Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 14, Problem 10E
Exercise 7-10A Preparing inventory purchases budgets with different assumptions
Executive officers of Stoneham Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two difference sources:
Stoneham’s past experience indicates that cost of goods sold is about 60 percent of sales revenue. The company tries to maintain 10 percent of the next quarter’s expected cost of goods sold as the current quarter’s ending inventory. This year’s ending inventory is $15,000. Next year’s ending inventory is budgeted to be $18,000.
Required
a. Prepare an inventory purchases budget using the sales manager’s estimate.
b. Prepare an inventory purchases budget using the marketing consultant’s estimate.
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Question 1
The following table presents selected information for Superior Flooring's monthly production budgets for the coming year. Superior's inventory policy is to have ending inventory equal to 10% of the next month's sales.
What is the beginning inventory in June?
A. 350
B. 310
C. 250
D. 340
Question 2
Which of the following statements is true?
A. A budget reconciliation report shows the difference between actual profit and budgeted profit and does not show the other variances.
B. Activity-based costing is not used to evaluate customer profitability.
C. Sales quantity (budgeted sales volume vs. actual sales volume) is the only item which differs between the master budget and the flexible budget.
D. Comparing the flexible budget to the as-if budget isolates a change in input price (e.g. budgeted input price vs. actual input price).
Question 3
Which of the following is not a benefit of budgeting?
A. It reduces the need for analysis with regard to company…
Exercise 7-7A Preparing an inventory purchases budget
Lumpkin Company sells lamps and other lighting fixtures. The purchasing department manager pre-
pared the following inventory purchases budget. Lumpkin's policy is to maintain an ending inventory
balance equal to 10 percent of the following month's cost of goods sold. April's budgeted cost of
goods sold is $40,000.
Budgeted cost of goods sold
Plus: Desired ending inventory
Inventory needed
Less: Beginning inventory
Required purchases (on account)
January
$30,000
3,200
33,200
6,000
$27,200
February
$32,000
4-41
March
$35,000
?
Planning for Profit at
Required
a. Complete the inventory purchases budget by filling in the missing amounts.
b. Determine the amount of cost of goods sold the company will report on its first quarter pro forma
income statement.
c. Determine the amount of ending inventory the company will report on its pro forma balance sheet
at the end of the first quarter.
Question 1
The marketing department of HASF Corporations has submitted the following sales forecast for the upcoming fiscal year (all sales are on account)
Q1
Q2
Q3
Q4
total
Budgeted units sales
?
10% increase
10 % decrease
16,335
62,685
Budget selling price per unit
18
18
18
?
18
budgeted sales revenue
?
297,000
?
294,030
?
Other information
Each quarter ending finished goods inventory is 20% of next month units sold.
Next year first quarter beginning inventory is 3,000.
Each finished units require 3 grams of raw material that cost Rs 3 per unit.
Management desired to end each quarter with an inventory of raw material equal to 15% of the current quarter production needs
Beginning inventory of raw material in first quarter 3,000 grams
FIND UNIT SALES of Q1
Answer format should be like : 10000 donot USE COMMA's or Currency or UNITs. Answer should be plain…
Chapter 14 Solutions
Survey Of Accounting
Ch. 14 - Prob. 1QCh. 14 - Prob. 2QCh. 14 - 3.What are the three levels of planning? Explain...Ch. 14 - 4.What is the primary factor that distinguishes...Ch. 14 - 5.What is the advantage of using a perpetual...Ch. 14 - Prob. 6QCh. 14 - Prob. 7QCh. 14 - 8. Ken Shilov, manager of the marketing...Ch. 14 - Prob. 9QCh. 14 - 10.What is the normal starting point in developing...
Ch. 14 - 11. How does the level of inventory affect the...Ch. 14 - 12.What are the components of the cash budget?...Ch. 14 - 13.The primary reason for preparing a cash budget...Ch. 14 - 14.What information does the pro forma income...Ch. 14 - 15.How does the pro forma statement of cash flows...Ch. 14 - Exercise 7-1A Budget responsibility Teresa...Ch. 14 - Exercise 7-2A Preparing a sales budget Parliament...Ch. 14 - Prob. 3ECh. 14 - Exercise 7-4A Preparing sales budgets with...Ch. 14 - Exercise 7-5A Determining cash receipts from...Ch. 14 - Exercise 7-6A Using judgment in making a sales...Ch. 14 - Exercise 7-7A Preparing an inventory purchases...Ch. 14 - Exercise 7-8A Preparing a schedule of cash...Ch. 14 - Exercise 7-9A Determining the amount of expected...Ch. 14 - Exercise 7-10A Preparing inventory purchases...Ch. 14 - Exercise 7-11A Preparing a schedule of cash...Ch. 14 - Prob. 12ECh. 14 - Exercise 7-13A Preparing a cash budget The...Ch. 14 - Exercise 7-14A Determining amount to borrow and...Ch. 14 - Prob. 15ECh. 14 - Problem 7-16A Behavioral impact of budgeting...Ch. 14 - Prob. 17PCh. 14 - Problem 7-18A Preparing an inventory purchases...Ch. 14 - Prob. 19PCh. 14 - Problem 7-21A Preparing a cash budget Fayette...Ch. 14 - Prob. 21PCh. 14 - Problem 7-22A Preparing budgets with multiple...Ch. 14 - Problem 7-23A Preparing a master budget for retail...Ch. 14 - ATC 7-1 Business Applications Case Preparing and...Ch. 14 - ATC7-2 Group Assignment Master budget and pro...Ch. 14 - ATC 7-4 Writing Assignment Continuous budgeting...Ch. 14 - Ethical Dilemma Bad budget system or unethical...
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