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1. (TCO 7) The culmination of preparing operating budgets is the: (Points : 4)

pro forma balance sheet.
production budget.
cash budget.
pro forma income statement.

Question 2. 2. (TCO 7) The starting point in preparing a master budget is the preparation of the: (Points : 4)
production budget.
sales budget.
purchasing budget.
personnel budget.
Question 3. 3. (TCO 7) The production budget shows planned sales of 32,000. Beginning inventory is 5,600. Units to be produced are 33,600. What is the desired ending inventory? (Points : 4)
4,000
5,600
6,400
7,200
Question 4. 4. (TCO 7) The direct materials budget shows:

Units to be produced

3,000

Production needs

12,000

Total needs

13,200



What are the direct materials per unit? (Points : 4)
0.44 pounds
4.0 pounds
4.4 pounds
Cannot be determined from the data provided.
Question 5. 5. (TCO 7) ABC Company expects the following sales and collection pattern for the last four months of the year:

Month

Cash Sales

Credit Sales

Total Sales

September

$25,000

$65,000

$90,000

October

$28,000

$72,000

$100,000

November

$26,000

$68,000

$94,000

December

$30,000

$71,000

$101,000


· 5% of credit sales are collected in the same month
· 65% of sales are collected in the following month
· 25% of sales are collected in the second following month
What are the projected cash collections for the month of December? (Points : 4)

$65,750
$92,200
$95,750
$99,000

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Lelia Lubowitz
Lelia LubowitzLv2
6 Mar 2019

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Master Budget Project
Okay Company is preparing to build its master budget. The budget will detail each quarter’s activity and the activity for the year in total. The master budget will be based on the following information:
a. This will be the first year of operation for Okay Company.
b. Budgeted unit sales by quarter for 2017 are projected as follows: First quarter 6,300, Second quarter 6,100, Third quarter 6,100 & Fourth quarter 6,450. First and second quarter 2018 budgeted sales units is 6,400 each quarter.
c. The selling price is $45 per unit. Sales are estimated to be collected 75% in cash and 25% credit. Of the credit sales, 85% are estimated to be collected in the quarter following the sale and 15% are collected in the second quarter following the sale.
d. Since this is the first year of operations there is no beginning inventory of finished goods at the beginning of the year. Okay’s ending finished good inventory policy is 35% of the following quarter’s unit sales needs.
e. Each unit uses 0.50 hours of direct labor and 2 units of direct materials. Laborers are paid $12 per hour and one unit of direct materials costs $4.50.
f. Since this is the first year of operations there is no beginning inventory of direct materials at the beginning of the year. Okay plans to have 30% of the direct materials needed for the next quarter’s production units on hand at the end of each quarter.
g. Okay buys direct materials on account. 80% of the purchases are paid for in the quarter of acquisition, and the remaining 20% are paid for in the following quarter.
h. Fixed overhead totals $25,000 each quarter. Of this total, $5,000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred.
i. Variable overhead is budgeted at $3 per units produced. All variable overhead expenses are paid for in the quarter incurred.
j. Fixed selling and administrative expenses total $15,000 per quarter, including $2,500 depreciation.
k. Variable selling and administrative expenses are budgeted at $1.25 per unit sold. All selling and administrative expenses are paid for in the quarter incurred.
l. Okay will pay quarterly dividends of $10,000. During the fourth quarter, $135,000 of equipment will be purchased.

Required: Prepare a master budget for Okay Company for each quarter of 2017 and for the year in total. The following component budgets must be included:
1.(2 points) Calculate the Ending Cash Balance if 1st Quarter Sales is changed to 6,000 units
2.(2 points) For correct formulas in excel spreadsheet.

[The following information applies to the questions displayed below.]

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:


Beech Corporation
Balance Sheet
June 30
Assets
Cash $ 92,000
Accounts receivable 130,000
Inventory 48,600
Plant and equipment, net of depreciation 216,000
Total assets $ 486,600
Liabilities and Stockholders’ Equity
Accounts payable $ 77,000
Common stock 329,000
Retained earnings 80,600
Total liabilities and stockholders’ equity $ 486,600


rev: 09_17_2014_QC_54310

7.

value:
3.12 points

Required information

Beech’s managers have made the following additional assumptions and estimates:
1.

Estimated sales for July, August, September, and October will be $270,000, $290,000, $280,000, and $300,000, respectively.
2.

All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
3.

Each month’s ending inventory must equal 30% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
4.

Monthly selling and administrative expenses are always $50,000. Each month $5,000 of this total amount is depreciation expense and the remaining $45,000 relates to expenses that are paid in the month they are incurred.
5.

The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.


Required:
1.

Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.


2-a.

Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.


2-b.

Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.


3.

Prepare an income statement for the quarter ended September 30.


4.

Prepare a balance sheet as of September 30.

rev: 09_17_2014_QC_54310

References

eBook & Resources

WorksheetLearning Objective: 08-02 Prepare a sales budget, including a schedule of expected cash collections.Learning Objective: 08-09 Prepare a budgeted income statement.

Difficulty: 1 EasyLearning Objective: 08-04 Prepare a direct materials budget, including a schedule of expected cash disbursements for purchases of materials.Learning Objective: 08-10 Prepare a budgeted balance sheet.

Check my work

8.

value:
3.16 points

Required information

Beech’s managers have made the following additional assumptions and estimates:
1.

Estimated sales for July, August, September, and October will be $270,000, $290,000, $280,000, and $300,000, respectively.
2.

All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
3.

Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
4.

Monthly selling and administrative expenses are always $50,000. Each month $5,000 of this total amount is depreciation expense and the remaining $45,000 relates to expenses that are paid in the month they are incurred.
5.

The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.


Required:
1.

Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.


2-a.

Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.


2-b.

Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.


3.

Prepare an income statement for the quarter ended September 30.


4.

Prepare a balance sheet as of September 30.

.

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