Question 1

Which of the following statements is incorrect?

Accepted Answer

A)  A continuous twelve-month budget results from dropping the month just ended and adding a future month. 
B)  The production budget is derived from the direct materials and direct labor budgets. 
C)  The cash budget shows anticipated cash flows. 
D)  In the budget process for not-for-profit organizations, the emphasis is on cash flow rather than on revenue and expenses. 
A)  A continuous twelve-month budget results from dropping the month just ended and adding a future month. 
B)  The production budget is derived from the direct materials and direct labor budgets. 
C)  The cash budget shows anticipated cash flows. 
D)  In the budget process for not-for-profit organizations, the emphasis is on cash flow rather than on revenue and expenses.

Question 2

Why are budgets useful in the planning process?

Accepted Answer

A)  They provide management with information about the company's past performance. 
B)  They help communicate goals and provide a basis for evaluation. 
C)  They guarantee the company will be profitable if it meets its objectives. 
D)  They enable the budget committee to earn their paycheck. 
A)  They provide management with information about the company's past performance. 
B)  They help communicate goals and provide a basis for evaluation. 
C)  They guarantee the company will be profitable if it meets its objectives. 
D)  They enable the budget committee to earn their paycheck.

Question 3

Orange Co. is a manufacturer and Pineapple Company is a merchandiser. What is the difference in the budgets the two entities will prepare?

Accepted Answer

A)  Orange Co. will prepare a production budget, and Pineapple Company will prepare a merchandise purchases budget. 
B)  Orange Co. will prepare a sales forecast, and Pineapple Company will prepare a sales budget. 
C)  Pineapple Company will prepare a production budget, and Orange Co. will prepare a merchandise purchases budget. 
D)  Both companies will prepare the same types of budgets. 
A)  Orange Co. will prepare a production budget, and Pineapple Company will prepare a merchandise purchases budget. 
B)  Orange Co. will prepare a sales forecast, and Pineapple Company will prepare a sales budget. 
C)  Pineapple Company will prepare a production budget, and Orange Co. will prepare a merchandise purchases budget. 
D)  Both companies will prepare the same types of budgets.

Question 4

The budget committee has the responsibility for coordinating the preparation of the budget.

Accepted Answer

A) True 
 B)False

Question 5

The budget that is often considered to be the most important financial budget is the

Accepted Answer

A)  cash budget. 
B)  capital expenditure budget. 
C)  budgeted income statement. 
D)  budgeted balance sheet. 
A)  cash budget. 
B)  capital expenditure budget. 
C)  budgeted income statement. 
D)  budgeted balance sheet.

Question 6

Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

Accepted Answer

A)  38,280 
B)  37,680 
C)  38,880 
D)  40,200 
A)  38,280 
B)  37,680 
C)  38,880 
D)  40,200

Question 7

The production budget shows expected unit sales of 32,000. Beginning finished goods units are 3,600. Required production units are 33,600. What are the desired ending finished goods units?

Accepted Answer

A)  2,000 
B)  3,600 
C)  6,400 
D)  5,200 
A)  2,000 
B)  3,600 
C)  6,400 
D)  5,200

Question 8

Which of the following expenses would not appear on a selling and administrative expense budget?

Accepted Answer

A)  Sales commissions 
B)  Depreciation 
C)  Property taxes 
D)  Indirect labor 
A)  Sales commissions 
B)  Depreciation 
C)  Property taxes 
D)  Indirect labor

Question 9

Petal Co. reported the following information for 2019: $\begin{array}{llll}&\text { October }& \text { November }& \text { December }\
\text { Budgeted sales } & \$ 930,000 & \$ 870,000 & \$1,080,000 \
\end{array}$ All sales are on credit.

-Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
How much is the November 30, 2019 budgeted Accounts Receivable?

Accepted Answer

A)  $900,000 
B)  $540,000 
C)  $465,000 
D)  $435,000 
A)  $900,000 
B)  $540,000 
C)  $465,000 
D)  $435,000

Question 10

A benefit of budgeting is that it provides definite objectives for evaluating performance.

Accepted Answer

A) True 
 B)False

Question 11

Strand Company is planning to sell 400 buckets and produce 380 buckets during March. Each bucket requires 500 grams of plastic and one-half hour of direct labor. Plastic costs $10 per 500 grams and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Strand has 300 kilos of plastic in beginning inventory and wants to have 200 kilos in ending inventory. How much is the total amount of budgeted direct labor for March?

