rences Mailings REVIEW Aa - 21 AaBbCcI AaBbCcI AaBbC AaBbCc] Aab ab I Normal 1 No Spac... Heading 1 Heading 2 Title Paragraph Styles . 1 . 1 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 - 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 - 1 . 13 . 1 . 14 . 1 . 15 . 14 1 17 4 1 5. A manufacturing firm would begin preparation of its master budget by constructing a A sales budget. B. production budget. C. cash budget. D. capital budget. E. set of pro-forma financial statements. THEORY 1. Santorini Corporation has experienced a number of out-of-stock situations with respect to its finished-goods inventories. Inventory at the end of May, for example, was only 50 units-an all-time low. Management desires to implement a policy whereby finished-goods inventory is 70% of the following month's sales. Budgeted sales for June, July, and August are expected to be 5,000 units, 5,600 units, and 5,500 units, respectively. Required: Determine the number of units that Santorini must produce in June and July. 2. Turbo Manufacturing plans to produce 20,000 units, 24,000 units, and 30,000 units. respectively, in October, November, and December. Each of these units requires four units of part no. 879, which the company can purchase for $7 each. Turbo has 35,000 units of part no. 879 in stock on September 30.tutorials 3 [Compatibility Mole] - Word erences Mailings Review View 9 Tellime what you wantto do. Aa - RP ST AaBbCI AaBbCcI AaBbC AaBbCc] AdD AaBbCCC ay - 1 Normal " No Spac. Heading 1 Heading 2 Title Subtitle Paragraph Styles . 1 . 1 7 1 - 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 - 1 . 8 . 1 : 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 - 13 . 1 - 14 . 1 . 15 1 4 ' 1 . 174 1 . 18 4 3. Scot Company plans to sell 400,000 units of finished product in July 20x1. Management (1) anticipates a growth rate in sales of 5% per month thereafter and (2) desires a monthly ending finished-goods inventory (in units) of 80% of the following month's estimated sales. There are 300,000 completed units in the June 30, 20x1 inventory . Each unit of finished product requires four pounds of direct material at a cost of $1.50 per pound. There are 1,600,000 pounds of direct material in inventory on June 30, 20x1. Required: A. Prepare a production budget for the quarter ended September 30, 20x1. Note: For both part "A" and part "B" of this problem, prepare your budget on a quarterly (not monthly) basis. B. Independent of your answer to part "A." assume that Scot plans to produce 1,200,000 units of finished product for the quarter ended September 30. If the firm desires to stock direct materials at the end of this period equal to 25% of current production usage, compute the cost of direct material purchases for the quarter. 4. Jacobs manufactures two products: A and B. The company predicts a sales volume of 10,000 units for product A and ending finished-goods inventory of 2,000 units. These numbers for product B are 12,000 and 3,000, respectively. Jacobs currently has 7,000 units of A in inventory and 9,000 units of B. The following raw materials are required to manufacture these products: Required for ProductHeading 1 Heading 2 Title Paragraph Styles . 1 71 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 11 . 1 . 12 . 1 . 13 . 1 . 14 . 1 . 15 1 4 4 17 4. Jacobs manufactures two products: A and B. The company predicts a sales volume of 10,000 units for product A and ending finished-goods inventory of 2,000 units. These numbers for product B are 12,000 and 3,000, respectively. Jacobs currently has 7,000 units of A in inventory and 9,000 units of B. The following raw materials are required to manufacture these products: Required for Product Raw Material Cost per Pound A B $2.00 2 pounds 2.50 1 pound 1 pound N 1.25 3 pounds Product A requires three hours of cutting time and two hours of finishing time; B requires one hour and three hours, respectively. The direct labor rate for cutting is $10 per hour and $18 per hour for finishing. Required: A. Prepare a production budget in units. B. Prepare a materials usage budget in pounds and dollars. C. Prepare a direct labor budget in hours and dollars for product A. I 5. Tara Company has the following historical collection pattern for its credit sales: 70% collected in month of sale 15% collected in the first month after sale 10% collected in the second month after sale 4% collected in the third month after sale 1% uncollectible Budgeted credit sales for the last six months of the year follow. July $30,000 August 35,000 September 40,000 October 45,000 November 50,000 December 42,500 Required: -11- -References Mailings REVIEW VIEW A A Aa - AaBbCcI AaBbCcl AaBbC AaBbCc] Aal A - y . A- Normal 1 No Spac. Heading 1 Heading 2 Title Paragraph Styles 1. . . 1 . 1 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 - 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14 . 1 15 . 14 617. CHAPTER 3 - BUDGETING- MULTIPLE CHOICE QUESTIONS 1. Which of the following choices correctly denotes managerial functions that are commonly associated with budgeting? Performance Coordination Planning Evaluation of Activities A. Yes Yes No B. Yes Yes Yes C. Yes No No D Yes No Yes E. No Yes No A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E 2. A formal budget program will almost always result in: A. higher sales. B. more cash inflows than cash outflows. C. decreased expenses. D. improved profits. E. a detailed plan against which actual results can be compared. 3. A budget serves as a benchmark against which: A. actual results can be compared. B. allocated results can be compared. C. actual results become inconsequential. D. allocated results become inconsequential. E. cash balances can be compared to expense totals. 4. An organization's budgets will often be prepared to cover: A. one month. B. one quarter. C. one year D. periods longer than one year. E. All of these states