Question 1

Alliance Company's budgets production of 24,000 units in January and 28,000 units in the February.Each finished unit requires 4 pounds of raw material K that costs $2.50 per pound.Each month's ending raw materials inventory should equal 40% of the following month's budgeted materials.The January 1 inventory for this material is 38,400 pounds.What is the budgeted materials need in pounds for January?

Accepted Answer

The budgeted materials need for January is calculated as follows:  - January production requires 24,000 units * 4 pounds/unit = 96,000 pounds.  - February's production requires 28,000 units * 4 pounds/unit = 112,000 pounds.  - Ending inventory for January should be 40% of February's requirement = 112,000 * 0.40 = 44,800 pounds.  - Total materials needed for January = 96,000 + 44,800 - 38,400 (beginning inventory) = 102,400 pounds.

Question 2

A department store has budgeted sales of 12,000 men's suits in September.Management wants to have 6,000 suits in inventory at the end of the month to prepare for the winter season.Beginning inventory for September is expected to be 4,000 suits.What is the dollar amount of the purchase of suits if each suit has a cost of $75.

Accepted Answer

To find the dollar amount of the purchase, calculate the number of suits needed: Desired ending inventory (6,000) + Sales (12,000) - Beginning inventory (4,000) = 14,000 suits to be purchased. Multiply by the cost per suit: 14,000 suits * $75 = $1,050,000.

Question 3

Cameroon Corp.manufactures and sells electric staplers for $16 each.If 10,000 units were sold in December,and management forecasts 4% growth in sales each month,the dollar amount of electric stapler sales budgeted for February should be:

Accepted Answer

To find the budgeted sales for February, calculate the sales for January first: 10,000 units * 1.04 = 10,400 units. Then, calculate February sales: 10,400 units * 1.04 = 10,816 units. Finally, multiply by the price per unit: 10,816 units * $16 = $173,056.

Question 4

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n):

Accepted Answer

A selling expense budget is a plan that outlines the expected types and amounts of selling expenses during the budget period. This budget helps a company to estimate its selling costs and to allocate resources accordingly. The other options listed are different types of budgets that do not relate specifically to selling expenses.

Question 5

Bengal Co.provides the following sales forecast for the next three months:  The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales.Finished goods inventory on June 30 is 1,250 units.The budgeted production units for July are:

Accepted Answer

The answer of Bengal Co.provides the following sales forecast for...

Question 6

A plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period is called a:

Accepted Answer

A merchandise purchases budget is a plan that outlines the amount and cost of merchandise to be purchased by a merchandising company during the budget period. This budget is essential because it helps the company plan ahead, avoid stock-outs or overstocking, and ensure that it has enough inventory to meet demand. The other options listed (selling expenses budget, sales budget, cash budget, capital expenditures budget) are all important budgets for a company, but they do not report on the units or costs of merchandise to be purchased.

Question 7

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a:

Accepted Answer

A capital expenditures budget is a plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets. This budget is used to help companies plan for long-term investments in property, plant, and equipment. The other options listed do not specifically pertain to plant assets.

Question 8

A quantity of inventory that provides protection against lost sales caused by unfulfilled demands from customers is called:

Accepted Answer

Safety stock provides a cushion against unexpected demand and helps ensure that customers are not turned away empty-handed. Just-in-time inventory, budgeted stock, and continuous inventory don't necessarily provide this protection. Capital stock is a term used in finance and doesn't relate to inventory management.

Question 9

A sporting goods manufacturer budgets production of 45,000 pairs of ski boots in the first quarter and 30,000 pairs in the second quarter of the upcoming year.Each pair of boots require 2 kg of a key raw material.The company aims to end each quarter with ending raw materials inventory equal to 20% of the following quarter's material needs.Beginning inventory for this material is 18,000 kg and the cost per kg is $8.What is the budgeted materials purchases cost for the first quarter?

Accepted Answer

First, we need to calculate the material needed for production in each quarter:

1st quarter: 45,000 pairs x 2 kg/pair = 90,000 kg
2nd quarter: 30,000 pairs x 2 kg/pair = 60,000 kg

Next, we need to calculate the ending inventory for each quarter:

1st quarter ending inventory: 20% of 60,000 kg = 12,000 kg
2nd quarter ending inventory: 20% of 90,000 kg = 18,000 kg

Now, we can calculate the total material needed for the first quarter:

Total material needed = 90,000 kg + 12,000 kg - 18,000 kg (beginning inventory) = 84,000 kg

Finally, we can calculate the budgeted materials purchases cost for the first quarter:

Budgeted cost = total material needed x cost per kg = 84,000 kg x $8/kg = $672,000

Therefore, the correct answer is B) $672,000.

