Question 1

Mimosa,Inc.,a merchandising company,has the following budgeted figures:  Calculate cost of goods sold for the month of February.

Accepted Answer

COGS = $67,000 × 60% = $40,200

Question 2

When a merchandiser calculates the budgeted cash payments for selling and administrative expenses,noncash expenses like depreciation are also considered.

Accepted Answer

Noncash expenses like depreciation are not considered in the calculation of budgeted cash payments for selling and administrative expenses because they do not involve an actual outflow of cash.

Question 3

What is the cornerstone of the master budget for a merchandising company? Why?

Accepted Answer

The answer of What is the cornerstone of the master...

Question 4

Yoshino,Inc.,a merchandising company,has the following budgeted figures:  Calculate the ending merchandise inventory for the month of March.

Accepted Answer

Ending merchandise inventory for 11eb0def_788c_f398_9431_c33a48f7463d_TB6702_00

Question 5

Keeping merchandise inventory at the maximum level that meets the needs of providing goods to customers,with turning over the merchandise inventory efficiently,helps reduce inventory storage costs,insurance costs,and warehousing costs.

Accepted Answer

Keeping merchandise inventory at the minimum level that meets the needs of providing goods to customers, with turning over the merchandise inventory efficiently, helps reduce inventory storage costs, insurance costs, and warehousing costs.

Question 6

For a merchandising company,the selling and administrative expense budget separates fixed and variable expenses.

Accepted Answer

The selling and administrative expense budget for a merchandising company typically separates fixed and variable expenses as part of the budgeting process. This allows for more accurate forecasting and budget planning.

Question 7

When preparing the selling and administrative expense budget,there is no need for a merchandising company to separate mixed costs into the fixed and variable components.

Accepted Answer

When preparing the selling and administrative expense budget, mixed costs must be separated into the fixed and variable components.

Question 8

For a merchandising company,budgeted purchases equals cost of goods sold plus beginning merchandise inventory minus ending merchandise inventory.

Accepted Answer

Purchases equals cost of goods sold plus ending merchandise inventory minus beginning merchandise inventory.

Question 9

Teleco Corp.is preparing its budget for the first quarter of 2018.The following data is provided:  April's cost of goods sold is $32,000.The amount of Merchandise Inventory to be shown on the budgeted balance sheet at March 31 would be ________.

Accepted Answer

Cost of goods sold = (32,000 × 25%) + 5000 = $13,000

Question 10

Hygeia Health expects to sell 460 units of Product A and 450 units of Product B each day at an average price of $15 for Product A and $33 for Product B.The expected cost for Product A is 38% of its selling price and the expected cost for Product B is 57% of its selling price.Hygeia Health has no beginning inventory,but it wants to have a six-day supply of ending inventory for each product.Compute the budgeted cost of goods sold for the next (seven-day)week.(Round the answer to the nearest dollar.)

Accepted Answer

Cost of goods sold = (Selling price × % expected cost ) × units
Cost of goods sold:
Product A: ($15 × 38%) × (460 units × 7 days) = $18,354
Product B: ($33 × 57%) × (450 units × 7 days) = $59,252
Total cost of goods sold: $18,354 + $59,252 = $77,606

Question 11

Which of the following budgets would not be prepared for a merchandising firm?

Accepted Answer

A direct labor budget is typically prepared for a manufacturing firm that incurs direct labor costs in the production process. Merchandising firms do not typically have direct labor costs, as they do not manufacture their products. The other budgets listed (cash budget, capital expenditures budget, sales budget) would all be relevant for a merchandising firm.

Question 12

The inventory,purchases,and cost of goods sold budget determines cost of goods sold for the budgeted income statement,and ending Merchandise Inventory for the budgeted balance sheet.

Accepted Answer

The inventory, purchases, and cost of goods sold budget directly affects and determines the cost of goods sold for the budgeted income statement, as well as the ending merchandise inventory for the budgeted balance sheet. This is because it outlines the expected costs associated with producing or acquiring the goods that a company sells, and therefore has a direct impact on the calculation of cost of goods sold and ending inventory.

Question 13

The financial budget of a merchandising company is similar to that of a manufacturing company.

Accepted Answer

Both types of companies must allocate funds for inventory, production costs, marketing, and administration expenses. The main difference is that a manufacturing company will also have additional expenses related to production equipment and machinery.

