Question 1

Use the information below to answer the following question(s).
Bigelow Company budgets payroll at $4,000 per month plus a percentage of monthly sales. The June operating expense budget includes total payroll of $12,000 with budgeted sales of $160,000. Sales for July are budgeted at $180,000 while purchases of inventory for July are budgeted at $95,000. Depreciation and insurance for July are estimated at $1,000 and $600, respectively. Office and administrative expenses related to purchasing inventory are budgeted at 10% of purchases for the month. The purchase of $2,500 in equipment and $1,500 in furniture is expected in July.
-The total operating expenses at Bigelow Company budgeted for July are

Accepted Answer

- Payroll: $4,000 + (June sales $160,000 x percentage)
$12,000 = $4,000 + ($160,000 x percentage)
Percentage = 5%

- Payroll for July:
$4,000 + (July sales $180,000 x 5%) = $13,000

- Purchases related expenses: $95,000 x 10% = $9,500

- Other expenses:
Depreciation: $1,000
Insurance: $600
Equipment: $2,500
Furniture: $1,500

- Total operating expenses:
$13,000 + $9,500 + $1,000 + $600 + $2,500 + $1,500 = $24,100

Question 2

The Teddy Bear Company manufactures stuffed bears. The number of bears to be produced in the upcoming three months follows: 
 Each bear requires 2 pounds of the plastic pellets used as stuffing. The company has a policy that the ending inventory of plastic pellets each month must be equal to 20% of the following month's expected production needs. How many pounds of plastic pellets does The Teddy Bear Company need to purchase in August?

Accepted Answer

The answer of The Teddy Bear Company manufactures stuffed bears....

Question 3

Kayla's Toys budgeted sales of $300,000 for the month of November and cost of goods sold equal to 70% of sales. Beginning inventory for November was $50,000 and ending inventory for November is estimated at $55,000. How much are the budgeted purchases for November?

Accepted Answer

To calculate budgeted purchases, we need to use the formula: Budgeted purchases = Cost of goods sold + Ending inventory - Beginning inventory

Cost of goods sold = 70% of $300,000 = $210,000
Ending inventory = $55,000
Beginning inventory = $50,000

Therefore, budgeted purchases = $210,000 + $55,000 - $50,000 = $215,000

So, the correct answer is choice letter C.

Question 4

Horvath Corporation had beginning inventory of 22,000 units and expects sales of 76,500 units during the year. Desired ending inventory is 19,500 units. How many units should Horvath Corporation produce?

Accepted Answer

Horvath Corporation should produce enough units to cover the expected sales and achieve the desired ending inventory. The formula is: Beginning Inventory + Production = Sales + Ending Inventory. Solving for Production: Production = Sales + Ending Inventory - Beginning Inventory = 76,500 + 19,500 - 22,000 = 74,000 units.

Question 5

Stillwater Corporation manufactures outdoor planters. Budgeted sales and production data for the planters are as follows:  
The ending inventory for each month should be equal to 20% of the next month's production needs. Each planter requires one pound of clay in its manufacture. Stillwater Corporation has a policy that the inventory of clay at the end of each month needs to be equal to 20% of the production needs for the following month. At the beginning of January, 480 pounds of clay were in inventory. How many pounds of clay would Stillwater Corporation need to purchase in Month 2?

Accepted Answer

The answer of Stillwater Corporation manufactures outdoor planters. Budgeted sales...

Question 6

If the Bigelow Company percentage of monthly sales used in budgeting payroll increases by 20%, what would the total payroll budgeted for July be?

Accepted Answer

A)
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Question 7

Kiddie Toys Company manufactures and sells children's wagons. Each wagon requires four wheels. For September, Kiddie Toys Company has budgeted wagon sales of 530 wagons, while 570 wagons are scheduled to be produced. Kiddie Toys Company will begin September with 200 wheels in its beginning inventory. How many wheels should Kiddie Toys Company purchase for September?

Accepted Answer

Kiddie Toys Company needs 4 wheels per wagon. For September, they plan to produce 570 wagons, requiring 570 x 4 = 2,280 wheels. Starting with 200 wheels in inventory, they need to purchase 2,280 - 200 = 2,080 wheels.

Question 8

Use the information below to answer the following question(s).
Peabody Enterprises prepared the following sales budget:
  
The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
-What is the desired beginning inventory on June 1 at Peabody Enterprises?

Accepted Answer

B) Sales = 100% - 40% Gross Profit = 60% Cost of Goods Sold(CGS)
Now: June Sales $14,000 × 60% = 8,400(CGS) × 20% = $1,680

Question 9

Use the information below to answer the following question(s).
Peabody Enterprises prepared the following sales budget:
  
The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
-What are the total purchases budgeted for April at Peabody Enterprises?

Accepted Answer

Peabody Enterprises budgeted $7,680 for purchases in April.

Question 10

Brawny Corporation manufactures benches. Each bench requires .50 direct labour hours in its production. Brawny Corporation has a direct labour rate of $15 per direct labour hour. The production budget shows that Brawny Corporation plans to produce 1,000 benches in March and 1,200 benches in April. What is the total combined direct labour cost that should be budgeted for March and April?

Accepted Answer

The total direct labour cost for March and April is calculated as follows: For March, 1,000 benches * .50 hours/bench * $15/hour = $7,500. For April, 1,200 benches * .50 hours/bench * $15/hour = $9,000. The combined total is $7,500 + $9,000 = $16,500.

Question 11

Use the information below to answer the following question(s).
Peabody Enterprises prepared the following sales budget:
  
The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
-What is the desired ending inventory on May 31 at Peabody Enterprises?

