Question 1

The formula for determining budgeted merchandise purchases is budgeted

Accepted Answer

A)  production + desired ending inventory - beginning inventory. 
B)  sales + beginning inventory - desired ending inventory. 
C)  cost of goods sold + desired ending inventory - beginning inventory. 
D)  cost of goods sold + beginning inventory - desired ending inventory. 
A)  production + desired ending inventory - beginning inventory. 
B)  sales + beginning inventory - desired ending inventory. 
C)  cost of goods sold + desired ending inventory - beginning inventory. 
D)  cost of goods sold + beginning inventory - desired ending inventory.

Question 2

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 3

Lester Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.50 per pound and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Lester has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 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)  25,520 
B)  25,120 
C)  25,920 
D)  26,800 
A)  25,520 
B)  25,120 
C)  25,920 
D)  26,800

Question 4

The direct materials budget must be completed before the production budget because the quantity of materials available for production must be known.

Accepted Answer

A) True 
 B)False

Question 5

Effective budgeting is dependent on an _________________________ in which authority and responsibility are clearly defined.

Accepted Answer

organizational struc

Question 6

In the direct materials budget, the quantity of direct materials to be purchased is computed by adding direct materials required for production to

Accepted Answer

A)  desired ending direct materials. 
B)  beginning direct materials. 
C)  desired ending direct materials less beginning direct materials. 
D)  beginning direct materials less desired ending direct materials. 
A)  desired ending direct materials. 
B)  beginning direct materials. 
C)  desired ending direct materials less beginning direct materials. 
D)  beginning direct materials less desired ending direct materials.

Question 7

Ensley, Inc. makes and sells a single product, widgets. Three pounds of wackel are needed to make one widget. Budgeted production of widgets for the next few months follows:
September 29,000 units
October 31,000 units
The company wants to maintain monthly ending inventories of wackel equal to 20% of the following month's production needs. On August 31, 9,000 pounds of wackel were on hand.
Instructions
How much wackel should be purchased in September?

Accepted Answer

The answer of Ensley, Inc. makes and sells a single...

Question 8

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 9

Eckert Company has budgeted the following unit sales:   
Of the units budgeted, 40% are sold by the Southern Division at an average price of $15 per unit and the remainder are sold by the Eastern Division at an average price of $12 per unit.
Instructions
Prepare separate sales budgets for each division and for the company in total for the second quarter of 2010.

Accepted Answer

The answer of Eckert Company has budgeted the following unit...

Question 10

Unger Company has 12,000 units in beginning finished goods. If sales are expected to be 60,000 units for the year and Unger desires ending finished goods of 15,000 units, how many units must the company produce?

Accepted Answer

A)  57,000 
B)  60,000 
C)  63,000 
D)  75,000 
A)  57,000 
B)  60,000 
C)  63,000 
D)  75,000

Question 11

Haley Company estimates its sales at 100,000 units in the first quarter and that sales will increase by 10,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $35. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.
Production in units for the third quarter should be budgeted at

Accepted Answer

A)  122,500. 
B)  115,000. 
C)  152,500. 
D)  120,000. 
A)  122,500. 
B)  115,000. 
C)  152,500. 
D)  120,000.

Question 12

Which of the following is not a proper match-up?

Accepted Answer

A)  Long range planning $\harr$Strategies 
B)  Budgeting $\harr$Short-term goals 
C)  Long-range planning $\harr$ 5 years 
D)  Budgeting $\harr$Long-term goals 
A)  Long range planning $\harr$Strategies 
B)  Budgeting $\harr$Short-term goals 
C)  Long-range planning $\harr$ 5 years 
D)  Budgeting $\harr$Long-term goals

Question 13

The starting point in preparing a master budget is the preparation of the

Accepted Answer

A)  production budget. 
B)  sales budget. 
C)  purchasing budget. 
D)  personnel budget. 
A)  production budget. 
B)  sales budget. 
C)  purchasing budget. 
D)  personnel budget.

Question 14

Which of the following is not a financial budget?

Accepted Answer

A)  Capital expenditure budget 
B)  Cash budget 
C)  Manufacturing overhead budget 
D)  Budgeted balance sheet 
A)  Capital expenditure budget 
B)  Cash budget 
C)  Manufacturing overhead budget 
D)  Budgeted balance sheet

Question 15

The direct materials and direct labor budgets provide information for preparing the

Accepted Answer

A)  sales budget. 
B)  production budget. 
C)  manufacturing overhead budget. 
D)  cash budget. 
A)  sales budget. 
B)  production budget. 
C)  manufacturing overhead budget. 
D)  cash budget.

Question 16

Jacobsen, Inc. is planning to sell 200 buckets and produce 190 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. Jacobsen 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)  $1,500 
B)  $3,000 
C)  $1,425 
D)  $2,850 
A)  $1,500 
B)  $3,000 
C)  $1,425 
D)  $2,850

Question 17

An overly optimistic sales budget may result in

Accepted Answer

A)  increases in selling prices late in the year. 
B)  insufficient inventories. 
C)  increased sales during the year. 
D)  excessive inventories. 
A)  increases in selling prices late in the year. 
B)  insufficient inventories. 
C)  increased sales during the year. 
D)  excessive inventories.

Question 18

The production budget shows expected unit sales of 32,000. Beginning finished goods units are 5,600. Required production units are 33,600. What are the desired ending finished goods units?

Accepted Answer

A)  4,000 
B)  5,600 
C)  6,400 
D)  7,200 
A)  4,000 
B)  5,600 
C)  6,400 
D)  7,200

Question 19

The responsibility for expressing management's budgeting goals in financial terms is performed by the

Accepted Answer

A)  accounting department. 
B)  top management. 
C)  lower level of management. 
D)  budget committee. 
A)  accounting department. 
B)  top management. 
C)  lower level of management. 
D)  budget committee.

Question 20

A merchandiser has a merchandise purchases budget rather than a production budget.

Accepted Answer

A) True 
 B)False

Exam 23: Incremental Analysis

The formula for determining budgeted merchandise purchases is budgeted

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

The direct materials budget must be completed before the production budget because the quantity of materials available for production must be known.

Effective budgeting is dependent on an _________________________ in which authority and responsibility are clearly defined.

In the direct materials budget, the quantity of direct materials to be purchased is computed by adding direct materials required for production to

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

Unger Company has 12,000 units in beginning finished goods. If sales are expected to be 60,000 units for the year and Unger desires ending finished goods of 15,000 units, how many units must the company produce?

Which of the following is not a proper match-up?

The starting point in preparing a master budget is the preparation of the

Which of the following is not a financial budget?

The direct materials and direct labor budgets provide information for preparing the

An overly optimistic sales budget may result in

The production budget shows expected unit sales of 32,000. Beginning finished goods units are 5,600. Required production units are 33,600. What are the desired ending finished goods units?

The responsibility for expressing management's budgeting goals in financial terms is performed by the

A merchandiser has a merchandise purchases budget rather than a production budget.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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