Question 1

The primary difference between a static budget and a flexible budget is that a static budget

Accepted Answer

A)  is suitable in volatile demand situation while flexible budget is suitable in a stable demand situation 
B)  is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales 
C)  includes only fixed costs, whereas a flexible budget includes only variable costs 
D)  is a plan for a single level of production, whereas a flexible budget can be converted to any level of production 
A)  is suitable in volatile demand situation while flexible budget is suitable in a stable demand situation 
B)  is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales 
C)  includes only fixed costs, whereas a flexible budget includes only variable costs 
D)  is a plan for a single level of production, whereas a flexible budget can be converted to any level of production

Question 2

The cash collections expected in October from accounts receivable are estimated to be

Accepted Answer

A)  $246,400 
B)  $262,500 
C)  $210,000 
D)  $294,500 
A)  $246,400 
B)  $262,500 
C)  $210,000 
D)  $294,500

Question 3

The capital expenditures budget is part of the planned investing activities of a company.

Accepted Answer

A) True 
 B)False

Question 4

The dollar amount of Material B used in production during the year is

Accepted Answer

A)  $1,057,400 
B)  $1,193,400 
C)  $1,026,800 
D)  $1,224,000 
A)  $1,057,400 
B)  $1,193,400 
C)  $1,026,800 
D)  $1,224,000

Question 5

Production and sales estimates for June are as follows:   The budgeted total sales for June is

Accepted Answer

A)  $225,000 
B)  $500,000 
C)  $525,000 
D)  $200,000 
A)  $225,000 
B)  $500,000 
C)  $525,000 
D)  $200,000

Question 6

Prepare a monthly flexible selling expense budget for Cottonwood Company for sales volumes of $300,000,
$350,000, and $400,000, based on the following data
Sales commissions Sales manager's salary Advertising expense Shipping expense
Miscellaneous selling expense
6% of sales
$120,000 per month
$90,000 per month
1% of sales
$6,000 per month plus 1.5% of sales

Accepted Answer

The answer of Prepare a monthly flexible selling expense budget...

Question 7

Budgeting supports the planning process by encouraging all of the following activities except

Accepted Answer

A)  requiring all organizational units to establish their goals for the upcoming period 
B)  increasing the motivation of managers and employees by providing agreed-upon expectations 
C)  directing and coordinating operations during the period 
D)  improving overall decision making by considering all viewpoints, options, and cost reduction possibilities 
A)  requiring all organizational units to establish their goals for the upcoming period 
B)  increasing the motivation of managers and employees by providing agreed-upon expectations 
C)  directing and coordinating operations during the period 
D)  improving overall decision making by considering all viewpoints, options, and cost reduction possibilities

Question 8

Production and sales estimates for March for the Robin Co. are as follows:   The number of units expected to be manufactured in March is

Accepted Answer

A)  24,000 
B)  27,000 
C)  27,600 
D)  21,600 
A)  24,000 
B)  27,000 
C)  27,600 
D)  21,600

Question 9

Finch Company began its operations on March 31 of the current year. Finch has the following projected costs:   1) Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month.
2) Insurance expense is $1,000 a month; however, the insurance is paid four times yearly in the first month of the quarter, i.e., January, April, July, and October).
3) Property tax is paid once a year in November.
-The cash payments for Finch Company expected in the month of June are

Accepted Answer

A)  $215,500 
B)  $188,800 
C)  $214,000 
D)  $212,000 
A)  $215,500 
B)  $188,800 
C)  $214,000 
D)  $212,000

Question 10

The Tough Jeans Company produces two different styles of jeans, Working Life and Social Life. The company sales budget estimates that 400,000 of the Working Life jeans and 250,000 of the Social Life jeans will be sold during the year. The company begins with 9,000 pairs of Working Life and 18,000 pairs of Social Life. The company desires ending inventory of 7,500 of Working Life and 10,000 Social Life. Prepare a production budget for the year.

Accepted Answer

The answer of The Tough Jeans Company produces two different...

Question 11

The first budget to be prepared is usually the production budget.

Accepted Answer

A) True 
 B)False

Question 12

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called zero-based budgeting.

Accepted Answer

A) True 
 B)False

Question 13

Production and sales estimates for June are as follows:   The number of units expected to be manufactured in June is

Accepted Answer

A)  15,500 
B)  17,500 
C)  16,500 
D)  13,500 
A)  15,500 
B)  17,500 
C)  16,500 
D)  13,500

Question 14

The production budget is the starting point for preparation of the direct labor cost budget.

Accepted Answer

A) True 
 B)False

Question 15

If budgeted beginning inventory is $8,000, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted production should be

Accepted Answer

A)  $1,400 
B)  $9,600 
C)  $11,660 
D)  $11,550 
A)  $1,400 
B)  $9,600 
C)  $11,660 
D)  $11,550

Question 16

Match each phrase that follows with the term a-e) it describes.
-occurs when budgets are too loose

Accepted Answer

A) planning 
B) directing 
C) controlling 
D) budget slack 
E) goal conflict 
A) planning 
B) directing 
C) controlling 
D) budget slack 
E) goal conflict

Question 17

Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. Sales on account are budgeted to be $150,000 for March and receipts from sales on account total $162,500 in April. What are budgeted sales on account for April?

Accepted Answer

The answer of Big Wheel, Inc. collects 25% of its...

Question 18

Flexible budgeting builds the effect of changes in level of activity into the budget system.

Accepted Answer

A) True 
 B)False

Question 19

If the expected sales volume for the current period is 9,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is

Accepted Answer

A)  9,000 
B)  8,900 
C)  8,700 
D)  9,100 
A)  9,000 
B)  8,900 
C)  8,700 
D)  9,100

Question 20

The capital expenditures budget details future plans for acquisition of fixed assets.

Accepted Answer

A) True 
 B)False

Exam 21: Budgeting

The primary difference between a static budget and a flexible budget is that a static budget

The cash collections expected in October from accounts receivable are estimated to be

The capital expenditures budget is part of the planned investing activities of a company.

The dollar amount of Material B used in production during the year is

Production and sales estimates for June are as follows: The budgeted total sales for June is

Budgeting supports the planning process by encouraging all of the following activities except

Production and sales estimates for March for the Robin Co. are as follows: The number of units expected to be manufactured in March is

The first budget to be prepared is usually the production budget.

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called zero-based budgeting.

Production and sales estimates for June are as follows: The number of units expected to be manufactured in June is

The production budget is the starting point for preparation of the direct labor cost budget.

If budgeted beginning inventory is $8,000, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted production should be

Match each phrase that follows with the term a-e) it describes. -occurs when budgets are too loose

Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. Sales on account are budgeted to be $150,000 for March and receipts from sales on account total $162,500 in April. What are budgeted sales on account for April?

Flexible budgeting builds the effect of changes in level of activity into the budget system.

If the expected sales volume for the current period is 9,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is

The capital expenditures budget details future plans for acquisition of fixed assets.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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