Chapter 20: Q31QS_1 (page 916)
Activity-based budgeting is a budget system based on expected activities.
Thebudgetis used tomanagethe organization'stotal funds to reduce costs.
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How does budgeting help management coordinate and plan business activities?
Forrest Company manufactures phone chargers and has a JIT policy that ending inventory must equal 10% of the next month’s sales. It estimates that October’s actual ending inventory will consist of 40,000 units. November and December sales are estimated to be 400,000 and 350,000 units, respectively. Compute the number of units to be produced for the month of November.
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.
Following are selected accounts for a company. For each account, indicate whether it will appear on a budgeted income statement (BIS) or a budgeted balance sheet (BBS). If an item will not appear on either budgeted financial statement, label it NA.
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office salaries expense . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . .
Interest expense on loan payable . . . . . . .
Cash dividends paid . . . . . . . . . . . . . . . . . .
Bank loan owed . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . .
Walker Company prepares monthly budgets. The current budget plans for a September ending merchandise inventory of 30,000 units. Company policy is to end each month with merchandise inventory equal to 15% of budgeted sales for the following month. Budgeted sales and merchandise purchases for the next three months follow. The company budgets sales of 200,000 units in October. Prepare the merchandise purchases budgets for the months of July, August, and September.
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