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3 Hiccup expects the following sales volumes for the first quarter of next year:
units.
4 Bling has estimated the following for the next budget period:
$000
Sales 5000
Fixed manufacturing costs 2000
$
5 A manufacturing company always carries finished goods inventory equal to 20
% of the next month’s budgeted sales.
Sales for the current month are 2000 units and are budgeted to be
20 % higher next month.
units.
A Demand
B Labour hours
C Materials
D Cash
7 What would be the usual order of budget preparation for a manufacturing company,
whose principal budget factor is sales demand?
9 A retailer forecasts that sales in the first month of the year will be 600 000 $
and will then grow a 4 % per month for the next three months.
It prices its products by adding a mark-up of 20 % to its purchase cost.
The retailer always carries sufficient inventory to cover the next month’s forecast sales.
What is the forecast inventory (to the nearest dollar) at the end of the 2
month of the year?
$
10 A company manufactures two products, X and Y, from the same direct material. An equal
number of each product will be produced this period.
Information regarding costs:
Product X Y
Materials required
Material kg 2 3
The company always holds closing inventory of raw material sufficient for 40
% of the next period’s production.
The budgeted closing raw material inventory for the previous period is 900
kgs.
units.
13 BD is preparing a cash budget. An extract from its sales budget shows the following sales:
$
March 60 000
April 70 000
May 55 000
June 65 000
What amount should be included for receipts from sales in the cash budget for May?
$
14 The following details have been extracted from the trade receivables records of CL:
%
Invoices paid in 30 days 50
Invoices paid in 60 days 30
Invoices paid in 90 days 15
Irrecoverable debts 5
Invoices are issued on the last day of each month. Customers paying in 30 days are entitled to
to deduct a 3% settlement discount. Credit sales for July to October are budgeted as follows:
$
July 80 000
August 60 000
September 100 000
October 70 000
How much should be included in the cash budget in October for receipts from trade
receivables?
$
17 A company manufactures and sells one product which requires 5 kg of raw material in its
manufacture. The budgeted data relating to the next period are as follows:
Units
Sales 21 000
Opening inventory of finished goods 3 500
Closing inventory of finished goods 5 000
Kg
Opening inventory of raw materials 50 000
Closing inventory of raw materials 46 000
What is the quantity of budgeted raw material purchases for next period?
kg
18 A company manufactures a single product. Budgeted production (in units) for the first three
months (M1, M2 and M3) of next year is as follows:
$
M1 4 000
M2 5 000
M3 3 500
EXCEL
19 A company manufactures a single product. In a computer spreadsheet the cells F1 to F12
contain the budgeted monthly sales units for the twelve months of next year in sequence with
January sales in cell F1 and finishing with December sales in F12. The company policy is for
the closing inventory of finished goods each month to be 10% of the budgeted sales units for
the following month.
Which of the following formula will generate the budgeted production (in units) for
March next year?
A [F3 + (0.1*F4)]
B [F3 – (0.1*F4)]
C [(1.1*F3) – (0.1*F4)]
D [(0.9*F3) + (0.1*F4)]
20 An accountant wishes to use the following spreadsheet to calculate budgeted production units: