At the end of 2019, Dubai Mission prepared its master budget for 2020. Selected amounts from that budget, along with actual results for 2020, are presented below: \[\begin{array} { l r r } & \underline { \text { Budgeted } } & \underline { \text { Actual } } \\ \text { Sales } & \$ 180,000 & \$ 210,000 \\ \text { Research and development cost } & 25,000 & 20,000 \\ \text { Interest revenue } & 7,600 & 7,000 \\ \text { Cost of goods sold } & 60,000 & 65,000 \\ \text { Marketing costs } & 45,000 & 45,000 \end{array}\] Which items in the table have favourable variances?

A) Sales and marketing expense B) Cost of goods sold and sales C) Sales and research and development expense D) Sales and interest revenue A) Sales and marketing expense B) Cost of goods sold and sales C) Sales and research and development expense D) Sales and interest revenue

Zariz Ltd budgeted product costs for the third quarter of 2019 were based on an expected volume of 2,000 units. The budgeted unit costs appear below: $\begin{array}{lr} \text { Direct material } & \$ 1.50 \\ \text { Direct labor } & 2.25 \\ \text { Variable overhead } & 4.25 \\ \text { Fixed overhead } & \underline{3.00} \\ \quad \text { Total } & \underline{\$ 11.00} \\ \end{array}$ If Zariz Ltd had a budgeted volume of 2,500 units, the total budgeted product cost for the third quarter of 2019 would have been

A) $26,000 B) $16,000 C) $20,500 D) None of the above A) $26,000 B) $16,000 C) $20,500 D) None of the above

At the end of 2019, Dubai Mission prepared its master budget for 2020. Selected amounts from that budget, along with actual results for 2020, are presented below: \[\begin{array} { l r r } & \underline { \text { Budgeted } } & \underline { \text { Actual } } \\ \text { Sales } & \$ 180,000 & \$ 210,000 \\ \text { Research and development cost } & 25,000 & 20,000 \\ \text { Interest revenue } & 7,600 & 7,000 \\ \text { Cost of goods sold } & 60,000 & 65,000 \\ \text { Marketing costs } & 45,000 & 45,000 \end{array}\] Which items in the table have unfavourable variances?

A) Marketing expense and cost of goods sold B) Cost of goods sold and sales C) Sales and research and development expense D) Interest revenue and cost of goods sold A) Marketing expense and cost of goods sold B) Cost of goods sold and sales C) Sales and research and development expense D) Interest revenue and cost of goods sold

Poster Artist Ltd, a retail store selling classic and rare marketing materials, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: \[\begin{array} { l l } \text { Begirring irventory } & \$ 20,000 \\ \text { Budgeted purchases } & 50,000 \\ \text { Expected reverue } & 150,000 \\ \text { Irflows of cash } & 120,000 \\ \text { Support departments costs } & 30,000 \\ \text { Total cash outflows } & 80,000 \end{array}\] Which of the following amounts will be subtracted from gross profit on Poster Artist Ltd's budgeted income statement?

A) $30,000 B) $80,000 C) $14,000 D) $110,000 A) $30,000 B) $80,000 C) $14,000 D) $110,000

Super Solar Systems has forecast the following unit sales and production for the next year, by quarter: \[\begin{array} { | l | l | l | l | l | } \hline & 1 ^ { \text {st } } & 2 ^ { \text {nd } } & 3 ^ { \text {rd } } & 4 ^ { \text {th } } \\ \hline \text { Production } & 75 & 80 & 70 & 50 \\ \hline \text { Sales } & 60 & 70 & 75 & 60 \\ \hline \end{array}\] Super Solar has the following beginning inventories: \[\begin{array} { | l | l | } \hline \text { Firished Goods } & 50 \\ \hline \text { Direct Material A } & 50 \\ \hline \text { Direct Material B } & 50 \\ \hline \end{array}\] A finished unit requires one unit of material A and two units of material B There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories. What is ending finished goods inventory for quarter 2?

A) 145 B) 75 C) 65 D) 70 A) 145 B) 75 C) 65 D) 70

Super Solar Systems has forecast the following unit sales and production for the next year, by quarter: \[\begin{array} { | l | l | l | l | l | } \hline & 1 ^ { \text {st } } & 2 ^ { \text {nd } } & 3 ^ { \text {rd } } & 4 ^ { \text {th } } \\ \hline \text { Production } & 75 & 80 & 70 & 50 \\ \hline \text { Sales } & 60 & 70 & 75 & 60 \\ \hline \end{array}\] Super Solar has the following beginning inventories: \[\begin{array} { | l | l | } \hline \text { Firished Goods } & 50 \\ \hline \text { Direct Material A } & 50 \\ \hline \text { Direct Material B } & 50 \\ \hline \end{array}\] A finished unit requires one unit of material A and two units of material B There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories. How much material B must be purchased in quarter 1?

A) 264 B) 132 C) 150 D) 160 A) 264 B) 132 C) 150 D) 160

Exam 6: Operational Budgets

At the end of 2019, Dubai Mission prepared its master budget for 2020. Selected amounts from that budget, along with actual results for 2020, are presented below: Sales \ 180,000 \ 210,000 Research and development cost 25,000 20,000 Interest revenue 7,600 7,000 Cost of goods sold 60,000 65,000 Marketing costs 45,000 45,000 Which items in the table have favourable variances?

(Multiple Choice)

4.8/5

(76)

Question 61

Beginning inventory plus budgeted production equals sales plus targeted ending inventory in a production budget.

