41. Consistency between goals of the firm and the goals of its employees is referred to as
goal:
42. A significant advantage of using either an activity-based budgeting (ABB) or a time-
driven activity-based budgeting (TDABB) system is:
43. Budgets can serve as the standard against which actual performance is measured. When
compensation is based on this comparison, the organization is said to use:
44. Critics (for example,
The
Beyond
Budgeting
Roundtable
) of traditional budgeting assert
that the budgeting process:
45. Zero-base budgeting (ZBB):
46. Wild West Fashion expects the total costs of goods sold to be $30,000 in November and
$60,000 in December for one of its young adult suits. Management also wants to have on hand at
the end of each month 10 percent of the expected total cost of sales for the following month.
What dollar amount of suits should be purchased in November?
47. ACEM Hardware purchased 5,000 gallons of paint in March. The store had 1,500 gallons
on hand at the beginning of March, and expects to have 1,000 gallons on hand at the end of
March. What is the budgeted number of gallons to be sold during March?
48. Joe’s Mart policy is to have 20% of the next month’s sales on hand at the end of the
current month. Projected sales for August, September, and October are 25,000 units, 20,000
units, and 30,000 units, respectively. How many units must be purchased in September?
49. Cripe Corporation maintains ending inventory for each month at 5% of the following
month’s sales. It predicted the following sales (in units) for the first four months of the coming
year:
January February March April
Sales (units) 2,000 2,400 3,000 2,800
How many units should be produced in March?
50. LeMinton Company expects the following credit sales for the first five months of the year:
January, $25,000; February, $40,000; March, $30,000; April, $36,000, May $40,000. Experience
has shown that payment for the credit sales is received as follows: 60% in the month of sale, 25%
in the first month after sale, 12% in the second month after sale, and the remainder is
uncollectible. How much cash can LeMinton Company expect to collect in March as a result of
credit sales (current and past)?
51. The Johann’s Professional Service Company expects 70% of sales for cash and 30% on
credit. The company collects 80% of its credit sales in the month following sale, 15% in the
second month following sale, and 5% are not collected (that is, they are “bad debts”). Expected
sales for June, July, and August are $48,000, $54,000, and $44,000, respectively. What are the
company’s expected total cash receipts in August?
52. Blake Company has $15,000 cash at the beginning of June and anticipates $50,000 in
cash receipts and $34,500 in cash disbursements. The company requires a minimum cash
balance of $20,000. Any excess cash over the minimum desired balance is used to pay down
debts. Blake has an agreement with its bank to borrow as needed or to repay loans as funds
become available. As of May 31, the company owes $15,000 to the bank. The balance of the loan
on June 30 will be:
53. Gorberchev Food Processing expects to have 20,000 units of finished goods inventory on
hand on March 31 and reports the following expected sales (in units) for the months of April
through July:
April 120,000
May 140,000
June 150,000
July 120,000
At the end of each month the company desires its ending finished goods inventory to be 20% of
the next month’s projected sales (in units).
The budgeted production (in units) for Gorberchev Food Processing for April should be:
54. Gorberchev Food Processing expects to have 20,000 units of finished goods inventory on
hand on March 31 and reports the following expected sales (in units) for the months of April
through July:
April 120,000
May 130,000
June 140,000
July 120,000
At the end of each month the company desires its ending finished goods inventory to be 20% of
the next month’s projected sales (in units).
The budgeted production (in units) for Gorberchev Food Processing for May should be:
55. Doanne Food Processing expects to have 36,000 pounds of raw materials inventory on
hand on March 31, the end of the current year. The company budgets the following production (in
units) for April through July, inclusive:
April 120,000
May 130,000
June 140,000
July 120,000
At the end of each month the firm desires its ending raw material inventory to be 10% of the next
month’s production needs. Each finished unit requires three pounds of raw materials.
Doanne’s budgeted purchases for raw materials (in pounds) during April should be:
56. Doanne Food Processing expects to have 36,000 pounds of raw materials inventory on
hand on March 31, the end of the current year. The company budgets the following production (in
units) for April through July, inclusive:
April 120,000
May 130,000
June 140,000
July 120,000
At the end of each month the firm desires its ending raw material inventory to be 10% of the next
month’s production needs. Each finished unit requires three pounds of raw materials.
Doanne’s budgeted purchases (in pounds) of raw materials for June would be:
57. Oracle Supply Co. supply forecasts purchases of 15,000 widgets in June. It sells the
widget at $12.00 per unit. The company has 1,000 units on hand on June 1. The desired ending
inventory of widgets on June 30 is to be 20% lower than the beginning inventory. Total June sales
for widgets are anticipated to be (in dollars):
58. Salich Manufacturing Corporation has provided the following sales budget information:
July $45,000
August $55,000
September $60,000
Cash sales are normally 40% of total sales; credit sales are expected to be collected in their
entirety in the month following the month of sale. The amount of cash expected to be received
from customers in September is:
59. Worton Distributing expects its September sales to be 25% higher than its August sales
of $150,000. Purchases were $100,000 in August and are expected to be $120,000 in September.
All sales are on credit and are expected to be collected as follows: 30% in the month of the sale
and 70% in the following month. Purchases are paid 25% in the month of purchase and 75% in
the following month. The cash balance on September 1 is $10,000. The ending cash balance on
September 30 is estimated to be:
60. Tony’s Fashions forecasts sales of $300,000 for the quarter ended December 31. The
company’s gross profit rate averages 20% of sales. Inventory as of September 30 is $100,000. If
the December 31st inventory is targeted at $40,000, budgeted purchases for the quarter should
be:
61. Boone Co.’s sales, based on past experience, are 20% cash and 80% credit. Credit sales
are typically collected as follows: 40% in the month of sale, 50% in the month after the sale, and
10% in the second month following month of sale. On December 31, the accounts receivable
balance is $54,000, of which $12,000 is from November sales. Total sales for January and
February are budgeted to be $100,000 and $120,000, respectively.
What are Boone Co.’s budgeted cash receipts for January?
62. Boone Co.’s sales, based on past experience, are 20% cash and 80% credit. Credit sales
are typically collected as follows: 40% in the month of sale, 50% in the month after the sale, and
10% in the second month following month of sale. On December 31, the accounts receivable
balance is $54,000, of which $12,000 is from November sales. Total sales for January and
February are budgeted to be $100,000 and $120,000, respectively.
What are Boone Co.’s budgeted cash receipts for February?