Which of the following is true of budgets when they are administered thoughtfully quizlet?

For next year, Roberts, Inc., has budgeted sales of 20,000 units, targeted ending finished goods inventory of 1,650 units, and beginning finished goods inventory of 750 units. All other inventories are zero. How many units should be produced next year?
A) 19,100 units
B) 20,000 units
C) 20,900 units
D) 22,400 units

First Class, Inc., expects to sell 22,000 pool cues for $12 each. Direct materials costs are $3, direct manufacturing labor is $4, and manufacturing overhead is $0.84 per pool cue. The following inventory levels apply to 2019:

Beginning inventory Ending inventory
Direct materials 33,000 units 33,000 units
Work-in-process inventory 0 units 0 units
Finished goods inventory 1,400 units 2,500 units

On the 2019 budgeted income statement, what amount will be reported for sales?
A) $277,200
B) $264,000
C) $396,000
D) $409,200

First Class, Inc., expects to sell 28,000 pool cues for $14 each. Direct materials costs are $3, direct manufacturing labor is $5, and manufacturing overhead is $0.82 per pool cue. The following inventory levels apply to 2019:

Beginning inventory Ending inventory
Direct materials 26,000 units 26,000 units
Work-in-process inventory 0 units 0 units
Finished goods inventory 1,300 units 2,800 units

How many pool cues need to be produced in 2019?
A) 30,800 cues
B) 29,300 cues
C) 29,500 cues
D) 26,500 cues

First Class, Inc., expects to sell 26,000 pool cues for $14 each. Direct materials costs are $2, direct manufacturing labor is $4, and manufacturing overhead is $0.89 per pool cue. The following inventory levels apply to 2019:

Beginning inventory Ending inventory
Direct materials 31,000 units 31,000 units
Work-in-process inventory 0 units 0 units
Finished goods inventory 1,800 units 3,300 units

On the 2019 budgeted income statement, what amount will be reported for cost of goods sold?
A) $189,475
B) $179,140
C) $168,805
D) $201,877

Bradford, Inc., expects to sell 11,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $11, and manufacturing overhead is $5 per vase. The following inventory levels apply to 2019:

Beginning inventory Ending inventory
Direct materials 1,000 units 1,000 units
Work-in-process inventory 0 units 0 units
Finished goods inventory 100 units 600 units

On the 2019 budgeted income statement, what amount will be reported for sales?
A) $241,500
B) $220,500
C) $252,000
D) $231,000

Bradford, Inc., expects to sell 6,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $10, and manufacturing overhead is $3 per vase. The following inventory levels apply to 2019:

Beginning inventory Ending inventory
Direct materials 5,000 units 5,000 units
Work-in-process inventory 0 units 0 units
Finished goods inventory 400 units 600 units

How many ceramic vases should be produced in 2019?
A) 5,800 vases
B) 6,200 vases
C) 11,000 vases
D) 6,000 vases

Bradford, Inc., expects to sell 8,000 ceramic vases for $21 each. Direct materials costs are $4, direct manufacturing labor is $10, and manufacturing overhead is $4 per vase. The following inventory levels apply to 2019:

Beginning inventory Ending inventory
Direct materials 3,000 units 3,000 units
Work-in-process inventory 0 units 0 units
Finished goods inventory 400 units 800 units

On the 2019 budgeted income statement, what amount will be reported for cost of goods sold?
A) $198,000
B) $151,200
C) $144,000
D) $136,800

The following information pertains to the January operating budget for Murphy Corporation, a retailer:

Budgeted sales are $208,000 for January
Collections of sales are 60% in the month of sale and 40% the next month
Cost of goods sold averages 64% of sales
Merchandise purchases total $154,000 in January
Marketing costs are $3,600 each month
Distribution costs are $5,000 each month
Administrative costs are $10,500 each month

For January, budgeted gross margin is ________.
A) $124,800
B) $133,120
C) $74,880
D) $54,000

Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,500 units of Prime and 1,500 units of Luxuria in 2019.The following estimates are given for 2019:

Prime Luxuria
Selling price $200 $500
Direct materials 70 100
Direct labor 60 180
Manufacturing overhead 90 150

Nantucket had an inventory of 200 units of Prime and 105 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 400 units of Prime and 230 units of Luxuria.

Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $12. There were 120 units of Crimpson in stock at the end of 2018. The management does not want to have any stock of Crimpson at the end of 2019.

