Question

1- Webster Corporation's budgeted sales for February are $325,000. Webster pays sales representatives a commission of 6% of sales dollars. The company pays a sales manager a monthly salary of $4,400 and expects advertising expense of $2,000 per month. Compute the total budgeted selling expenses for February.

Multiple Choice

• $19,500.

• $6,400.

• $23,900.

• $25,900.

• $21,500.

  2- Grason Corporation is preparing a budgeted balance sheet for 2018. The retained earnings balance at December 31, 2017 was $533,500. The 2018 budgeted income statement shows expected net income of $112,000. The company expects to declare dividends during 2018 amounting to $40,000. The expected balance in retained earnings on the 2018 budgeted balance sheet is:

  Multiple Choice

• $533,500.

• $605,500.

• $645,500.

• $493,500.

• $685,500

  5- Which of the following factors is least likely to be considered in preparing a sales budget?

  Multiple Choice

• Business capacity.

• Forecasted economic and market conditions.

• Prediction of unit sales.

• The capital expenditures budget.

• Proposed selling expenses, such as advertising.

  7- Alliance Company budgets production of 24,000 units in January and 28,000 units in the February. Each finished unit requires 4 pounds of raw material K that costs $2.50 per pound. Each month's ending raw materials inventory should equal 40% of the following month's budgeted materials. The January 1 inventory for this material is 38,400 pounds. What is the budgeted materials needed in pounds for January?

  Multiple Choice

• 102,400 pounds.

• 96,000 pounds.

• 57,600 pounds.

• 140,800 pounds.

• 83,200 pounds.

Answer 1

Ans. 1	Option   4th   $25,900
	Selling Expense Budget
	For the Month of February
	Total sales	$325,000
	Variable cost:
	Sales commissions ($325,000*6%)	$19,500
	Total variable costs	$19,500
	Fixed cost:
	Sales manager's salary	$4,400
	Advertising expenses	$2,000
	Total fixed costs	$6,400
	Total selling expenses	$25,900
Ans. 2	Option 2nd   $605,500
	Particulars		Amount
	Beginning balance of Retained earnings		$533,500
	Add: Net income		$112,000
	Less: Dividends paid		-$40,000
	Ending balance of Retained earnings		$605,500
	*The ending balance of retained earnings includes the net income & beginning balance of retained earnings
	and excludes the dividends paid during the year.
Ans. 3	Option    4th   The capital expenditure budget
	Explanations : Capital expenditures are not planned while preparing a sales budget.
Ans. 4	Option 1st   102,400 pounds
		January
	Budgeted production (units)	24,000
	(X) Materials requirement per unit	4
	Materials needed for production	96000
	Add: budgeted ending inventory	44800
	Total materials requirements	140800
	Less: Budgeted beginning inventory	-38400
	Budgeted materials needed in pounds	102400
	*Working Notes:
		February
	Budgeted production (units)	28,000
	(X) Materials requirement per unit	4
	Materials needed for production	112000
	*Budgeted ending inventory for January = Materials need in February * 40%
	112,000 * 40%     =   44,800