Question 1

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

Accepted Answer

This statement is true. The inventory, purchases, and cost of goods sold budget is an integral part of budgeting for a business as it helps determine the cost of goods sold for the budgeted income statement, ending merchandise inventory for the budgeted balance sheet, and merchandise inventory purchases for the cash budget.

Question 2

What is a common method of accessing short-term financing?

Accepted Answer

The answer of What is a common method of accessing...

Question 3

The selling and administrative expense budget separates fixed and variable expenses.

Accepted Answer

The selling and administrative expense budget separates fixed and variable expenses.

Question 4

Regarding the sales budget,which of the following statements is incorrect?
A)The forecast of sales revenue is the cornerstone of the master budget.
B)The level of sales affects expenses and almost all other elements of the master budget.
C)The budgeted sales are carried from the sales budget to the balance sheet.
D)Budgeted total sales for each product equal the sales price multiplied by the expected number of units sold.

Accepted Answer

The budgeted sales are not carried from the sales budget to the balance sheet. The sales budget provides the information necessary to prepare other budgets, such as the production budget and the cash budget. The information from the sales budget is used to prepare the income statement, which is a part of the financial statements, but not the balance sheet.

Question 5

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 6

When preparing the selling and administrative expense budget,there is no need 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 7

Flamingo,Inc.has the following budgeted figures:

Calculate cost of goods sold for the month of February.
A)$15,000
B)$34,500
C)$42,000
D)$36,000

Accepted Answer

D)COGS = $60,000 × 60% = $36,000

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

Health Resources expects to sell 480 units of Product A and 440 units of Product B each day at an average price of $19 for Product A and $32 for Product B.The expected cost for Product A is 40% of its selling price and the expected cost for Product B is 62% of its selling price.Health Resources has no beginning inventory,but it wants to have a six-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. )
A)$12,378
B)$139,200
C)$162,400
D)$23,200

Accepted Answer

C)Sales price × Expected number of units sold = Budgeted total sales
Product A: $19 × (480 units × 7 days)= $63,840
Product B: $32 × (440 units × 7 days)= $98,560
Total budgeted sales: $63,840 + $98,560 = $162,400

Question 10

MFL Sales expects to sell 400 units of Product A and 360 units of Product B each day at an average price of $20 for Product A and $26 for Product B.The expected cost for Product A is 36% of its selling price and the expected cost for Product B is 59% of its selling price.MFL Sales 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. )
A)$56,627
B)$50,414
C)$104,160
D)$58,817

Accepted Answer

D)Cost of goods sold = (Selling price × % expected cost )× units
Cost of goods sold:
Product A: ($20 × 36%)× (400 units × 7 days)= $20,160
Product B: ($26 × 59%)× (360 units × 7 days)= $38,657
Total cost of goods sold: $20,160 + $38,657 = $58,817

Question 11

DGT Industries expects to sell 450 units of Product A and 400 units of Product B each day at an average price of $23 for Product A and $31 for Product B.The expected cost for Product A is 38% of its selling price and the expected cost for Product B is 60% of its selling price.DGT 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. )
A)$79,611
B)$91,000
C)$159,250
D)$125,103

Accepted Answer

C)
D)Purchases = Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory
Cost of goods sold:
Product A: ($23 × 38%)× (450 units × 7 days)= $27,531
Product B: ($31 × 60%)× (400 units × 7 days)= $52,080
Total cost of goods sold: $27,531 + $52,080= $79,611
Desired ending inventory: (Daily sales × 4 days)× (Selling price × % expected cost)
Product A: (450 × 4)× ($23 × 38%)= $15,732
Product B: (400 × 4)× ($31 × 60%)= $29,760
Total Desired ending inventory: $15,732 + $29,760 = $45,492
Purchases: Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory
Product A: $27,531 + $15,732 - 0 = $43,263
Product B: $52,080 + $29,760 - 0 = $81,840
Total budgeted purchases: $43,263 + $81,840 = $125,103

Question 12

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

Accepted Answer

Both types of companies need to consider costs and expenses related to producing and selling their products, such as inventory, sales, and marketing expenses. Therefore, their financial budgets have many similarities.

Question 13

Allain,Inc.has the following budgeted figures:

Calculate the ending merchandise inventory for the month of March.
A)$36,400
B)$62,800
C)$34,540
D)$52,800

Accepted Answer

A)Ending merchandise inventory for 11ea8a42_4fa5_77ba_8b44_a35d9d8a378e_TB5024_00

Question 14

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

April's cost of goods sold is 28,000.The amount of Merchandise Inventory to be shown on the budgeted balance sheet at March 31 would be ________.
A)$9,500
B)$10,400
C)$33,000
D)$10,600

Accepted Answer

D)Cost of goods sold = (28,000 × 20%)+ 5,000 = $10,600

Question 15

Zale,Inc.has provided the following extracts from their budget for the first quarter of the forthcoming year:

The company collects 70% of credit sales in the same month and the balance in the next month.Calculate the collections from the customers for the month of February.
A)$456,000
B)$432,000
C)$552,000
D)$600,000

Accepted Answer

11ea8a42_4fa5_ecf0_8b44_f3b4cd350ae2_TB5024_00 
Collection for credit sale: 11ea8a42_4fa5_ecf1_8b44_3f0c60d882f6_TB5024_00

Question 16

What is the formula used to determine the amount of merchandise inventory to be purchased?

Accepted Answer

The answer of What is the formula used to determine...

Question 17

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 18

While calculating 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 budgeted cash payments for selling and administrative expenses because they do not involve an actual outflow of cash.

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

Freighters,Inc.has the following budgeted figures:
Calculate the budgeted purchases for the month of January.

A)$23,600
B)$51,700
C)$24,700
D)$4,500

Accepted Answer

11ea8a42_4fa5_77b7_8b44_c973af5ca69c_TB5024_00

Quiz 22: Master Budgets

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

What is a common method of accessing short-term financing?

The selling and administrative expense budget separates fixed and variable expenses.

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

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

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

Flamingo,Inc.has the following budgeted figures: Calculate cost of goods sold for the month of February.

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

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

Allain,Inc.has the following budgeted figures: Calculate the ending merchandise inventory for the month of March.

Monument Corp.is preparing its budget for the first quarter of 2018.The following data is provided: April's cost of goods sold is 28,000.The amount of Merchandise Inventory to be shown on the budgeted balance sheet at March 31 would be ________.

Zale,Inc.has provided the following extracts from their budget for the first quarter of the forthcoming year: The company collects 70% of credit sales in the same month and the balance in the next month.Calculate the collections from the customers for the month of February.

What is the formula used to determine the amount of merchandise inventory to be purchased?

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

While calculating the budgeted cash payments for selling and administrative expenses,noncash expenses like depreciation are also considered.

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.

Freighters,Inc.has the following budgeted figures: Calculate the budgeted purchases for the month of January.