What is the total budgeted cost of goods sold for Nantucket Industries in 2019?
A) $1,325,000
B) $1,415,000
C) $1,433,000
D) $1,625,000

B) $1,415,000

Explanation: Budgeted cost of goods sold for Prime = [3,500 units (Estimated sales) × $220 (Cost per unit)] = $770,000. Budgeted cost of goods sold for Luxuria = [1,500 units (Estimated sales) × $430 (Cost per unit)] = $645,000. Total cost of goods sold = $770,000 + $645,000 =$1,415,000.

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019:

Month Sales
January 29,000
February 40,800
March 34,600
April 36,200

Finished goods inventory at the end of December is 7,000 units. Target ending finished goods inventory is 20% of the next month's sales.

How many mattresses need to be produced in January 2019?
A) 27,800 mattresses
B) 30,160 mattresses
C) 41,800 mattresses
D) 44,160 mattresses

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019:

Month Sales
January 32,000
February 36,800
March 29,600
April 43,200

Finished goods inventory at the end of December is 7,100 units. Target ending finished goods inventory is 20% of the next month's sales.

How many mattresses should be produced in the first quarter of 2019?
A) 108,580 mattresses
B) 99,940 mattresses
C) 67,680 mattresses
D) 67,620 mattresses

B) 99,940 mattresses

Explanation: January February March Total
(For the quarter)
Estimated sales 32,000 36,800 29,600 98,400
Less: Opening inventory 7,100 7,360 5,920 7,100
24,900 29,440 23,680 91,300
Add: Closing inventory 7,360 5,920 8,640 8,640
(20% of next month's sales)
Budgeted production 32,260 35,360 32,320 99,940

Wallace Company provides the following data for next year:

Month Budgeted Sales
January $120,000
February 108,000
March 140,000
April 147,000

The gross profit rate is 35% of sales. Inventory at the end of December is $29,600 and target ending inventory levels are 10% of next month's sales, stated at cost.

What is the amount of purchases budgeted for January?
A) $70,980
B) $55,420
C) $78,000
D) $85,020

Wallace Company provides the following data for next year:

Month Budgeted Sales
January $126,000
February 111,000
March 134,000
April 147,000

The gross profit rate is 30% of sales. Inventory at the end of December is $30,600 and target ending inventory levels are 10% of next month's sales, stated at cost.

What is the amount of purchases budgeted for February?
A) $36,180
B) $77,700
C) $79,310
D) $97,580

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows:

Sales (168,000 units) $1,010,000
Less: Cost of goods sold 690,000
Gross margin 320,000
Operating expenses 400,000
(includes $55,000 of fixed costs)
Operating income -$80,000

Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.

What is the budgeted operating income for March 2018?
A) -$18,100
B) $396,550
C) -$59,403
D) $683,100

C) -$59,403

Explanation: Sales = $1,010,000. The cost of goods sold = $676,269 ($690,000 × 0.99 × 0.99). Budgeted gross margin for March = $333,731. Budgeted operating expenses = $393,135 (($345,000 × 0.99 × 0.99) + $55,000). Budgeted operating income = -$59,403.

The following information pertains to Monroe Company:

Month Sales Purchases
January $67,000 $32,000
February $88,000 $45,000
March $100,000 $58,000

∙ Cash is collected from customers in the following manner:
Month of sale 30%
Month following the sale 70%
∙ 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
∙ Labor costs are 20% of sales. Other operating costs are $37,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred.
∙ The cash balance on March 1 is $10,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.

How much cash will be collected from customers in March?
A) $96,400
B) $91,600
C) $100,000
D) $118,000

The following information pertains to Monroe Company:

Month Sales Purchases
January $63,000 $40,000
February $86,000 $40,000
March $102,000 $56,000

∙ Cash is collected from customers in the following manner:
Month of sale 35%
Month following the sale 65%
∙40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
∙Labor costs are 30% of sales. Other operating costs are $38,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred.
∙The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.

How much cash will be paid to suppliers in March?
A) $46,400
B) $56,000
C) $96,000
D) $102,400

7) The following information pertains to Monroe Company:

Month Sales Purchases
January $62,000 $33,000
February $84,000 $42,000
March $101,000 $61,000

∙ Cash is collected from customers in the following manner:
Month of sale 40%
Month following the sale 60%
∙45% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
∙Labor costs are 30% of sales. Other operating costs are $38,000 per month (including $10,000 of depreciation). Both of these are paid in the month incurred.
∙The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.

