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    pearl
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    The Direct Labor Budget will help prepare the Budgeted Income Statement because it represents planned future costs that get reflected in the Income Statement. If accounts payable have historically been 20% of sales, and estimated sales are $200,000, then estimated accounts payable is $40,000 which is 20% of $200,000.

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    The Direct Labor Budget will help prepare the Budgeted Income Statement because it represents planned future costs that get reflected in the Income Statement. If accounts payable have historically been 20% of sales, and estimated sales are $200,000, then estimated accounts payable is $40,000 which is 20% of $200,000.

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    9 views1 page

    Budget Is Prepared

    Uploaded by

    pearl
    The Direct Labor Budget will help prepare the Budgeted Income Statement because it represents planned future costs that get reflected in the Income Statement. If accounts payable have historically been 20% of sales, and estimated sales are $200,000, then estimated accounts payable is $40,000 which is 20% of $200,000.

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    of 1

    Which of the following detail budgets will help us prepare the Budgeted Income Statement?

    a. Direct Labor Budget

    b. Cash Budget

    c. Budgeted Balance Sheet

    d. Year End Balance Sheet

    Answer = a: The Income Statement is derived by looking at your planned income and costs for
    the period. So the Direct Labor Budget will represent part of your future costs and this should get
    reflected into your Budgeted Income Statement.

    5. If accounts payable have historically been 20% of sales and we have estimated sales of
    $ 200,000, than estimated accounts payable must be:

    a. $ 10,000

    b. $ 20,000

    c. $ 30,000

    d. $ 40,000

    Answer = d: Simply multiply 20% x $ 200,000 = $ 40,000.

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