(True/False)

4.8/5

(86)

Question 62

When allocated support department costs are higher than expected due to poor management in the support department a challenge that may result is:

(Multiple Choice)

4.7/5

(67)

Question 63

Differences in actual and budgeted sales volume will often lead to budget variances as variable costs vary according to volume.

(True/False)

4.9/5

(79)

Question 64

Zariz Ltd budgeted product costs for the third quarter of 2019 were based on an expected volume of 2,000 units. The budgeted unit costs appear below: Direct material \ 1.50 Direct labor 2.25 Variable overhead 4.25 Fixed overhead Total If Zariz Ltd had a budgeted volume of 2,500 units, the total budgeted product cost for the third quarter of 2019 would have been

(Multiple Choice)

4.9/5

(93)

Question 65

One objective of budgeting is to motivate managers to:

(Multiple Choice)

4.7/5

(72)

Question 66

Vaviano Ltd expects to sell 34,000 units of finished goods over the next 6-month period. The company has 10,000 units on hand and its managers want to have 14,000 units on hand at the end of the period. To produce one unit of finished product, two units of direct materials are needed. Vaviano has 100,000 units of direct material on hand and has budgeted for an ending inventory of 110,000 units. What is the number of finished units to be produced?

(Multiple Choice)

4.9/5

(83)

Question 67

Together the direct materials budget, direct labour budget and manufacturing budget provide the information to calculate cost of goods sold.

(True/False)

4.7/5

(85)

Question 68

Participative budgeting is another name for top down budgeting.

(True/False)

4.9/5

(86)

Question 69

At the end of 2019, Dubai Mission prepared its master budget for 2020. Selected amounts from that budget, along with actual results for 2020, are presented below: Sales \ 180,000 \ 210,000 Research and development cost 25,000 20,000 Interest revenue 7,600 7,000 Cost of goods sold 60,000 65,000 Marketing costs 45,000 45,000 Which items in the table have unfavourable variances?

(Multiple Choice)

4.8/5

(79)

Question 70

To overcome possible problems with budgets that are developed only by top level managers, an alternative is to use:

(Multiple Choice)

4.9/5

(77)

Question 71

Favourable variances are always positive amounts; unfavourable variances are always negative amounts.

(True/False)

4.7/5

(74)

Question 72

Targets developed via a participative budgeting are non-negotiable.

(True/False)

4.8/5

(76)

Question 73

Poster Artist Ltd, a retail store selling classic and rare marketing materials, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: Begirring irventory \ 20,000 Budgeted purchases 50,000 Expected reverue 150,000 Irflows of cash 120,000 Support departments costs 30,000 Total cash outflows 80,000 Which of the following amounts will be subtracted from gross profit on Poster Artist Ltd's budgeted income statement?

(Multiple Choice)

5.0/5

(82)

Question 74

The starting point of the budget cycle is:

(Multiple Choice)

4.8/5

(82)

Question 75

The first stage in the budget cycle is to reassess organisational vision and core competencies.

(True/False)

4.9/5

(75)

Question 76

Super Solar Systems has forecast the following unit sales and production for the next year, by quarter: Production 75 80 70 50 Sales 60 70 75 60 Super Solar has the following beginning inventories: Firished Goods 50 Direct Material A 50 Direct Material B 50 A finished unit requires one unit of material A and two units of material B There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories. What is ending finished goods inventory for quarter 2?

(Multiple Choice)

4.8/5

(86)

Question 77

Super Solar Systems has forecast the following unit sales and production for the next year, by quarter: Production 75 80 70 50 Sales 60 70 75 60 Super Solar has the following beginning inventories: Firished Goods 50 Direct Material A 50 Direct Material B 50 A finished unit requires one unit of material A and two units of material B There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories. How much material B must be purchased in quarter 1?

(Multiple Choice)

4.8/5

(84)

Question 78

Rainbow Legacy Ltd has the following balances at 31^st December 2019: Cash $46,000; accounts receivable $34,000 ($10,000 from November and $24,000 from December); merchandise inventory $40,000; and accounts payable $20,000 (for merchandise purchases only). Budgeted sales follow: January \ 100,000 February \ 180,000 March \ 120,000 April \ 200,000 Other data: -Sales are 40% cash, 50% collected during the following month, and 10% collected during the second month after sale. A 3% cash discount is given on cash sales -Cost of goods sold is 40% of sales -Ending inventory must be 150% of the next month's cost of sales -Purchases are paid 70% in month of purchase and 30% in the following month -The selling and administrative cost function is: $6,000 + $0.2 × sales. This includes $1,000 for depreciation -All costs are paid in the month incurred -Minimum cash balance requirement is $6,000 Cash receipts for April will be:

(Multiple Choice)

4.9/5

(76)

Question 79

On a budgeted statement of profit or loss, the gross profit is determined by:

(Multiple Choice)

5.0/5

(94)

Question 80

Beginning inventory plus budgeted production equals sales plus targeted ending inventory in a production budget.

When allocated support department costs are higher than expected due to poor management in the support department a challenge that may result is:

Differences in actual and budgeted sales volume will often lead to budget variances as variable costs vary according to volume.

One objective of budgeting is to motivate managers to:

Together the direct materials budget, direct labour budget and manufacturing budget provide the information to calculate cost of goods sold.

Participative budgeting is another name for top down budgeting.

To overcome possible problems with budgets that are developed only by top level managers, an alternative is to use:

Favourable variances are always positive amounts; unfavourable variances are always negative amounts.

Targets developed via a participative budgeting are non-negotiable.

The starting point of the budget cycle is:

The first stage in the budget cycle is to reassess organisational vision and core competencies.

On a budgeted statement of profit or loss, the gross profit is determined by:

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters