Question 1

A company's plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a:

Accepted Answer

A)  pro-forma budget. 
B)  master budget. 
C)  financial budget. 
D)  profit plan. 
E)  capital budget. 
A)  pro-forma budget. 
B)  master budget. 
C)  financial budget. 
D)  profit plan. 
E)  capital budget.

Question 2

A difference in timing between units sold and units produced can result from logistical lags.

Accepted Answer

A) True 
 B)False

Question 3

The first step in developing a master budget is always the creation of a cash budget.

Accepted Answer

A) True 
 B)False

Question 4

Tsao Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are planned for the year 20x1. Three units of raw material are required to produce each unit of finished product.
Required: 
A. If Tsao Company plans to sell 380,000 units during the year, compute the number of units the firm would have to manufacture during the year.
B. If 400,000 finished units were to be manufactured by Tsao Company during the year, determine the amount of raw material to be purchased.

Accepted Answer

The answer of Tsao Company budgets on an annual basis....

Question 5

A company's sales forecast would likely not consider general economic and industry trends.

Accepted Answer

A) True 
 B)False

Question 6

Planton Manufacturing plans to produce 20,000 units, 24,000 units, and 30,000 units, respectively, in October, November, and December. Each of these units requires four units of part no. 879, which the company can purchase for $7 each. Planton has 35,000 units of part no. 879 in stock on September 30.
Required: 
Prepare a direct-material purchases budget for October and November in units and dollars. Management desires to maintain an ending raw-material inventory equal to 40% of the following month's production usage.

Accepted Answer

The answer of Planton Manufacturing plans to produce 20,000 units,...

Question 7

Maki plans to sell 10,000 units of a particular product during July, and expects sales to increase at the rate of 10% per month during the remainder of the year. The June 30 and September 30 ending inventories are anticipated to be 1,100 units and 950 units, respectively. On the basis of this information, how many units should Maki purchase for the quarter ended September 30?

Accepted Answer

A)  31,850. 
B)  32,150. 
C)  32,950. 
D)  33,250. 
E)  None of the answers is correct. 
A)  31,850. 
B)  32,150. 
C)  32,950. 
D)  33,250. 
E)  None of the answers is correct.

Question 8

Consider the following statements about companies that are involved with international operations:
I. Budgeting for these firms is often very involved because of fluctuating values in foreign currencies.
II. Multinational firms may encounter hyperinflationary economies.
III. Such organizations often face changing laws and political climates that affect business activity.
Which of the above statements is (are) true?

Accepted Answer

A)  I only. 
B)  III only. 
C)  I and II. 
D)  II and III. 
E)  I, II, and III. 
A)  I only. 
B)  III only. 
C)  I and II. 
D)  II and III. 
E)  I, II, and III.

Question 9

List several factors that an organization might consider when developing a sales forecast.

Accepted Answer

· Past sales levels and economic trends

Question 10

The risk of being wrong about predictions can sometimes be mitigated by managers' actions.

Accepted Answer

A) True 
 B)False

Question 11

An organization's budgets will often be prepared to cover:

Accepted Answer

A)  one month. 
B)  one quarter. 
C)  one year. 
D)  periods longer than one year. 
E)  all of the answers are correct. 
A)  one month. 
B)  one quarter. 
C)  one year. 
D)  periods longer than one year. 
E)  all of the answers are correct.

Question 12

A company's expected receipts from sales and planned disbursements to pay bills is commonly called a:

Accepted Answer

A)  pro-forma budget. 
B)  master budget. 
C)  financial budget. 
D)  profit plan. 
E)  cash budget. 
A)  pro-forma budget. 
B)  master budget. 
C)  financial budget. 
D)  profit plan. 
E)  cash budget.

Question 13

A disadvantage of a provider hosted approach through the cloud is that the company's proprietary financial data resides outside of the company's walls.

Accepted Answer

A) True 
 B)False

Question 14

For an airline, which of the following would not be an operational budget?

Accepted Answer

A)  A labor budget for flight crew. 
B)  A budget of planned air miles to be flown. 
C)  A materials budget for aircraft parts. 
D)  A fuel budget. 
E)  A cash receipts budget of flying consumers. 
A)  A labor budget for flight crew. 
B)  A budget of planned air miles to be flown. 
C)  A materials budget for aircraft parts. 
D)  A fuel budget. 
E)  A cash receipts budget of flying consumers.

Question 15

DuPree Enterprises reported the following cash collections in July and August from credit sales:
   
The company sells a single product for $20, and all sales are collected over a two-month period. 
Required: 
A. Determine the number of units that were sold in July.
B. Determine the percent of credit sales collected in the month of sale and the percent of sales collected in the month following sale.
C. How many units were sold in August?
D. Determine the accounts receivable balance as of August 31.

Accepted Answer

A. July sales: $105,000 + $45,000 = $150

Question 16

A company's sales forecast would likely consider all of the following factors except:

Accepted Answer

A)  past sales levels and trends. 
B)  the company's intended pricing policy. 
C)  the company's product costing policy. 
D)  market research studies. 
E)  planned advertising and promotions. 
A)  past sales levels and trends. 
B)  the company's intended pricing policy. 
C)  the company's product costing policy. 
D)  market research studies. 
E)  planned advertising and promotions.

