Budget and Production

1. Budgeting supports the planning process by encouraging all of the following activities EXCEPT ________.
requiring all organizational units to establish their goals for the upcoming period
increasing the motivation of managers and employees by providing agreed-upon expectations
directing and coordinating operations during the period
improving overall decision making by considering all viewpoints, options, and cost reduction possibilities

2. McCabe Manufacturing Co.'s static budget at 8,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $23,000. At 9,000 units of production, a flexible budget would show ________.
variable costs of $49,500 and $25,875 of fixed costs
variable costs of $44,000 and $23,000 of fixed costs
variable costs of $49,500 and $23,000 of fixed costs
variable and fixed costs totaling $75,375

3. At the beginning of the period, the Cutting Department budgeted direct labor of $135,000, direct material of $165,000 and fixed factory overhead of $12,000 for 7,500 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?
$416,000
$412,000
$367,000
$357,000

4. If the expected sales volume for the current period is 7,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is ________.
7,000
6,900
7,100
7,200

5. The Martin Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Martin Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales.
What should the budgeted production be for January?
236,000
181,000
200,000
219,000

6. Dandy Jeans sells two lines of jeans; Simple Life and Fancy Life. Simple Life sells for $85.00 a pair and Fancy Life sells for $100.00 a pair. The company sells all of its jeans on credit and estimates that 60% is collected in the month of the sale, 35% is collected in the following month, and the rest is considered to be uncollectible. The estimated sales for Simple are as follows: January 20,000 jeans, February 27,500 jeans, and March 25,000 jeans. The estimated sales for Fancy are as follows: January 18,000 jeans, February 19,000, and March 20,500 jeans. What are the expected cash receipts for the month of March?
$3,988,125
$2,505,000
$2,125,000
$4,175,000