Question 14

Tuscarora,Inc.,a merchandising company,has the following budgeted figures:  Calculate the budgeted purchases for the month of January.

Accepted Answer

Budgeted purchases = Cost of goods sold + Ending inventory - Beginning inventory
= $224,500 + $23,850 - $21,950
= $226,400 - $21,950
= $204,450
Therefore, the budgeted purchases for the month of January is $23,850.

Question 15

Seaworthy Company,a merchandising company,has prepared the following sales budget:  Cost of goods sold is budgeted at 40% of sales,and the inventory at the end of February was $34,000.Desired inventory levels at the end of each month are 10% of the next month's cost of goods sold.What is the desired beginning inventory on June 1?

Accepted Answer

Calculation of beginning inventory on June 1: 11eb0def_788d_41be_9431_0d632a4cfe1b_TB6702_00

Question 16

Kwanzan Industries expects to sell 470 units of Product A and 410 units of Product B each day at an average price of $25 for Product A and $28 for Product B.The expected cost for Product A is 45% of its selling price and the expected cost for Product B is 65% of its selling price.Kwanzan Industries has no beginning inventory,but it wants to have a four-day supply of ending inventory for each product.Compute the budgeted purchases for the next (seven-day)week.(Round the answer to the nearest dollar.)

Accepted Answer

Purchases = Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory
Cost of goods sold:
Product A: ($25 × 45%) × (470 units × 7 days) = $37,013
Product B: ($28 × 65%) × (410 units × 7 days) = $52,234
Total cost of goods sold: $37,013 + $52,234= $89,247
Desired ending inventory: (Daily sales × 4 days) × (Selling price × % expected cost)
Product A: (470 × 4) × ($25 × 45%) = $21,150
Product B: (410 × 4) × ($28 × 65%) = $29,848
Total Desired ending inventory: $21,150 + $29,848 = $50,998
Purchases: Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory
Product A: $37,013 + $21,150 - 0 = $58,163
Product B: $52,234 + $29,848 - 0 = $82,082
Total budgeted purchases: $58,163 + $82,082 = $140,245

Question 17

Robust Resources expects to sell 490 units of Product A and 420 units of Product B each day at an average price of $16 for Product A and $27 for Product B.The expected cost for Product A is 41% of its selling price and the expected cost for Product B is 63% of its selling price.Robust Resources has no beginning inventory,but it wants to have a four-day supply of ending inventory for each product.Compute the company's budgeted sales for the next (seven-day)week.(Round the answer to the nearest dollar.)

Accepted Answer

Sales price × Expected number of units sold = Budgeted total sales
Product A: $16 × (490 units × 7 days) = $54,880
Product B: $27 × (420 units × 7 days) = $79,380
Total budgeted sales: $54,880 + $79,380 = $134,260

Question 18

For a merchandising company,what is the formula used to determine the amount of merchandise inventory to be purchased?

Accepted Answer

The answer of For a merchandising company,what is the formula...

Question 19

Regarding the sales budget,which of the following statements is incorrect?

Accepted Answer

The budgeted sales revenue is not carried from the sales budget to the balance sheet. Instead, it is carried to the income statement, where it is used to calculate gross profit and net income.

Question 20

From the following details,provided by a merchandising company,prepare the selling and administrative expenses budget for the first quarter of the next year.
 $$\begin{array} { | l | l | } 
\hline \text { Rent Expense } & \$ 8,000 \text { per month } \
\hline \text { Depreciation Expense } & \$ 3,500 \text { per month } \
\hline \text { Insurance Expense } & \$ 1,250 \text { per month } \
\hline \text { Miscellaneous Expense } & 2 \% \text { of sales, paid as incurred } \
\hline \text { Commissions Expense } & 10 \% \text { of sales } \
\hline \text { Salaries Expense } & \$ 7,000 \text { per month } \
\hline
\end{array}$$ $$\begin{array} { | l | l | l | r | } 
\hline & \text { Jan } & \text { Feb } & \text { March } \
\hline \text { Sales } & \$ 50,000 & \$ 65,000 & \$ 80,000 \
\hline
\end{array}$$

Accepted Answer

The answer of From the following details,provided by a merchandising...

Quiz 5: Master Budgets

Mimosa,Inc.,a merchandising company,has the following budgeted figures: Calculate cost of goods sold for the month of February.