Sales Budget and Cash Collections Quiz

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What is a budget?

A tool used to control an organization's activities

The act of setting financial goals

A detailed quantitative plan for acquiring and using resources over a specific time period (correct)

A method of preparing financial statements

What is the process of preparing a budget known as?

Strategic planning

Budgetary control

Financial forecasting

Budgeting (correct)

What is the purpose of using budgets to control an organization's activities?

To achieve financial objectives (correct)

To prepare financial statements

To forecast market trends

To audit financial records

What term describes the use of budgets to regulate and monitor an organization's actions?

Budgetary control Signup and view all the answers

What is involved in the planning phase of budgeting?

Setting objectives and creating budgets Signup and view all the answers

What does control involve in an organization?

Ensuring objectives are achieved through management steps Signup and view all the answers

What is one of the advantages of budgeting mentioned in the text?

Coordinating activities Signup and view all the answers

According to responsibility accounting, what should managers be held responsible for?

Only items they can control significantly Signup and view all the answers

What is the typical period covered by operating budgets?

One year Signup and view all the answers

What is a continuous budget?

Budget that rolls forward one month as the current month is completed Signup and view all the answers

What is the purpose of dividing an annual budget into quarters?

To align with fiscal quarters Signup and view all the answers

What is the total budgeted sales in dollars for the month of August?

$150,000 Signup and view all the answers

According to Royal’s collection pattern, what percentage of sales are uncollectible?

5% Signup and view all the answers

What is the total cash collections expected for April, considering the collection pattern?

$70,000 Signup and view all the answers

How much will be collected in May from April's sales, according to the collection pattern?

$47,500 Signup and view all the answers

What is the total expected cash collections for the quarter ended June 30th, considering all sales from April to June?

$220,000 Signup and view all the answers

If $20,000 units are sold in April at $10 per unit, how much cash will be collected in May for these sales?

$150,000 Signup and view all the answers

What are the total cash disbursements for the quarter?

$185,000 Signup and view all the answers

If a company follows a no layoff policy and pays $15 (time-and-a-half) for every hour worked in excess of 1,500 hours per month, what would be the total direct labor cost for the quarter?

$64,500 Signup and view all the answers

What is the rate per hour paid to workers for direct labor at Royal?

$10 Signup and view all the answers

How many hours of work per week are employees paid for at Royal?

40 hours Signup and view all the answers

If each unit of product requires 0.05 hours of direct labor, how many units can be produced with 1,500 hours of direct labor?

20,000 units Signup and view all the answers

The direct labor budget depends on which of the following factors?

Labor hours guaranteed or required Signup and view all the answers

What is the March 31 inventory used for in the direct materials budget calculation?

To calculate the materials to be purchased in May Signup and view all the answers

How are materials payments typically split by Royal according to the text?

One-half in the month of purchase, one-half in the following month Signup and view all the answers

What is the purpose of calculating expected cash disbursements for materials as mentioned in the text?

To anticipate and prepare for cash payments related to materials Signup and view all the answers

How much is Royal paying per pound for its materials?

$0.40 per pound Signup and view all the answers

Based on the information provided, how are materials purchases typically paid by Royal?

Half paid in advance, half paid in arrears Signup and view all the answers

What calculation involves multiplying 140,000 lbs. by $0.40/lb as mentioned in the text?

Calculating expected cash disbursements for materials Signup and view all the answers