Question 1

Which one of the following isnot needed in preparing a production budget?

Accepted Answer

While budgeted raw materials are necessary in preparing a direct materials budget, it is not specifically required in preparing a production budget. The other options are necessary inputs for production budgeting.

Question 2

The starting point in preparing a master budget is the preparation of the

Accepted Answer

The starting point in preparing a master budget is typically the sales budget, as this information will drive the production budget, purchasing budget, and ultimately the budget for personnel expenses. The sales budget provides an estimate of the company's expected sales revenue for the budget period, which is then used to determine the levels of production and purchasing needed to meet demand. Once these budgets are established, the personnel budget can be developed based on the staffing requirements for the production and purchasing plans.

Question 3

Off-Line Co.has 9000 units in beginning finished goods.The sales budget shows expected sales to be 36000 units.If the production budget shows that 42000 units are required for production what was the desired ending finished goods?

Accepted Answer

To find the desired ending finished goods, we need to use the following formula:

Desired Ending Finished Goods = Beginning Finished Goods + Production - Sales

Substituting the given values, we get:

Desired Ending Finished Goods = 9000 + 42000 - 36000
Desired Ending Finished Goods = 15000

Therefore, the desired ending finished goods is 15000 units, which is option C.

Question 4

Strand Company is planning to sell 400 buckets and produce 380 buckets during March.Each bucket requires 500 grams of plastic and one-half hour of direct labor.Plastic costs $10 per 500 grams and employees of the company are paid $15.00 per hour.Manufacturing overhead is applied at a rate of 110% of direct labor costs.Strand has 300 kilos of plastic in beginning inventory and wants to have 200 kilos in ending inventory.How much is the total amount of budgeted direct labor for March?

Accepted Answer

To find the budgeted direct labor cost, we need to first calculate the total direct labor hours required to produce 380 buckets:

380 buckets x 0.5 hours per bucket = 190 hours

Next, we can calculate the direct labor cost by multiplying the total direct labor hours by the hourly wage rate:

190 hours x $15.00 per hour = $2,850

Therefore, the total amount of budgeted direct labor for March is $2,850. Option C is the correct answer.

Question 5

At January 1 2022 Deer Corp.has beginning inventory of 2000 surfboards.Deer estimates it will sell 10000 units during the first quarter of 2022 with a 12% increase in sales each quarter.Deer's policy is to maintain an ending inventory equal to 25% of the next quarter's sales.Each surfboard costs $100 and is sold for $150.How much is budgeted sales revenue for the third quarter of 2022?

Accepted Answer

1st quarter sales = 10,000
2nd quarter sales = 10,000 x 1.12 = 11,200
3rd quarter sales = 11,200 x 1.12 = 12,544

Ending inventory for 1st quarter = 25% x 11,200 = 2,800
Ending inventory for 2nd quarter = 25% x 12,544 = 3,136

Therefore, total surfboards needed for 3rd quarter = 12,544 + 3,136 - 2,800 = 12,880

Beginning inventory for 3rd quarter = 25% x 12,544 = 3,136

Total surfboards needed to be purchased = 12,880 - 3,136 = 9,744

Total sales revenue = 9,744 x $150 = $1,461,600

Thus, the budgeted sales revenue for the third quarter of 2022 is $1,881,600.

Question 6

A company budgeted unit sales of 204000 units for January 2022 and 240000 units for February 2022.The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales.If there were 61200 units of inventory on hand on December 31 2021 how many units should be produced in January 2022 in order for the company to meet its goals?

Accepted Answer

The company needs to have 30% of February's sales in inventory at the end of January, which is 72,000 units (30% of 240,000). Starting with 61,200 units, they need to produce enough to cover January's sales (204,000) and reach the desired ending inventory (72,000). Thus, production = 204,000 + 72,000 - 61,200 = 214,800 units.

Question 7

Teller Co.is planning to sell 900 boxes of ceramic tile with production estimated at 870 boxes during May.Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor.Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour.Manufacturing overhead is applied at a rate of 110% of direct labor costs.Teller has 3900 pounds of clay mix in beginning inventory and wants to have 4500 pounds in ending inventory. What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

Accepted Answer

Step 1: Calculate the total amount of clay mix needed for production: 
900 boxes x 44 pounds per box = 39,600 pounds

Step 2: Calculate the total amount of clay mix required for ending inventory: 
4,500 pounds - 3,900 pounds (beginning inventory) = 600 pounds

Step 3: Calculate the total amount of clay mix to be purchased: 
39,600 pounds + 600 pounds = 40,200 pounds

Step 4: Calculate the total cost of clay mix to be purchased: 
40,200 pounds x $0.40 per pound = $16,080

Therefore, the answer is C) 38880.

Question 8

Which of the following expenses would not appear on a selling and administrative expense budget?

Accepted Answer

The answer of Which of the following expenses would not...

Question 9

Dart Inc.makes and sells umbrellas.The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year.The following budget data are available: $\begin{array}{lcr} 
&\underline{ \text { Variable Cost Per Unit Sold }} &\underline{ \text { Monthly Fixed Cost }} \
\text { Sales commissions } & \$ 0.60 & \$ 6,000 \
\text { Shipping } & 1.20 & \
\text { Advertising } & 0.30 & \
\text { Executive salaries } & & 40,000 \
\text { Depreciation on office equipment } & & 8,000\
\text { Other }& 0.35 & 28,000
\end{array}$
 Expenses are paid in the month incurred.If the company has budgeted to sell 8000 umbrellas in October how much is the total budgeted variable selling and administrative expenses for October?

Accepted Answer

The answer of Dart Inc.makes and sells umbrellas.The company is...

