Question 1

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 2

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.
Cash collections for the third quarter are budgeted at

Accepted Answer

A)  $2,373,000. 
B)  $3,444,000. 
C)  $4,137,000. 
D)  $4,788,000. 
A)  $2,373,000. 
B)  $3,444,000. 
C)  $4,137,000. 
D)  $4,788,000.

Question 3

Andersen Company required production for June is 66,000 units. To make one unit of finished product, three pounds of direct material Z are required. Actual beginning and desired ending inventories of direct material Z are 150,000 and 165,000 pounds, respectively. How many pounds of direct material Z must be purchased?

Accepted Answer

A)  189,000. 
B)  198,000. 
C)  204,000. 
D)  213,000. 
A)  189,000. 
B)  198,000. 
C)  204,000. 
D)  213,000.

Question 4

Of the following items, which one is not obtained from an individual operating budget?

Accepted Answer

A)  Selling and administrative expenses 
B)  Accounts receivable 
C)  Cost of goods sold 
D)  Sales 
A)  Selling and administrative expenses 
B)  Accounts receivable 
C)  Cost of goods sold 
D)  Sales

Question 5

The following information was taken from Noble Company's cash budget for the month of July:   If the company has a policy of maintaining a minimum end of the month cash balance of $200,000, the amount the company would have to borrow is

Accepted Answer

A)  $80,000. 
B)  $40,000. 
C)  $120,000. 
D)  $48,000. 
A)  $80,000. 
B)  $40,000. 
C)  $120,000. 
D)  $48,000.

Question 6

Hendrix Company's direct materials budget shows total cost of direct materials purchases for January $125,000, February $150,000 and March $175,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are

Accepted Answer

A)  $165,000. 
B)  $160,000. 
C)  $150,000. 
D)  $130,000. 
A)  $165,000. 
B)  $160,000. 
C)  $150,000. 
D)  $130,000.

Question 7

At January 1, 2010, Estrada, Inc. has beginning inventory of 2,000 surfboards. Estrada estimates it will sell 5,000 units during the first quarter of 2010 with a 12% increase in sales each quarter. Estrada's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2010?

Accepted Answer

A)  $225,000 
B)  $975,000 
C)  $940,800 
D)  $6,272 
A)  $225,000 
B)  $975,000 
C)  $940,800 
D)  $6,272

Question 8

A budget

Accepted Answer

A)  is a substitute for management. 
B)  is an aid to management. 
C)  can operate or enforce itself. 
D)  is the responsibility of the accounting department. 
A)  is a substitute for management. 
B)  is an aid to management. 
C)  can operate or enforce itself. 
D)  is the responsibility of the accounting department.

Question 9

The direct materials budget contains both quantity and cost data.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following budgets would be prepared for a manufacturer but not for a merchandiser?

Accepted Answer

A)  Direct labor budget 
B)  Cash budget 
C)  Sales budget 
D)  Budgeted income statement 
A)  Direct labor budget 
B)  Cash budget 
C)  Sales budget 
D)  Budgeted income statement

Question 11

The Northeast Regional Division of Platt Wholesale Corporation has been requested to prepare a quarterly budgeted income statement for 2011. The regional manager expects that sales in the first quarter of 2011 will increase by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2011.
The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 25% of the next quarter's sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31, 2010 is $132,000. Quarterly salaries are $15,000 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows:
The income statement for the first quarter of 2010 was as follows:   
Instructions
Prepare a budgeted quarterly income statement in tabular form for the first quarter of 2011. (Show computations.)

Accepted Answer

The answer of The Northeast Regional Division of Platt Wholesale...

Question 12

The budget should have the support of _________________ and should be an important basis for _________________________ by comparing actual results to expected results.

Accepted Answer

top management, eval

Question 13

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 14

Ogleby Company is preparing its manufacturing overhead budget for 2010. Relevant data consist of the following.
Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000.
Direct labor: Time is 1 hour per unit.
Variable overhead costs per direct labor hour: Indirect materials $0.90; indirect labor $1.20; and maintenance $0.50.
Fixed overhead costs per quarter: Supervisory salaries $40,000; depreciation $16,000; and maintenance $12,000.
Instructions
Prepare the manufacturing overhead budget for the year, showing quarterly data.

Accepted Answer

The answer of Ogleby Company is preparing its manufacturing overhead...

Question 15

Little Company is preparing its direct labor budget for 2010 from the following production budget based on a calendar year:   
Each unit requires 1.5 hours of direct labor. The union contract provides for a 10% increase in wage rate to $11 per hour on October 1.
Instructions
Prepare a direct labor budget for 2010.

Accepted Answer

The answer of Little Company is preparing its direct labor...

Question 16

Instead of a production budget, a merchandiser will prepare a

Accepted Answer

A)  pseudo-production budget. 
B)  merchandise purchases budget. 
C)  master time sheet. 
D)  sales forecast. 
A)  pseudo-production budget. 
B)  merchandise purchases budget. 
C)  master time sheet. 
D)  sales forecast.

Question 17

The financial budgets include the

Accepted Answer

A)  cash budget and the selling and administrative expense budget. 
B)  cash budget and the budgeted balance sheet. 
C)  budgeted balance sheet and the budgeted income statement. 
D)  cash budget and the production budget. 
A)  cash budget and the selling and administrative expense budget. 
B)  cash budget and the budgeted balance sheet. 
C)  budgeted balance sheet and the budgeted income statement. 
D)  cash budget and the production budget.

Question 18

Temple Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first quarter of 2010, the following data are developed:   
Instructions
Prepare a selling and administrative expense budget for the first quarter of 2010.

Accepted Answer

The answer of Temple Company combines its operating expenses for...

Question 19

A budget can facilitate the coordination of activities among the segments of a large company.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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

Of the following items, which one is not obtained from an individual operating budget?

The following information was taken from Noble Company's cash budget for the month of July: If the company has a policy of maintaining a minimum end of the month cash balance of $200,000, the amount the company would have to borrow is

Hendrix Company's direct materials budget shows total cost of direct materials purchases for January $125,000, February $150,000 and March $175,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are

A budget

The direct materials budget contains both quantity and cost data.

Which one of the following budgets would be prepared for a manufacturer but not for a merchandiser?

The budget should have the support of _ and should be an important basis for _________ by comparing actual results to expected results.

Which of the following statements is incorrect?

Instead of a production budget, a merchandiser will prepare a

The financial budgets include the

Temple Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first quarter of 2010, the following data are developed: Instructions Prepare a selling and administrative expense budget for the first quarter of 2010.

A budget can facilitate the coordination of activities among the segments of a large company.

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

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

Exam 23: Incremental Analysis

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

Of the following items, which one is not obtained from an individual operating budget?

The following information was taken from Noble Company's cash budget for the month of July: If the company has a policy of maintaining a minimum end of the month cash balance of $200,000, the amount the company would have to borrow is

Hendrix Company's direct materials budget shows total cost of direct materials purchases for January $125,000, February $150,000 and March $175,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are

A budget

The direct materials budget contains both quantity and cost data.

Which one of the following budgets would be prepared for a manufacturer but not for a merchandiser?

The budget should have the support of _________________ and should be an important basis for _________________________ by comparing actual results to expected results.

Which of the following statements is incorrect?

Instead of a production budget, a merchandiser will prepare a

The financial budgets include the

Temple Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first quarter of 2010, the following data are developed: Instructions Prepare a selling and administrative expense budget for the first quarter of 2010.

A budget can facilitate the coordination of activities among the segments of a large company.

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

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

The budget should have the support of _ and should be an important basis for _________ by comparing actual results to expected results.