1. The starting point for the master budget is typically:
a. the purchases budget
b. the pro-forma cash budget
c. the pro-forma income statement
d. the sales budget
2. Morse Company has a sales budget of 90,000 units in July, 75,000 units in August and 82,000 units in September. Libby requires ending finished goods inventories equal to 60 percent of the following months sales. How many units should be budgeted for production in August? Assume that beginning finished goods inventory in August was equal to the budgeted level.
3. Davis Enterprises manufactures a product that requires two gallons of chemical XU-16 per unit. The cost of XU-16 is $60.00 per gallon. Davis maintains an ending inventory of XU-16 equal to 60 percent of the following month's production usage. Planned production for Davis is as follows: 7,500 units in June, 8,000 units in July, and 6,700 units in August. What would be the cost of XU-16 budgeted to be purchased in June. Assume that beginning inventory of XU-16 in June was equal to the budgeted level.
4. Rocky's Industrial Tool Supply Company forecasts the following TOTAL sales figures for the next four months. April, $500,000 - May, $450,000 - June, $600,000 - July, $650,000. Cash sales average 20 percent of total sales and credit sales represent 80 percent of total sales. Credit sales are collected 80 percent in the month following sale and 20 percent two months following sale. The total estimated cash received in July would be: