Question 1

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget.

-Capital expenditures budget

Accepted Answer

The capital expenditures budget is considered a financial budget because it relates to the long-term financial planning of a company, including investments in property, plant, and equipment.

Question 2

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget.

-Cost of goods sold budget

Accepted Answer

The cost of goods sold budget is part of the operating budget because it details the direct costs attributable to the production of the goods sold by a company. This includes materials, labor, and overhead costs directly tied to the production process.

Question 3

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget.

-Revenues budget

Accepted Answer

The revenues budget is part of the operating budget because it outlines expected sales and revenue, directly related to the core business operations.

Question 4

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget.

-Budgeted statement of cash flows

Accepted Answer

The budgeted statement of cash flows is a financial budget because it relates to the company's financial position, showing how cash is expected to flow in and out of the business over the budget period.

Question 5

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget.

-Distribution costs budget

Accepted Answer

The distribution costs budget is part of the operating budget because it deals with the day-to-day operations of a company, specifically the costs associated with distributing the company's products.

Question 6

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget.

-Marketing costs budget

Accepted Answer

The marketing costs budget is part of the operating budget because it includes projected expenses related to the day-to-day operations of the business, specifically in the area of marketing and promotion.

Question 7

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget.

-Direct materials cost budget

Accepted Answer

The direct materials cost budget is part of the operating budget because it details the costs associated with the materials needed for production, which directly relates to the operations of the company.

Question 8

Use the information below to answer the following question(s).
Berry's Boxes manufactures boxes. It expects to sell 20,000 boxes in 2015. The company had enough beginning inventory of direct materials to produce 24,000 units. Beginning inventory of finished units totalled 2,000 with a target ending inventory of 2,500 units. The boxes sell for $3.00 and the company keeps no work-in-process inventory. Direct materials costs for each box total $1.00 while direct labour is $0.50. Factory overhead is $0.20 per box.
-What will be Berry's Boxes budgeted revenue?

Accepted Answer

20,000 × $3 = $60,000

Question 9

Use the information below to answer the following question(s).
Berry's Boxes manufactures boxes. It expects to sell 20,000 boxes in 2015. The company had enough beginning inventory of direct materials to produce 24,000 units. Beginning inventory of finished units totalled 2,000 with a target ending inventory of 2,500 units. The boxes sell for $3.00 and the company keeps no work-in-process inventory. Direct materials costs for each box total $1.00 while direct labour is $0.50. Factory overhead is $0.20 per box.
-What will be Berry's Boxes cost of goods sold in 2015?

Accepted Answer

($1.00 + $0.50 + $0.20) × 20,000 boxes = $34,000

Question 10

Use the information below to answer the following question(s).
Berry's Boxes manufactures boxes. It expects to sell 20,000 boxes in 2015. The company had enough beginning inventory of direct materials to produce 24,000 units. Beginning inventory of finished units totalled 2,000 with a target ending inventory of 2,500 units. The boxes sell for $3.00 and the company keeps no work-in-process inventory. Direct materials costs for each box total $1.00 while direct labour is $0.50. Factory overhead is $0.20 per box.
-What will be Berry's Boxes production costs incurred for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 2015?

Accepted Answer

DM = 20,500 × $1.00 = $20,500
DL = 20,500 × $0.50 = $10,250
MO = 20,500 × $0.20 = $4,100

Question 11

Use the information below to answer the following question(s).
Country Heather manufactures flowerpots. It expects to sell 40,000 flowerpots in 2016. The company had enough beginning inventory of direct materials to produce 48,000 units. Beginning inventory of finished units totalled 4,000 with a target ending inventory of 5,000 units. The flowerpots sell for $6.00 and the company keeps no work-in-process inventory. Direct materials costs for each flowerpot total $2.00 while direct labour is $1.00. Factory overhead is $0.40 per flowerpot.
-What will be Country Heather's budgeted revenue?

Accepted Answer

40,000 × $6 = $240,000

Question 12

Use the information below to answer the following question(s).
Country Heather manufactures flowerpots. It expects to sell 40,000 flowerpots in 2016. The company had enough beginning inventory of direct materials to produce 48,000 units. Beginning inventory of finished units totalled 4,000 with a target ending inventory of 5,000 units. The flowerpots sell for $6.00 and the company keeps no work-in-process inventory. Direct materials costs for each flowerpot total $2.00 while direct labour is $1.00. Factory overhead is $0.40 per flowerpot.
-What will be Country Heather's cost of goods sold?

Accepted Answer

40,000 × ($2.00 + $1.00 + $0.40) = $136,000

Question 13

Use the information below to answer the following question(s).
Fair Score Company manufactures scoreboards for athletic events. It expects to sell 20,000 scoreboards in 2015. The company has enough beginning inventory of direct materials to produce 8,000 units. Beginning work-in-process inventory totals 2,000 units and is 100 percent complete as to material and 50 percent complete as to labour and overhead. Beginning finished units total 4,000 with a target ending finished inventory of 3,000 units. The scoreboards sell for $800. There is no ending work-in-process inventory. Direct materials costs for each scoreboard total $200 while direct labour is $80. Manufacturing overhead is $60 per scoreboard.
-What will be Fair Score Company's budgeted total sales for 2015?