Accepted Answer

A)  $3,000 
B)  $6,000 
C)  $2,850 
D)  $5,7000 
A)  $3,000 
B)  $6,000 
C)  $2,850 
D)  $5,7000

Question 12

It is important that budgets be accepted by

Accepted Answer

A)  division managers only. 
B)  department heads only. 
C)  supervisors only. 
D)  All of these answers are correct. 
A)  division managers only. 
B)  department heads only. 
C)  supervisors only. 
D)  All of these answers are correct.

Question 13

A critical factor in budgeting for a service firm is to determine the amount of products to purchase.

Accepted Answer

A) True 
 B)False

Question 14

The most common budget period is

Accepted Answer

A)  one month. 
B)  three months. 
C)  six months. 
D)  one year. 
A)  one month. 
B)  three months. 
C)  six months. 
D)  one year.

Question 15

For a merchandiser, the starting point in the development of the master budget is the

Accepted Answer

A)  cash budget. 
B)  sales budget. 
C)  selling and administrative expenses budget. 
D)  budgeted income statement. 
A)  cash budget. 
B)  sales budget. 
C)  selling and administrative expenses budget. 
D)  budgeted income statement.

Question 16

The budget committee in a company is often headed by the

Accepted Answer

A)  president. 
B)  controller. 
C)  treasurer. 
D)  budget director. 
A)  president. 
B)  controller. 
C)  treasurer. 
D)  budget director.

Question 17

If budgets are to be effective, all of the following must be present except

Accepted Answer

A)  acceptance at all levels of management. 
B)  research and analysis in setting realistic goals. 
C)  stockholders' approval of the budget. 
D)  sound organizational structure. 
A)  acceptance at all levels of management. 
B)  research and analysis in setting realistic goals. 
C)  stockholders' approval of the budget. 
D)  sound organizational structure.

Question 18

The cash budget reflects

Accepted Answer

A)  all revenues and all expenses for a period. 
B)  expected cash receipts and cash disbursements from all sources. 
C)  all the items that appear on a budgeted income statement. 
D)  all the items that appear on a budgeted balance sheet. 
A)  all revenues and all expenses for a period. 
B)  expected cash receipts and cash disbursements from all sources. 
C)  all the items that appear on a budgeted income statement. 
D)  all the items that appear on a budgeted balance sheet.

Question 19

Dex Industries expects to purchase $120,000 of materials in March and $140,000 of materials in April. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. In addition, a 2% discount is received for payments made in the month of purchase. How much will April's cash disbursements for materials purchases be?

Accepted Answer

A)  $88,200 
B)  $108,200 
C)  $132,900 
D)  $120,000 
A)  $88,200 
B)  $108,200 
C)  $132,900 
D)  $120,000

Question 20

The manufacturing overhead budget generally has separate sections for variable, mixed, and fixed costs.

Accepted Answer

A) True 
 B)False

Which of the following statements is incorrect?

Why are budgets useful in the planning process?

Orange Co. is a manufacturer and Pineapple Company is a merchandiser. What is the difference in the budgets the two entities will prepare?

The budget committee has the responsibility for coordinating the preparation of the budget.

The budget that is often considered to be the most important financial budget is the

The production budget shows expected unit sales of 32,000. Beginning finished goods units are 3,600. Required production units are 33,600. What are the desired ending finished goods units?

Which of the following expenses would not appear on a selling and administrative expense budget?

A benefit of budgeting is that it provides definite objectives for evaluating performance.

It is important that budgets be accepted by

A critical factor in budgeting for a service firm is to determine the amount of products to purchase.

The most common budget period is

For a merchandiser, the starting point in the development of the master budget is the

The budget committee in a company is often headed by the

If budgets are to be effective, all of the following must be present except

The cash budget reflects

The manufacturing overhead budget generally has separate sections for variable, mixed, and fixed costs.

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 9: Budgetary Planning

Which of the following statements is incorrect?

Why are budgets useful in the planning process?

Orange Co. is a manufacturer and Pineapple Company is a merchandiser. What is the difference in the budgets the two entities will prepare?

The budget committee has the responsibility for coordinating the preparation of the budget.

The budget that is often considered to be the most important financial budget is the

The production budget shows expected unit sales of 32,000. Beginning finished goods units are 3,600. Required production units are 33,600. What are the desired ending finished goods units?

Which of the following expenses would not appear on a selling and administrative expense budget?

A benefit of budgeting is that it provides definite objectives for evaluating performance.

It is important that budgets be accepted by

A critical factor in budgeting for a service firm is to determine the amount of products to purchase.

The most common budget period is

For a merchandiser, the starting point in the development of the master budget is the

The budget committee in a company is often headed by the

If budgets are to be effective, all of the following must be present except

The cash budget reflects

The manufacturing overhead budget generally has separate sections for variable, mixed, and fixed costs.

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters