Chapter 20: 6DQ (page 912)
How does budgeting help management coordinate and plan business activities?
Budgeting helps the management segregate the organization's functions so that each objective of the firm can be attained without any conflict.
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Champ, Inc., predicts the following sales in units for the coming two months:
Each month’s ending inventory of finished units should be 60% of the next month’s sales. The April 30 finished goods inventory is 108 units. Compute budgeted production (in units) for May.
Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requires 8 pounds of direct materials at a cost of \(3 per pound and 0.5 direct labor hours at a rate of \)18 per hour. Variable manufacturing overhead is charged at a rate of \(3 per direct labor hour. Fixed manufacturing overhead is \)4,000 per month. The company’s policy is to maintain direct materials inventory equal to 20% of the next month’s materials requirement. At the end of February the company had 5,280 pounds of direct materials in inventory. The company’s production budget reports the following. Prepare budgets for March and April for (1) direct materials, (2) direct labor, and (3) factory overhead.
Use the following information to prepare a cash budget for the month ended on March 31 for Gado Company. The budget should show expected cash receipts and cash payments for the month of March and the balance expected on March 31.
a. Beginning cash balance on March 1, \(72,000.
b. Cash receipts from sales, \)300,000.
c. Budgeted cash payments for direct materials, \(140,000.
d. Budgeted cash payments for direct labor, \)80,000.
e. Other budgeted cash expenses, \(45,000.
f. Cash repayment of bank loan, \)20,000.
Addison Co. budgets production of 2,400 units during the second quarter. In addition, information on its direct labor and its variable and fixed overhead is shown below. For the second quarter, prepare (2) a factory overhead budget
Branson Belts makes handcrafted belts. The company budgets production of 4,500 belts during the second quarter. Each belt requires 4 direct labor hours, at a cost of $17 per hour. Prepare a direct labor budget for the second quarter.
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