Accepted Answer

20,000 × $800 = $16,000,000

Question 14

Use the information below to answer the following question(s).
Fair Score Company manufactures scoreboards for athletic events. It expects to sell 20,000 scoreboards in 2015. The company has enough beginning inventory of direct materials to produce 8,000 units. Beginning work-in-process inventory totals 2,000 units and is 100 percent complete as to material and 50 percent complete as to labour and overhead. Beginning finished units total 4,000 with a target ending finished inventory of 3,000 units. The scoreboards sell for $800. There is no ending work-in-process inventory. Direct materials costs for each scoreboard total $200 while direct labour is $80. Manufacturing overhead is $60 per scoreboard.
-How many scoreboards should Fair Score Company produce in 2015?

Accepted Answer

20,000 + 3,000 - 4,000 = 19,000 scoreboards

Question 15

Use the information below to answer the following question(s).
Fair Score Company manufactures scoreboards for athletic events. It expects to sell 20,000 scoreboards in 2015. The company has enough beginning inventory of direct materials to produce 8,000 units. Beginning work-in-process inventory totals 2,000 units and is 100 percent complete as to material and 50 percent complete as to labour and overhead. Beginning finished units total 4,000 with a target ending finished inventory of 3,000 units. The scoreboards sell for $800. There is no ending work-in-process inventory. Direct materials costs for each scoreboard total $200 while direct labour is $80. Manufacturing overhead is $60 per scoreboard.
-What will be Fair Score Company's budgeted total cost of direct materials used in 2015?

Accepted Answer

19,000 units - 2,000 WIP = 17,000
17,000 × $200 = $3,400,000 direct materials

Question 16

Use the information below to answer the following question(s).
Fair Score Company manufactures scoreboards for athletic events. It expects to sell 20,000 scoreboards in 2015. The company has enough beginning inventory of direct materials to produce 8,000 units. Beginning work-in-process inventory totals 2,000 units and is 100 percent complete as to material and 50 percent complete as to labour and overhead. Beginning finished units total 4,000 with a target ending finished inventory of 3,000 units. The scoreboards sell for $800. There is no ending work-in-process inventory. Direct materials costs for each scoreboard total $200 while direct labour is $80. Manufacturing overhead is $60 per scoreboard.
-What will be Contempo Futon's cost of goods manufactured for December?

Accepted Answer

[30,000 + [(0.30 × 15,000) + (0.1 × 15,000)] - [(0.3 × 30,000) + (0.1 × 15,000)] × $125 = $3,187,500

Question 17

Use the information below to answer the following question(s).
Boone Hobbies, a wholesaler, has a sales budget for next month of $600,000. Cost of units sold is expected to be 40 percent of sales. All units are paid for in the month following purchase. The beginning inventory of units is $20,000, and an ending amount of $24,000 is desired. Beginning accounts payable is $152,000.
-Boone Hobbies gross margin for next month is expected to be

Accepted Answer

$600,000 - ($600,000 × 0.40) = $360,000

Question 18

Use the information below to answer the following question(s).
Boone Hobbies, a wholesaler, has a sales budget for next month of $600,000. Cost of units sold is expected to be 40 percent of sales. All units are paid for in the month following purchase. The beginning inventory of units is $20,000, and an ending amount of $24,000 is desired. Beginning accounts payable is $152,000.
-Boone Hobbies budgeted purchases for next month is expected to be

Accepted Answer

$240,000 + $24,000 - $20,000 = $244,000

Question 19

Use the information below to answer the following question(s).
Samson Inc. expects to sell 10,000 barbells for $18.00 each. Direct materials costs are $5.00, direct manufacturing labour is $6.00, and manufacturing overhead is $2.50 per barbell. Each barbell requires 6 kilograms (kg) of material which is all added at the start of production. The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started.. Each barbell requires one-quarter hour of direct labour, and manufacturing overhead is allocated based on direct labour hours. Marketing costs are $2.00 per barbell. The following inventory levels are expected to apply to 2016:
 
-On the 2016 budgeted income statement, what amount will be reported for gross margin?

Accepted Answer

10,000 × ($18 - ($5.00 + $6.00 + $2.50)) = $45,000

Question 20

Use the information below to answer the following question(s).
Samson Inc. expects to sell 10,000 barbells for $18.00 each. Direct materials costs are $5.00, direct manufacturing labour is $6.00, and manufacturing overhead is $2.50 per barbell. Each barbell requires 6 kilograms (kg) of material which is all added at the start of production. The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started.. Each barbell requires one-quarter hour of direct labour, and manufacturing overhead is allocated based on direct labour hours. Marketing costs are $2.00 per barbell. The following inventory levels are expected to apply to 2016:
 
-How many barbells need to be produced in 2016?

Accepted Answer

10,000 + 150 - 200 = 9,950

Quiz 6: Master Budget and Responsibility Accounting

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget. -Capital expenditures budget

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget. -Cost of goods sold budget

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget. -Revenues budget

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget. -Budgeted statement of cash flows

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget. -Distribution costs budget

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget. -Marketing costs budget

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget. -Direct materials cost budget