Budgeting Paper 13


Which one of the following statements regarding selling and administrative budgets is most accurate?


Harvin Co. pays out sales commissions to its sales team in the month the company receives cash for payment. These commissions equal 5% of total (monthly) cash inflows as a result of sales. Harvin has budgeted sales of $300,000 for August, $400,000 for September, and $200,000 for October. Approximately half of all sales are on credit, and the other half are cash sales. Experience indicates that 70% of the budgeted credit sales will be collected in the month following the sale, 20% the month after that, and 10% of the sales will be uncollectible. Based on this information, what should be the total amount of sales commissions paid out by Harvin in the month of October?


Peterson’s Planters, Inc., budgeted the following amounts for the coming year:
Beginning inventory, finished goods $ 10,000
Cost of goods sold 400,000
Direct material used in production 100,000
Ending inventory, finished goods 25,000
Beginning and ending work-in-process inventory 0
Overhead is estimated to be two times the amount of direct labor dollars. The amount that should be budgeted for direct labor for the coming year is


The pro forma statement of employee benefit costs, a budget schedule that is prepared as part of an organization’s annual profit plan, would include costs related to


A company that manufactures furniture is establishing its budget for the upcoming year. All of the following items would appear in the overhead budget except for the


All of the following would appear on a projected schedule of cost of goods manufactured except for


A manufacturer of men’s t-shirts had the following information for last year.
Number of shirts sold and produced.. 125,000
Sale price per shirt.. $40
Direct manufacturing.. $10/shirt
Setup cost.. $100/setup hour
Setup hours.. 10,000
Shipping costs.. $200/shipment
Number of shipments.. 4,000
Administrative cost.. $8/shirt
The company’s operating profit last year was


The information contained in a cost of goods manufactured budget most directly relates to the


When preparing the annual budget, which one of the following is an acceptable method of allocating production line workers’ fringe benefits?


Which one of the following is the best characteristic concerning the capital budget? The capital budget is a(n)


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