Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
Chapter 22
Master Budgets and Planning
QUESTIONS
1. A written budget helps managers plan and control a business by 1) communicating
and 5) motivate employees.
2. Management controls operations by benchmarking against some norm. A
3. Continuous budgeting provides managers a full set of updated budgets each time a
5. Budgeting can be a strong positive motivating force if employees are involved or
consulted in the process. This participation promotes their commitment to reaching
6. Budgeting helps management coordinate and plan business activities by providing
7. The sales budget reflects the expected sales to be made over a period of time, stated
8. A selling expense budget is a plan of the expenses to be incurred to produce the
planned amount of sales. The capital expenditures budget lists dollar amounts of
9. In participatory budgeting, some employees might understate sales and/or overstate
10. A cash budget shows the planned cash receipts and cash payments for each budget
period, including any loans to be received or repaid. Since the operating budgets
11. A production budget shows the number of units to be produced each budget period.
12. A manager of an Apple store would have responsibility for and decision control over
13. With the exception of the decision to operate, the manager of a Samsung
distribution center is not likely to engage in a substantial amount of long-term
14.
Budget Participant
Description
Sales manager ………………..
Information on estimated sales (units and dollars).
Production manager ………..
Number of units to produce based on estimated sales.
of production.
Sales manager ………………..
Cost of selling the estimated sales level.
strative managers ……………
committee ………………………
to carry on business activities.
15. The bottle redesign will reduce the amount and total cost of glass used, thus
lowering direct materials costs on the direct materials budget. The lighter-weight bottle
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1205
QUICK STUDIES
Quick Study 22-1 (10 minutes)
Quick Study 22-2 (10 minutes)
Quick Study 22-3 (5 minutes)
Quick Study 22-4 (10 minutes)
Grace
Sales Budget
For Month Ended June 30
Prior month’s unit sales ………………………………………………………………
1,000
1,040
1206
Quick Study 22-5 (10 minutes)
Zilly Co.
Selling Expense Budget
For Month Ended June 30
Budgeted sales …………………………………………………………………………..
$400,000
Sales commission percent ………………………………………………………….
Sales commissions …………………………………………………………………….
Projected selling expense for June ……………………………………………..
Quick Study 22-6 (10 minutes)
Liza’s
Budgeted Cash Receipts
For Month Ended June 30
Budgeted sales …………………………………………………………………………..
$52,000
1207
Quick Study 22-7 (10 minutes)
ZORTEK CORP.
Direct Materials Budget
For Month Ended January 31
Budget production (units) ……………………………………………………………
400
Add budgeted ending inventory (200* units x 5 lbs. per unit x 40%) ….
Deduct beginning inventory (lbs.) ………………………………………………..
Quick Study 22-8 (5 minutes)
TORA CO.
Direct Labor Budget
For Month Ended July 31
Budget production (units) ……………………………………………………………
1,020
2,040
1208
Quick Study 22-9 (10 minutes)
SCORA INC.
Sales Budget
For January, February, and March
Budgeted
Unit Sales
Budgeted
Unit Price
Budgeted
Total Sales
$ 60,000
Quick Study 22-10 (10 minutes)
X-TEL
Cash Receipts Budget
For April, May, and June
April
May
June
Sales ……………………………………………………..
$60,000
$100,000
$80,000
1209
Quick Study 22-11 (10 minutes)
X-TEL
Selling Expense Budget
For April, May, and June
April
May
June
Budgeted sales ……………………………………..
$60,000
$100,000
$80,000
Sales commission percent …………………….
Sales commissions ………………………………
Sales manager monthly salary ……………….
Quick Study 22-12 (10 minutes)
CHAMP, INC.
Production Budget
For Month Ended May 31
Next month’s budgeted sales (units) ……………………………………………
200
120
300
1210
Quick Study 22-13 (10 minutes)
MIAMI SOLAR
Direct Materials Budget
For Month Ended July 31
Budgeted production (units, given) ……………………………………………..
5,000
Quick Study 22-14 (10 minutes)
MIAMI SOLAR
Direct Labor Budget
For Month Ended July 31
Budgeted production…………………………………………………………………..