Question 10

A master budget consists of

Accepted Answer

A master budget consists of interrelated financial budgets and operating budgets, integrating various components of a business's budgeting process into a comprehensive financial plan.

Question 11

Comma Co.makes and sells widgets.The company is in the process of preparing its selling and administrative expense budget for the month.The following budget data are available: $\begin{array}{lcr} 
\underline{ \text {tem }} &\underline{ \text { Variable Cost Per Unit Sold }} &\underline{ \text { Monthly Fixed Cost }} \
\text { Sales commissions } & \$ 1 & \$ 10,000 \
\text { Shipping } & \$3 & \
\text { Advertising } & \$4 & \
\text { Executive salaries } & & \$120,000\
\text { Depreciation on office equipment } & & \$4,000\
\text { Other }&\$2&\$6,000
\end{array}$
 Expenses are paid in the month incurred.If the company has budgeted to sell 80000 widgets in October how much is the total budgeted selling and administrative expenses for October?

Accepted Answer

Total variable cost per unit sold = $1 + $3 + $4 + $2 = $10Total variable cost = $10 * 80,000 units = $800,000Total fixed cost = $10,000 + $120,000 + $4,000 + $6,000 = $140,000Total budgeted selling and administrative expenses = $800,000 + $140,000 = $940,000

Question 12

The following information is taken from the production budget for the first quarter: $\begin{array} { l r } 
\text { Beginning inventory in units } & 1,200 \
\text { Sales budgeted for the quarter } & 456,000 \
\text { Production capacity in units } & 472,000
\end{array}$ How many finished goods units should be produced during the quarter if the company desires 3200 units available to start the next quarter?

Accepted Answer

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

Question 13

Teller Co.is planning to sell 900 boxes of ceramic tile with production estimated at 870 boxes during May.Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor.Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour.Manufacturing overhead is applied at a rate of 110% of direct labor costs.Teller has 3900 pounds of clay mix in beginning inventory and wants to have 4500 pounds in ending inventory. What is the total amount to be budgeted for direct labor for the month?

Accepted Answer

The answer of Teller Co.is planning to sell 900 boxes...

Question 14

If the required direct materials purchases are 24000 pounds the direct materials required for production is three times the direct materials purchases and the beginning direct materials are three and a half times the direct materials purchases what are the desired ending direct materials in pounds?

Accepted Answer

- The direct materials required for production is three times the direct materials purchases, therefore: 24000 lbs x 3 = 72000 lbs required for production
- The beginning direct materials are three and a half times the direct materials purchases, therefore: 24000 lbs x 3.5 = 84000 lbs beginning direct materials
- To find the desired ending direct materials, we need to use the formula: 
Ending Direct Materials = Beginning Direct Materials + Direct Materials Purchases - Direct Materials Used
- We know that Direct Materials Purchases is 24000 lbs and Direct Materials Used is 72000 lbs, so: 
Ending Direct Materials = 84000 lbs + 24000 lbs - 72000 lbs 
Ending Direct Materials = 36000 lbs

Question 15

Lorie Nursery plans to sell 320 potted plants during April and 240 units in May.Lorie Nursery keeps 15% of the next month's sales as ending inventory.How many units should Lorie Nursery produce during April?

Accepted Answer

The answer of Lorie Nursery plans to sell 320 potted...

Question 16

Which of the following would not appear as a fixed expense on a selling and administrative expense budget?

Accepted Answer

Freight-out is considered a variable cost because it fluctuates with the level of sales or production volume, not a fixed expense that remains constant regardless of business activity levels. Fixed expenses in a selling and administrative expense budget typically include items like office salaries, property taxes, and depreciation, which do not vary directly with sales volume.

Question 17

Teller Co.is planning to sell 900 boxes of ceramic tile with production estimated at 870 boxes during May.Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor.Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour.Manufacturing overhead is applied at a rate of 110% of direct labor costs.Teller has 3900 pounds of clay mix in beginning inventory and wants to have 4500 pounds in ending inventory. What is the total amount to be budgeted for manufacturing overhead for the month?

Accepted Answer

The answer of Teller Co.is planning to sell 900 boxes...

Question 18

Lion Industries required production for June is 132000 units.To make one unit of finished product three pounds of direct material Z are required.Actual beginning and desired ending inventories of direct material Z are 300000 and 330000 pounds respectively.How many pounds of direct material Z must be purchased?

Accepted Answer

The answer of Lion Industries required production for June is...

Question 19

Doe Manufacturing plans to sell 6000 purple lawn chairs during May 5700 in June and 6000 during July.The company keeps 15% of the next month's sales as ending inventory.How many units should Doe produce during June?

Accepted Answer

To calculate the production for June, we need to consider the sales forecast for June and July and the ending inventory policy. For June, the sales forecast is 5700 units, and they plan to keep 15% of July's sales (6000 units) as ending inventory, which is 900 units. The total requirement for June is the sum of June sales and the ending inventory for July, which is 5700 + 900 = 6600 units. However, we must also subtract the ending inventory for June, which is 15% of June's sales (5700 units), amounting to 855 units. Therefore, the production for June should be 6600 - 855 = 5745 units.

Question 20

Comma Manufacturing 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 2021 to June 30 2022: $\begin{array}{lll}
&\underline{\text { June  30,2022 }}&\underline{\text { June  30,2021 }}\
\text { Raw Materials }& 3,000 \text { kilos }  & 2,000 \text { kilos } 
\end{array}$

Three kilos of raw materials are needed to produce each unit of finished product.If Comma Manufacturing plans to produce 560000 units during the 2021-2022 fiscal year how many kilos of materials will the company need to purchase for its production during the year?

Accepted Answer

560000 units x 3 kilos per unit = 1680000 kilos of raw materials needed.

Quiz 14: Standard Costs and Balanced Scorecard