Question 1

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

Accepted Answer

Yes, this is true. The selling and administrative expense budget typically separates fixed and variable expenses in order to provide a clearer picture of the company's costs and help with budgeting and financial planning. Fixed expenses are those that do not change with the level of sales or production, such as rent, salaries, and insurance. Variable expenses, on the other hand, are those that do vary with sales or production levels, such as commissions and shipping fees. By breaking these expenses down into fixed and variable categories, a company can better understand its cost structure and make more informed decisions about pricing, staffing, and other business operations.

Question 2

Seaworthy Company,a merchandising company,has prepared the following sales budget:

Cost of goods sold is budgeted at 50% 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

D)Calculation of beginning inventory on June 1:
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Question 3

Kwanzan Industries 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 $30 for Product B.The expected cost for Product A is 42% of its selling price and the expected cost for Product B is 59% of its selling price.Kwanzan Industries has no beginning inventory,but it wants to have a five-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

D)
Purchases = Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory
Cost of goods sold:
Product A: ($16 × 42%)× (490 units × 7 days)= $23,050
Product B: ($30 × 59%)× (420 units × 7 days)= $52,038
Total cost of goods sold: $23,050 + $52,038= $75,088
Desired ending inventory: (Daily sales × 5 days)× (Selling price × % expected cost)
Product A: (490 × 5)× ($16 × 42%)= $16,464
Product B: (420 × 5)× ($30 × 59%)= $37,170
Total Desired ending inventory: $16,464 + $37,170 = $53,634
Purchases: Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory
Product A: $23,050 + $16,464 - 0 = $39,514
Product B: $52,038 + $37,170 - 0 = $89,208
Total budgeted purchases: $39,514 + $89,208 = $128,722

Question 4

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 5

Teleco Corp.is preparing its budget for the first quarter of 2018.The following data is provided:

April's cost of goods sold is $34,000.The amount of Merchandise Inventory to be shown on the budgeted balance sheet at March 31 would be ________.

Accepted Answer

D)Cost of goods sold = (34,000 × 10%)+ 10,000 = $13,400

Question 6

Hygeia Health expects to sell 450 units of Product A and 380 units of Product B each day at an average price of $15 for Product A and $35 for Product B.The expected cost for Product A is 35% of its selling price and the expected cost for Product B is 55% of its selling price.Hygeia Health has no beginning inventory,but it wants to have a three-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

D)Cost of goods sold = (Selling price × % expected cost )× units
Cost of goods sold:
Product A: ($15 × 35%)× (450 units × 7 days)= $16,538
Product B: ($35 × 55%)× (380 units × 7 days)= $51,205
Total cost of goods sold: $16,538 + $51,205 = $67,743

Question 7

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

Accepted Answer

Both merchandising and manufacturing companies need to allocate resources effectively and efficiently to achieve their revenue goals. They both need to consider costs related to inventory, production, personnel, and marketing, among others, when preparing their financial budgets.

Question 8

From the following details,provided by a merchandising company,prepare the selling and administrative expenses budget for the first quarter of the next year.

Accepted Answer

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

Question 9

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 10

Tuscarora,Inc. ,a merchandising company,has the following budgeted figures:

Calculate the budgeted purchases for the month of January.

Accepted Answer

C)
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Question 11

Mimosa,Inc. ,a merchandising company,has the following budgeted figures:

Calculate cost of goods sold for the month of February.

Accepted Answer

D)COGS = $63,000 × 60% = $37,800

Question 12

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 13

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

This is accurate as the inventory, purchases, and cost of goods sold budget is used to calculate the cost of goods sold for the budgeted income statement, as well as the ending Merchandise Inventory for the budgeted balance sheet.

Question 14

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 15

Robust Resources expects to sell 440 units of Product A and 400 units of Product B each day at an average price of $18 for Product A and $27 for Product B.The expected cost for Product A is 40% of its selling price and the expected cost for Product B is 64% of its selling price.Robust Resources has no beginning inventory,but it wants to have a three-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

C)Sales price × Expected number of units sold = Budgeted total sales
Product A: $18 × (440 units × 7 days)= $55,440
Product B: $27 × (400 units × 7 days)= $75,600
Total budgeted sales: $55,440 + $75,600 = $131,040

Question 16

Yoshino,Inc. ,a merchandising company,has the following budgeted figures:

Calculate the ending merchandise inventory for the month of March.

Accepted Answer

A)Ending merchandise inventory for
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Question 17

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 18

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

Accepted Answer

A direct labor budget is not necessary for a merchandising firm as they do not typically have to budget for the cost of labor used in the production process. Merchandising firms buy and resell products rather than manufacturing them, so they do not have direct labor costs to budget for. However, a sales budget, cash budget, and capital expenditures budget would all be applicable to a merchandising firm.

Question 19

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 20

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

Accepted Answer

Budgeted sales are not carried from the sales budget to the balance sheet. The sales budget is used to determine the expected sales revenue, which is used to create the income statement. The income statement is then used to calculate net income, which is reported on the balance sheet.

Quiz 22: Master Budgets