BRIEF EXERCISES 1. Advantages of Budgeting LOI Review the following incomplete statements regard- ing the advantages of budgeting. a. The budgeting process forces management to focus on the and not be distracted by daily crises in the organization. b. The budgeting process can define specific and objectives that can become _, or standards of performance, for evaluating future performance. C. The budgeting process forces throughout the organization. d. The budgeting process can increase the coordina- tion of organizational activities and help facili- tate goal e. The budgeting process can help management identify and deal with potential or constraints before they become major problems. Required Complete each of the preceding incomplete state- ments with the correct term or terms from the following list: bottlenecks, communication, future, goals, congruence, benchmarks. laking 197 2. Forecasting Sales LO Harriman Entertainment produced and sold 100 video games for $10 each Last wear Demand is strong for the company's video games and Harriman believes that volume will increase by 25 percent the company increases the game price by 20 percer Required What are Harriman's expected sales revenues coming year? n's expected sales revenues for the 3. Purchases Budget L04 Blanchard Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels in units) are planned for the fiscal year of July 1, 2011, through June 30, 2012: July 1, 2011 June 30, 2012 Raw materials 40,000 50,000 Work in process 10,000 10,000 Finished goods 80.000 50,000 Two units of raw material are needed to produce each unit of finished product Required If Blanchard Company were to manufacture 500,000 finished units during the 2011-2012 fiscal year, how many units of raw material would it need to purchase? 4. Cash Receipts Budget L05 Cookies and Cream begins business on January 1 of the current year and sells delicious chocolate chip cookies for $2.50 per box. The company's founder and lead marketing quru estimates first quarter sales (in boxes) as follows: January 1,500 February 1,200 March 1,600 4,300 Cookies and Cream expects cash to be collected in the following manner: 55 percent of sales collected in month of sale 35 percent of sales collected in month following sala 10 percent of sales collected in second month fola ing sale Required Total Prepare a cash receipts budget for the first quarter w much will customers owe the company at the end of March if sales are exactly as estimated 5. Budgeting Basics 106,7 Budgeting plays an important role in an tion's planning, operating, and control act The following statements relate to vari ents relate to various aspects of budgeting Rudgeted financal statements that are era financial statements should never be to external parties such as banks Chapter The use of gets in PL daets and budgeted fina mbined to form an inter-re d financial state ter-related ser anagers use to make b. Operating budgets an ments are combined to larities between the bu handising company and mpany, there are importa hen spends a significant ng for and preparing a of planning tools that mana many decisions. Although there are similariti geting process for a merchandis a manufacturing company, th differences, too. d. A service company often spends amount of time planning for and labor budget. e. A merchandising compan budgets for the followi cash, and selling and adm Required ising company would likely prepar the following areas: sales, producti selling and administrative expenses coduction, Indicate whether each of the preceding stateme is true or false. 6. Flexible Budget LOS Honolulu Hello produces pineapple candy. The company currently uses a static budget process. The company's controller prepared the following budget for April's production: Estimated production 24,000 boxes Direct labor per box 4 minutes Direct labor required for estimated production 1,600 hours Average direct labor rate per hour Estimated direct labor cost $20,000 $12.50 Actual production during April was 26,400 boxes and actual direct labor cost was $22,850. Required Prepare a flexible budget for Hon shows the projected direct difference between the bud e budget for Honolulu Hello that e projected direct labor cost and any een the budget and actual labor BRIEF EXERCISES 1. Advantages of Budgeting LOI Review the following incomplete statements regard- ing the advantages of budgeting. a. The budgeting process forces management to focus on the and not be distracted by daily crises in the organization. b. The budgeting process can define specific and objectives that can become _, or standards of performance, for evaluating future performance. C. The budgeting process forces throughout the organization. d. The budgeting process can increase the coordina- tion of organizational activities and help facili- tate goal e. The budgeting process can help management identify and deal with potential or constraints before they become major problems. Required Complete each of the preceding incomplete state- ments with the correct term or terms from the following list: bottlenecks, communication, future, goals, congruence, benchmarks. laking 197 2. Forecasting Sales LO Harriman Entertainment produced and sold 100 video games for $10 each Last wear Demand is strong for the company's video games and Harriman believes that volume will increase by 25 percent the company increases the game price by 20 percer Required What are Harriman's expected sales revenues coming year? n's expected sales revenues for the 3. Purchases Budget L04 Blanchard Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels in units) are planned for the fiscal year of July 1, 2011, through June 30, 2012: July 1, 2011 June 30, 2012 Raw materials 40,000 50,000 Work in process 10,000 10,000 Finished goods 80.000 50,000 Two units of raw material are needed to produce each unit of finished product Required If Blanchard Company were to manufacture 500,000 finished units during the 2011-2012 fiscal year, how many units of raw material would it need to purchase? 4. Cash Receipts Budget L05 Cookies and Cream begins business on January 1 of the current year and sells delicious chocolate chip cookies for $2.50 per box. The company's founder and lead marketing quru estimates first quarter sales (in boxes) as follows: January 1,500 February 1,200 March 1,600 4,300 Cookies and Cream expects cash to be collected in the following manner: 55 percent of sales collected in month of sale 35 percent of sales collected in month following sala 10 percent of sales collected in second month fola ing sale Required Total Prepare a cash receipts budget for the first quarter w much will customers owe the company at the end of March if sales are exactly as estimated 5. Budgeting Basics 106,7 Budgeting plays an important role in an tion's planning, operating, and control act The following statements relate to vari ents relate to various aspects of budgeting Rudgeted financal statements that are era financial statements should never be to external parties such as banks Chapter The use of gets in PL daets and budgeted fina mbined to form an inter-re d financial state ter-related ser anagers use to make b. Operating budgets an ments are combined to larities between the bu handising company and mpany, there are importa hen spends a significant ng for and preparing a of planning tools that mana many decisions. Although there are similariti geting process for a merchandis a manufacturing company, th differences, too. d. A service company often spends amount of time planning for and labor budget. e. A merchandising compan budgets for the followi cash, and selling and adm Required ising company would likely prepar the following areas: sales, producti selling and administrative expenses coduction, Indicate whether each of the preceding stateme is true or false. 6. Flexible Budget LOS Honolulu Hello produces pineapple candy. The company currently uses a static budget process. The company's controller prepared the following budget for April's production: Estimated production 24,000 boxes Direct labor per box 4 minutes Direct labor required for estimated production 1,600 hours Average direct labor rate per hour Estimated direct labor cost $20,000 $12.50 Actual production during April was 26,400 boxes and actual direct labor cost was $22,850. Required Prepare a flexible budget for Hon shows the projected direct difference between the bud e budget for Honolulu Hello that e projected direct labor cost and any een the budget and actual labor