from Operating Activities?

Question 72

What are some threats that a company might face in the commercial farming industry?

Question 73

What is operational planning? What length of planning horizon does it generally cover?

Question 74

What are some examples of reports that can be used to measure a company's progress against their goals and plans?

Question 75

How is SWOT analysis used in the planning process?

Question 76

In evaluating company performance, what may be wrong with simply comparing current period performance against previous-period results?

Question 77

How can participative budgeting lead to greater acceptance of performance standards?

Question 78

What budgets are affected by the Production Budget?

Question 79

Which budget should be prepared first and why?

Question 80

What is the source of input for the Budgeted Statement of Cash Flows?