5,000
1211
Quick Study 22-15 (10 minutes)
MIAMI SOLAR
Factory Overhead Budget
For Month Ended August 31
Total budgeted direct labor* ……………………………………………
$339,200
Budgeted variable overhead ……………………………………………
Quick Study 22-16 (15 minutes)
ATLANTIC SURF
Production Budget
July and August
July
August
Budgeted ending inventories
1212
Quick Study 22-17 (15 minutes)
Forrest Company
Production Budget
For Month Ended November 30
Next month’s budgeted sales ………………………………………………………
350,000
400,000
435,000
Quick Study 22–18 (15 minutes)
Hockey Pro
Factory Overhead Budget
For Month Ended May 31
Units to be produced ………………………………………………………………….
3,900
1213
Quick Study 22-19 (10 minutes)
MUSIC WORLD
Cash Receipts Budget
For Month Ended September 30
Cash receipts from September cash sales (40% x $170,000) …………
Quick Study 22-20 (10 minutes)
THE GUITAR SHOPPE
Cash Receipts Budget
For Month Ended September 30
Cash receipts from August sales (55% x $150,000) ………………………
Total budgeted cash receipts ………………………………………………………
Quick Study 22-21 (10 minutes)
WELLS COMPANY
Budgeted Cash Receipts
For Month Ended November 30
Cash receipts from November cash sales (25% x $80,000) ……………
$ 20,000
Total budgeted cash receipts ………………………………………………………
$ 65,100
1214
Quick Study 22-22 (15 minutes)
Computation of budgeted Accounts Receivable balance as of July 31
Sales month
Total Sales
Credit
Sales*
Percent Still
Uncollected*
Amount
Uncollected
Quick Study 22-23 (5 minutes)
SANTOS CO.
Cash Budget
For Month Ended February 28
Beginning cash balance ………………………………………………………………
$ 20,000
Cash payments …………………………………………………………………………..
Additional loan from bank …………………………………………………………..
1215
Quick Study 22-24 (15 minutes)
GADO COMPANY
Cash Budget
For Month Ended March 31
Beginning cash balance ………………………………………………….
$ 72,000
Quick Study 22-25 (10 minutes)
Sales ……………………………………………………….………………………………… BIS
Quick Study 22-26 (10 minutes)
GARDA
Cash Payments for Merchandise (Budgeted)
For Month Ended September 30
1216
Quick Study 22-27 (10 minutes)
TORRES CO.
Cash Payments for Merchandise (Budgeted)
For January, February, and March
January
February
March
Purchases ……………………………………………..
$15,800
$18,600
$20,200
Cash payments for
$ 6,320
$ 7,440
$ 8,080
Quick Study 22-28 (5 minutes)
RAIDER-X COMPANY
Purchases Budget (in units)
For Month Ended April 30
Budgeted ending inventory (130% x 3,000) …………………………………..
3,900
1217
Quick Study 22-29 (15 minutes)
LEXI COMPANY
Merchandise Purchases Budget
For April, May, and June
April
May
June
Next month’s budgeted sales (units) ………
1,220,000
980,000
1,020,000
Quick Study 22-30 (15 minutes)
MONTEL COMPANY
Computation of Budgeted Cost of Purchases
For Month Ended July 31
Budgeted ending inventory ……………………………………………………….
$ 40,000
1218
Quick Study 22-31 (10 minutes)
1. Activity-based budgeting requires managers to focus on the activities of
2. Traditional budgeting consists of listing the amount of resources
Quick Study 22-32 (10 minutes)
1.
(in € millions)
2.
Note: Assume budgeted sales of €25,000 for this question.
1219
Quick Study 22-33 (10 minutes)
1.
2.
Shipping costs ($32,400 x 3%) ………………………………………..
$ 972
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1220
EXERCISES
Exercise 22-1 (5 minutes)
Exercise 22-2 (10 minutes)
Exercise 22-3 (15 minutes)
RUIZ CO.
Production Budget
For April, May, and June
April
May
June
Next month’s budgeted sales (units) ………
580
540
620
155
1221
Exercise 22-4 (15 minutes)
RUIZ CO.
Direct Materials Budget
For April, May, and June
April
May
June
Budgeted production (units)* …………………
455
570
560
Materials needed for production (lbs.) ……
Exercise 22-5 (10 minutes)
MANNER COMPANY
Direct Labor Budget
For July, August, and September
July
August
Sept.
1222
Exercise 22-6 (15 minutes)
RIDA INC.
Direct Materials Budget
Second Quarter
Units to be produced ………………………………………………………
240,000
Exercise 22-7 (15 minutes)
1.
ADDISON CO.
Direct Labor Budget
Second Quarter
Exercise 22-7 (continued)