How much cash will be disbursed in total in March?

How much cash will be disbursed in total in March?
A) $58,300
B) $68,300
C) $108,850
D) $118,850

The following information pertains to Monroe Company:

Month Sales Purchases
January $68,000 $35,000
February $87,000 $46,000
March $106,000 $58,000

∙ Cash is collected from customers in the following manner:
Month of sale 30%
Month following the sale 70%
∙ 45% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
∙ Labor costs are 20% of sales. Other operating costs are $32,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred.
∙ The cash balance on March 1 is $8,900. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.

What is the ending cash balance for March?

A) $8,900
B) $5,200
C) $5,000
D) $6,000

Freemore Company has the following sales budget for the last six months of 2018:

July $206,000 October $181,000
August 168,000 November 203,000
September 209,000 December 185,000

Sales are immediately due, however the cash collection of sales, historically, has been as follows:
55% of sales collected in the month of sale,
35% of sales collected in the month following the sale,
7% of sales collected in the second month following the sale, and
3% of sales are uncollectible.

Cash collections for September are ________.
A) $126,710
B) $173,750
C) $188,170
D) $199,930

Freemore Company has the following sales budget for the last six months of 2018:

July $204,000 October $180,000
August 170,000 November 201,000
September 205,000 December 180,000

Sales are immediately due, however the cash collection of sales, historically, has been as follows:
55% of sales collected in the month of sale,
35% of sales collected in the month following the sale,
7% of sales collected in the second month following the sale, and
3% of sales are uncollectible.

What is the ending balance of accounts receivable for the end of September, assuming uncollectible balances are written off at the end of the second month following the sale?
A) $260,550
B) $134,070
C) $113,375
D) $109,250

Freemore Company has the following sales budget for the last six months of 2018:

July $205,000 October $187,000
August 168,000 November 200,000
September 205,000 December 182,000

Sales are immediately due, however the cash collection of sales, historically, has been as follows:
55% of sales collected in the month of sale,
35% of sales collected in the month following the sale,
7% of sales collected in the second month following the sale, and
3% of sales are uncollectible.

Cash collections for October are ________.
A) $102,850
B) $186,360
C) $199,450
D) $181,390

) Estate Corp., has the following information:

Month Budgeted Purchases
January $27,600
February 29,100
March 28,500
April 29,980
May 26,780

Purchases are paid for in the following manner:
10% of the purchase amount in the month of purchase
50% of the purchase amount in the month after purchase
40% of the purchase amount in the second month after purchase

What is the expected balance in Accounts Payable as of March 31?
A) $37,290
B) $14,250
C) $2,910
D) $25,650

Estate Corp., has the following information:

Month Budgeted Purchases
January $27,100
February 29,400
March 29,400
April 30,480
May 27,580

Purchases are paid for in the following manner:
10% of the purchase amount in the month of purchase
50% of the purchase amount in the month after purchase
40% of the purchase amount in the second month after purchase

What is the expected balance in Accounts Payable as of April 30?
A) $38,220
B) $39,192
C) $29,400
D) $18,288

) Estate Corp., has the following information:

Month Budgeted Purchases
January $27,600
February 29,400
March 28,500
April 30,480
May 27,680

Purchases are paid for in the following manner:
15% of the purchase amount in the month of purchase
35% of the purchase amount in the month after purchase
50% of the purchase amount in the second month after purchase

What is the expected Accounts Payable balance as of May 31?
A) $34,196
B) $33,503
C) $38,768
D) $4,572

The following information pertains to the January operating budget for Casey Corporation.

∙ Budgeted sales for January $201,000 and February $101,000.
∙ Collections for sales are 40% in the month of sale and 60% the next month.
∙ Gross margin is 25% of sales.
∙ Administrative costs are $13,000 each month.
∙ Beginning accounts receivable is $25,000.
∙ Beginning inventory is $17,000.
∙ Beginning accounts payable is $73,000. (All from inventory purchases.)
∙ Purchases are paid in full the following month.
∙ Desired ending inventory is 25% of next month's cost of goods sold (COGS).

For January, budgeted cash collections are ________.
A) $201,000
B) $105,400
C) $80,400
D) $25,000