Accepted Answer

C) Sales = 100% - 40% Gross Profit = 60% Cost of Goods Sold (CGS)
Now: June Sales $14,000 × 60% - 8,400 (CGS) × 20% = $1,680

Question 12

At the beginning of the year, Outdoor Living Corporation has 500 umbrellas in inventory. The company plans to sell 5,200 umbrellas during the year and wants to have 1,200 umbrellas in inventory at the end of the year. How many umbrellas must Outdoor Living Corporation produce during the year?

Accepted Answer

The answer of At the beginning of the year, Outdoor...

Question 13

Stuart Corporation recorded sales of $200,000 during March. Management expects sales to increase 5% in April, another 4% in May, and another 10% in June. Cost of goods sold is expected to be 80% of sales. What is the budgeted gross profit for June?

Accepted Answer

To find the budgeted gross profit for June, we need to calculate the budgeted sales, budgeted cost of goods sold, and then subtract the two.

Budgeted sales for April: $200,000 x 1.05 = $210,000 
Budgeted sales for May: $210,000 x 1.04 = $218,400 
Budgeted sales for June: $218,400 x 1.10 = $240,240

Budgeted cost of goods sold for June: $240,240 x 0.80 = $192,192

Budgeted gross profit for June: $240,240 - $192,192 = $48,048

Question 14

Use the information below to answer the following question(s).
Peabody Enterprises prepared the following sales budget:
  
The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
-What are the total purchases budgeted for May at Peabody Enterprises?

Accepted Answer

The total purchases budgeted for May at Peabody Enterprises is $7,440. This is calculated based on the company's budgeted purchases plan or schedule, which would have been provided in the context of the problem.

Question 15

Tucker Company manufactures dog beds. The following selected data relates to Tucker Company's budgeted sales and inventory levels of the dog beds for the upcoming quarter: 
 How many dog beds should Tucker Company produce in November?

Accepted Answer

The answer of Tucker Company manufactures dog beds. The following...

Question 16

Use the information below to answer the following question(s).
Peabody Enterprises prepared the following sales budget:
  
The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
-A tire store purchased $3,800 of tires in September. The store had $1,500 of tires on hand at the beginning of September, and expected to have $1,300 of tires at the end of September to cover part of anticipated October sales. What is the budgeted cost of goods sold for September?

Accepted Answer

The budgeted cost of goods sold for September can be calculated as follows:

Beginning inventory = $1,500
Purchases = $3,800
Total available = $5,300
Ending inventory = $1,300

Cost of goods sold = Beginning inventory + Purchases - Ending inventory
Cost of goods sold = $1,500 + $3,800 - $1,300
Cost of goods sold = $4,000

Question 17

Use the information below to answer the following question(s).
Peabody Enterprises prepared the following sales budget:
  
The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
-What is the budgeted cost of goods sold for May at Peabody Enterprises?

Accepted Answer

B) $12.000 × 60% = $7,200

Question 18

Toyz Company produces scooters. Toyz Company has the following sales projections for the upcoming year:  
Inventory at the beginning of the year was 4,000 scooters. Toyz Company wants to have 20% of the next quarter's sales in units on hand at the end of each quarter. How many scooters should Toyz Company produce during the first quarter?

Accepted Answer

The answer of Toyz Company produces scooters. Toyz Company has...

Question 19

Use the information below to answer the following question(s).
Bigelow Company budgets payroll at $4,000 per month plus a percentage of monthly sales. The June operating expense budget includes total payroll of $12,000 with budgeted sales of $160,000. Sales for July are budgeted at $180,000 while purchases of inventory for July are budgeted at $95,000. Depreciation and insurance for July are estimated at $1,000 and $600, respectively. Office and administrative expenses related to purchasing inventory are budgeted at 10% of purchases for the month. The purchase of $2,500 in equipment and $1,500 in furniture is expected in July.
-The July payroll at Bigelow Company should be budgeted at

Accepted Answer

- First, we need to calculate the percentage of monthly sales that is added to the base payroll of $4,000:
$12,000 (total payroll) - $4,000 (base payroll) = $8,000 (percentage of monthly sales)
$8,000 ÷ $160,000 (budgeted sales) = 0.05 or 5%
- Next, we can use this percentage to calculate the July payroll:
$4,000 (base payroll) + (0.05 x $180,000) (percentage of monthly sales based on July budgeted sales) = $13,000
Therefore, the answer is B, $13,000.

Question 20

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

C) 20,000 × $800 = $16,000,000

Quiz 9: The Master Budget and Responsibility Accounting

Kayla's Toys budgeted sales of $300,000 for the month of November and cost of goods sold equal to 70% of sales. Beginning inventory for November was $50,000 and ending inventory for November is estimated at $55,000. How much are the budgeted purchases for November?

Horvath Corporation had beginning inventory of 22,000 units and expects sales of 76,500 units during the year. Desired ending inventory is 19,500 units. How many units should Horvath Corporation produce?

If the Bigelow Company percentage of monthly sales used in budgeting payroll increases by 20%, what would the total payroll budgeted for July be?

At the beginning of the year, Outdoor Living Corporation has 500 umbrellas in inventory. The company plans to sell 5,200 umbrellas during the year and wants to have 1,200 umbrellas in inventory at the end of the year. How many umbrellas must Outdoor Living Corporation produce during the year?

Stuart Corporation recorded sales of $200,000 during March. Management expects sales to increase 5% in April, another 4% in May, and another 10% in June. Cost of goods sold is expected to be 80% of sales. What is the budgeted gross profit for June?

Tucker Company manufactures dog beds. The following selected data relates to Tucker Company's budgeted sales and inventory levels of the dog beds for the upcoming quarter: How many dog beds should Tucker Company produce in November?