Question 10

Masterson Company's budgeted production calls for 56,000 liters in April and 52,000 liters in May of a key raw material that costs $1.85 per liter.Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials.The January 1 inventory for this material is 16,800 liters.What is the budgeted cost of materials purchases for April?

Accepted Answer

The answer of Masterson Company's budgeted production calls for 56,000...

Question 11

When preparing the cash budget,all of the following should be considered except:

Accepted Answer

Depreciation expense is a non-cash expense and does not directly impact the firm's cash balance. The other options (A, B, D, and E) directly impact the cash inflows and outflows of the company and should be considered when preparing the cash budget.

Question 12

Bengal Co.provides the following sales forecast for the next three months:  The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales.Finished goods inventory on June 30 is 1,250 units.The budgeted production units for August are:

Accepted Answer

The answer of Bengal Co.provides the following sales forecast for...

Question 13

Schrank Company is trying to decide how many units of merchandise to order each month.The company's 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 purchased in September?

Accepted Answer

The answer of Schrank Company is trying to decide how...

Question 14

A July sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit.The management forecasts 2% growth in sales each month.Total July sales are anticipated to be:

Accepted Answer

The total July sales are calculated by multiplying the number of units (6,000) by the price per unit ($10.50), which equals $63,000.

Question 15

Cameroon Corp.manufactures and sells electric staplers for $16 each.If 10,000 units were sold in December,and management forecasts 4% growth in sales each month,the number of electric stapler sales budgeted for March should be:

Accepted Answer

To find the budgeted sales for March, calculate the sales growth over three months (December to March). Starting with 10,000 units in December, apply a 4% growth each month: January sales = 10,000 * 1.04 = 10,400; February sales = 10,400 * 1.04 = 10,816; March sales = 10,816 * 1.04 = 11,248.64, which rounds to 11,249.

Question 16

Flack Corporation provides the following information for its December budgeting process: The November 30 inventory was 1,800 units.
Budgeted sales for December are 4,000 units.
Desired December 31 inventory is 2,840 units.
Budgeted purchases are:

Accepted Answer

To calculate the budgeted purchases, use the formula: Budgeted Purchases = Budgeted Sales + Desired Ending Inventory - Beginning Inventory. Thus, 4,000 (sales) + 2,840 (desired ending inventory) - 1,800 (beginning inventory) = 5,040 units.

Question 17

A sporting equipment store expects to purchase $8,000 of ski boots in October.The store had $2,000 of ski boots in merchandise inventory at the beginning of October,and expects to have $3,000 of ski boots in merchandise inventory at the end of October to cover part of anticipated November sales.What is the budgeted cost of goods sold for October?

Accepted Answer

The answer of A sporting equipment store expects to purchase...

Question 18

Which of the following factors is least likely to be considered in preparing a sales budget?

Accepted Answer

The capital expenditures budget is typically not directly related to the sales budget and is more focused on investing in fixed assets such as property, plant, and equipment. Therefore, it is least likely to be considered in preparing a sales budget. The other factors listed are more directly linked to sales forecasting and budgeting.

Question 19

A plan showing the planned sales units and the revenue to be derived from these sales,and is the usual starting point in the budgeting process,is called the:

Accepted Answer

A sales budget is a plan that outlines the expected units of products or services to be sold and the revenue that will be generated from these sales. It is the usual starting point in the budgeting process, as it can help businesses to determine the amount of revenue they can expect to generate and how much they will need to spend on other expenses such as operating costs and merchandise purchases.

Question 20

Masterson Company's budgeted production calls for 56,000 liters in April and 52,000 liters in May of a key raw material that costs $1.85 per liter.Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials.The January 1 inventory for this material is 16,800 liters.What is the budgeted materials need in liters for April?

Accepted Answer

The answer of Masterson Company's budgeted production calls for 56,000...

Quiz 22: Master Budgets and Planning

Cameroon Corp.manufactures and sells electric staplers for $16 each.If 10,000 units were sold in December,and management forecasts 4% growth in sales each month,the dollar amount of electric stapler sales budgeted for February should be:

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n) :

Bengal Co.provides the following sales forecast for the next three months: The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales.Finished goods inventory on June 30 is 1,250 units.The budgeted production units for July are: