Accounting 212 Chapter 8 Flashcards

What is the usual starting point for a master budget?

Which of the following budgets are prepared before the sales budget? (Select any that apply)

How is the production budget calculated?

What does the required purchases of raw materials in units equal when preparing a direct materials budget?

The manufacturing overhead budget shows only the variable portion of manufacturing overhead.

It is necessary to prepare any other budgets before preparing the cash budget.

What is the amount that should be collected in March for Gaylord Corp?

What is the total budgeted cash collection in April for Pitkin Corp?

What is the budgeted cash collection in June based on the sales data?

What are the expected cash collections for November for Sirignano Corp?

What are the cash receipts in April expected to be for Pocast Corp?

What percentage of budgeted sales is expected to be collected in the month of sale and the following month for the sales data in September to October?

Master Budget Overview

The master budget typically starts with the sales forecast or sales budget.
Budgets such as the Budgeted Income Statement and Direct Labor Budget are prepared after the sales budget.

Production Budget

The production budget is derived from the sales budget and considers the desired ending inventory.

Direct Materials Budget

Required raw material purchases in units are calculated using:
- Raw materials needed for production
- Desired ending inventory of raw materials
- Beginning inventory of raw materials

Manufacturing Overhead Budget

The manufacturing overhead budget incorrectly reflects only the variable portion of overhead.

Cash Budget Preparation

It is essential to prepare other budgets before the cash budget; it's incorrect to assume otherwise.

Collections From Sales

For Gaylord Corp:
- Collections in March are primarily from January (50,000), February (60,000), and March (40,000).
- Total amount collected in March is 51,000.
For Pitkin Corp:
- Current month sales (70%) and the following month (20%) contribute to total cash collection.
- April's total budgeted cash collections amount to 275,000.
For a sales pattern:
- Cash collections follow a trend of 30% in the month of sale, 60% the following month, and 10% in the second month.
- June's budgeted cash collection is 137,000.

Selling Price and Cash Collections

Sirignano Corp has a budgeted selling price of 84 per unit with various sales figures across months.
- Expected cash collections for November total 826,560.

Pocast Corp Cash Receipts

Pocast Corp collects 60% of sales in the month they occur, 30% in the following month, and 10% the second month thereafter.
- Expected cash receipts in April are projected to be 530,000.

September to October Sales Data

Budgeted sales figures for September (120,000), October (140,000), and upcoming months (180,000 and 160,000).
Expected collection rates are 50% in the month of sale and 30% in the following month.

Test your knowledge with these flashcards from Accounting 212, Chapter 8. Focused on the master budget and its components, these cards provide key terms and definitions to help reinforce your understanding. Perfect for exam preparation or review.