Question 1

Budget development for the coming year usually starts

Accepted Answer

A)  a year in advance. 
B)  the first month of the year to be budgeted. 
C)  several months before the end of the current year. 
D)  the last month of the previous year. 
A)  a year in advance. 
B)  the first month of the year to be budgeted. 
C)  several months before the end of the current year. 
D)  the last month of the previous year.

Question 2

If budgets are to be effective, there must be

Accepted Answer

A)  a history of successful operations. 
B)  independent verification of budget goals. 
C)  an organizational structure with clearly defined lines of authority and responsibility. 
D)  excess plant capacity. 
A)  a history of successful operations. 
B)  independent verification of budget goals. 
C)  an organizational structure with clearly defined lines of authority and responsibility. 
D)  excess plant capacity.

Question 3

Long-range planning usually encompasses a period of at least

Accepted Answer

A)  six months. 
B)  1 year. 
C)  5 years. 
D)  10 years. 
A)  six months. 
B)  1 year. 
C)  5 years. 
D)  10 years.

Question 4

The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first.

Accepted Answer

A) True 
 B)False

Question 5

Which one of the following sections would not appear on a cash budget?

Accepted Answer

A)  Cash receipts 
B)  Financing 
C)  Investing 
D)  Cash disbursements 
A)  Cash receipts 
B)  Financing 
C)  Investing 
D)  Cash disbursements

Question 6

If a monthly cash budget is prepared properly, there will never be a cash deficiency at the end of any month.

Accepted Answer

A) True 
 B)False

Question 7

Three major sections of a cash budget are (1) ___________________, (2) ____________________, and (3) ______________________.

Accepted Answer

cash recei

Question 8

Cromwell Company makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available:   Expenses are paid in the month incurred. If the company has budgeted to sell 4,000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?

Accepted Answer

A)  $8,400 
B)  $9,200 
C)  $50,800 
D)  $9,800 
A)  $8,400 
B)  $9,200 
C)  $50,800 
D)  $9,800

Question 9

The following information is taken from the production budget for the first quarter:   How many finished goods units should be produced during the quarter if the company desires 2,400 units available to start the next quarter?

Accepted Answer

A)  343,500 
B)  340,500 
C)  355,500 
D)  344,400 
A)  343,500 
B)  340,500 
C)  355,500 
D)  344,400

Question 10

The primary benefits of budgeting include all of the following except it

Accepted Answer

A)  requires only top management to plan ahead and formalize their future goals. 
B)  provides definite objectives for evaluating performance. 
C)  creates an early warning system for potential problems. 
D)  motivates personnel throughout the organization. 
A)  requires only top management to plan ahead and formalize their future goals. 
B)  provides definite objectives for evaluating performance. 
C)  creates an early warning system for potential problems. 
D)  motivates personnel throughout the organization.

Question 11

In many companies, responsibility for coordinating the preparation of the budget is assigned to

Accepted Answer

A)  the company's independent certified public accountants. 
B)  the company's internal auditors. 
C)  the company's board of directors. 
D)  a budget committee. 
A)  the company's independent certified public accountants. 
B)  the company's internal auditors. 
C)  the company's board of directors. 
D)  a budget committee.

Question 12

Ivey, Inc. makes and sells buckets. Each bucket uses 3/4 pound of plastic. Budgeted production of buckets in units for the next three months is as follows:   
The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month's budgeted production needs. The cost of plastic is $2.12 per pound.
Instructions
Prepare a direct materials purchases budget for the month of May.

Accepted Answer

The answer of Ivey, Inc. makes and sells buckets. Each...

Question 13

Company A is a manufacturer and Company B is a merchandiser. What is the difference in the budgets the two entities will prepare?

Accepted Answer

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

Question 14

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 15

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 for manufacturing overhead for the month?

Accepted Answer

A)  $2,392.50 
B)  $2,475 
C)  $9,570 
D)  $9,900 
A)  $2,392.50 
B)  $2,475 
C)  $9,570 
D)  $9,900

Question 16

The financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than

Accepted Answer

A)  the prior years. 
B)  management's minimum required balance. 
C)  the amount needed to avoid a service charge at the bank. 
D)  the industry average. 
A)  the prior years. 
B)  management's minimum required balance. 
C)  the amount needed to avoid a service charge at the bank. 
D)  the industry average.

Question 17

Morrison Company has the following budgeted sales: January $80,000, February $120,000, and March $100,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during March are:

Accepted Answer

A)  $112,000. 
B)  $106,000. 
C)  $105,000. 
D)  $100,000. 
A)  $112,000. 
B)  $106,000. 
C)  $105,000. 
D)  $100,000.

Question 18

Budgets can have a positive or negative effect on human behavior depending on the manner in which the budget is developed and administered.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following items would never appear on a cash budget?

Accepted Answer

A)  Office salaries expense 
B)  Interest expense 
C)  Depreciation expense 
D)  Travel expense 
A)  Office salaries expense 
B)  Interest expense 
C)  Depreciation expense 
D)  Travel expense

Question 20

Which is the last step in developing the master budget?

Accepted Answer

A)  Preparing the budgeted balance sheet 
B)  Preparing the cost of goods manufactured budget 
C)  Preparing the budgeted income statement 
D)  Preparing the cash budget 
A)  Preparing the budgeted balance sheet 
B)  Preparing the cost of goods manufactured budget 
C)  Preparing the budgeted income statement 
D)  Preparing the cash budget

Exam 23: Incremental Analysis

Budget development for the coming year usually starts

If budgets are to be effective, there must be

Long-range planning usually encompasses a period of at least

The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first.

Which one of the following sections would not appear on a cash budget?

If a monthly cash budget is prepared properly, there will never be a cash deficiency at the end of any month.

Three major sections of a cash budget are (1) ___________________, (2) ____________________, and (3) ______________________.

The following information is taken from the production budget for the first quarter: How many finished goods units should be produced during the quarter if the company desires 2,400 units available to start the next quarter?

The primary benefits of budgeting include all of the following except it

In many companies, responsibility for coordinating the preparation of the budget is assigned to

Company A is a manufacturer and Company B is a merchandiser. What is the difference in the budgets the two entities will prepare?

The budget committee in a company is often headed by the

The financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than

Morrison Company has the following budgeted sales: January $80,000, February $120,000, and March $100,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during March are:

Budgets can have a positive or negative effect on human behavior depending on the manner in which the budget is developed and administered.

Which one of the following items would never appear on a cash budget?

Which is the last step in developing the master 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

Filters

Three major sections of a cash budget are (1) _, (2) , and (3) ____.