.Planning involves gathering feedback to ensure that the plan is being properly

Question

.Planning involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change True False ACCT 232 CHAPTER 7 QUIZ I. 2. A benefit of self imposed budgeting is that it may allow lower-level managers to create budgetary slack True False The first budget a company prepares in a master budget is the production budget. True False 4. .The direct materials budget is typically prepared before the production budget True False 5. .A self-imposed budget is a budget that is prepared with the full cooperation and participation of managers at all levels True False 6. The Fraley Corporation, a merchandising firm, has planned the following sales for the next four months: March April MayJune July 5,000 7000 9,000 6,000 8,000 Sales in units Sales price/unit 10 10 10 10 10 Total budgeted sales S50,000 $70,000 590,000 560,000 $80,000 From experience, the company has learned that a month's sales on account are collected according to the following pattern: Month of sale First month following month of sale Uncollectible 60% | 35% 5% Fraley likes to maintain a finished goods inventory equal to 10% of the next month's estimated sales. Required: 1. Compute the budgeted cash receipts for May. 2. Compute the budgeted product budget for May.

Explanation / Answer

1(False) Planning : It specifying the goals to be achived and necssary actions to achive those goals in advance. 2(False) Self Imposed Budget: It is generally prepared with the cooperation of all levels of managers. These budget are prepared by front line mangers ,so it is more reliable. Top Mangers initiate budget process by giving broad guidelines. 3(False) First budget in the master budget is the Sales budget, than Production budget. 4(False) Direct Material budget allways prepared after the production budget. 5 (True) Self Imposed Budget: It is generally prepared with the cooperation of all levels of managers. Top Mangers initiate budget process by giving broad guidelines. 6) Fraley Corporation 1) Budgeted cash receipts for May Cash collected in May April sales $ 70,000.00 $70000*35%=$24500 May Sales $ 90,000.00 $90000*60%=$54000 Total Cash receipts for May=($24500+$54000)=$78500 6)(2) Budgeted Product Budget for May Sales $ 90,000.00 Add: Ending Finshed goods Inventory=(June Sale*10%)=($60000*10%) $    6,000.00 Total Production required $ 96,000.00 Less: Beginning finished goods inventory=(May Sales *10%)=($90000*10%) $    9,000.00 Product to be manufactured $ 87,000.00 Note: Ending Finished goods inventory of April=May sales *10% May Beginning Inventory=April Ending Finished goods Inventory

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