Question 17

The direct-material budget shows the number of units and the cost of material to be purchased and used during a budget period. Which of the following formulas is this schedule based on?

Accepted Answer

A)  Raw materials required for production + desired ending inventory of raw material = Total raw material required - expected beginning inventory of raw material = Raw material to be purchased. 
B)  Raw materials required for production - desired ending inventory of raw material = Total raw material required + expected beginning inventory of raw material = Raw material to be purchased. 
C)  Total raw material required + Raw materials required for production = desired ending inventory of raw material = Raw material to be purchased. 
D)  Raw material to be purchased + expected beginning inventory of raw material = Desired ending inventory of raw material x cost per unit = Raw materials required for production. 
E)  Raw material required for production ÷ [(expected beginning inventory of raw material + desired ending inventory of raw material) /2] = Raw material to be purchased. 
A)  Raw materials required for production + desired ending inventory of raw material = Total raw material required - expected beginning inventory of raw material = Raw material to be purchased. 
B)  Raw materials required for production - desired ending inventory of raw material = Total raw material required + expected beginning inventory of raw material = Raw material to be purchased. 
C)  Total raw material required + Raw materials required for production = desired ending inventory of raw material = Raw material to be purchased. 
D)  Raw material to be purchased + expected beginning inventory of raw material = Desired ending inventory of raw material x cost per unit = Raw materials required for production. 
E)  Raw material required for production ÷ [(expected beginning inventory of raw material + desired ending inventory of raw material) /2] = Raw material to be purchased.

Question 18

Randall Corporation, headquartered in Pittsburgh, has a manufacturing plant in Dallas. Plant managers desire to participate in the company's budget efforts, which, for the past 10 years, have been handled solely by top executives in Pittsburgh. Dallas managers feel that by becoming involved, they can make great strides in terms of improving operating performance of their aging facility.
Required: 
Briefly discuss this situation, focusing on the benefits and problems of letting Dallas managers participate in the company's budgetary efforts.

Accepted Answer

Participative budgets will make the plan

Question 19

Nevis' production data for one of its products were taken from the most recent quarterly production budget:
 
If it takes two direct labor hours to produce each unit and Nevis' cost per labor hour is $15, direct labor cost for August would be budgeted at:

Accepted Answer

A)  $16,500. 
B)  $31,200. 
C)  $33,000. 
D)  $34,800. 
E)  None of the answers is correct. 
A)  $16,500. 
B)  $31,200. 
C)  $33,000. 
D)  $34,800. 
E)  None of the answers is correct.

Question 20

The difference between the revenue or cost projection that a person provides, and a realistic estimate of the revenue or cost, is called:

Accepted Answer

A)  passing the buck. 
B)  budgetary slack. 
C)  false budgeting. 
D)  participative budgeting. 
E)  resource allocation processing. 
A)  passing the buck. 
B)  budgetary slack. 
C)  false budgeting. 
D)  participative budgeting. 
E)  resource allocation processing.

A company's plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a:

A difference in timing between units sold and units produced can result from logistical lags.

The first step in developing a master budget is always the creation of a cash budget.

A company's sales forecast would likely not consider general economic and industry trends.

List several factors that an organization might consider when developing a sales forecast.

The risk of being wrong about predictions can sometimes be mitigated by managers' actions.

An organization's budgets will often be prepared to cover:

A company's expected receipts from sales and planned disbursements to pay bills is commonly called a:

A disadvantage of a provider hosted approach through the cloud is that the company's proprietary financial data resides outside of the company's walls.

For an airline, which of the following would not be an operational budget?

A company's sales forecast would likely consider all of the following factors except:

The direct-material budget shows the number of units and the cost of material to be purchased and used during a budget period. Which of the following formulas is this schedule based on?

Nevis' production data for one of its products were taken from the most recent quarterly production budget: If it takes two direct labor hours to produce each unit and Nevis' cost per labor hour is $15, direct labor cost for August would be budgeted at:

The difference between the revenue or cost projection that a person provides, and a realistic estimate of the revenue or cost, is called:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 9: Financial Planning and Analysis: the Master Budget

A company's plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a:

A difference in timing between units sold and units produced can result from logistical lags.

The first step in developing a master budget is always the creation of a cash budget.

A company's sales forecast would likely not consider general economic and industry trends.

List several factors that an organization might consider when developing a sales forecast.

The risk of being wrong about predictions can sometimes be mitigated by managers' actions.

An organization's budgets will often be prepared to cover:

A company's expected receipts from sales and planned disbursements to pay bills is commonly called a:

A disadvantage of a provider hosted approach through the cloud is that the company's proprietary financial data resides outside of the company's walls.

For an airline, which of the following would not be an operational budget?

A company's sales forecast would likely consider all of the following factors except:

The direct-material budget shows the number of units and the cost of material to be purchased and used during a budget period. Which of the following formulas is this schedule based on?

Nevis' production data for one of its products were taken from the most recent quarterly production budget: If it takes two direct labor hours to produce each unit and Nevis' cost per labor hour is $15, direct labor cost for August would be budgeted at:

The difference between the revenue or cost projection that a person provides, and a realistic estimate of the revenue or cost, is called:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters