Exam 7: Budgeting

A budget can be an effective means of communicating management's plans to the owners of a business.

Consider Derek's budget information: materials to be used totals $64,750; direct labor totals $198,400; factory overhead totals $394,800; work in process inventory January 1, $189,100; and work in progress inventory on December 31, $197,600. What is the budgeted cost of goods manufactured for the year?

The budget process involves doing all of the following except

Purple Co.'s production budget for Product X for the year ended December 31 is as follows: In Purple's production operations, Materials A, B, and C are required to make Product X. The quantities of direct materials expected to be used for each unit of product are as follows: Prepare a direct materials purchases budget for Product X, assuming that there are no beginning or ending inventories for direct materials (all units purchased are used in production).

Supervisor salaries, maintenance, and indirect factory wages would normally appear in the factory overhead cost budget.

A process whereby the effect of fluctuations in the level of activity is built into the budgeting system is referred to as flexible budgeting.

The master budget is an integrated set of budgets that tie together a company's operating, financing and investing activities into an integrated plan for the coming year.

The budgeted balance sheet assumes that all operating and financing plans are met.

Doran Technologies produces a single product.  Expected manufacturing costs are as follows: Variable costs    Direct materials                              $4.00 per unit    Direct labor                                    $1.20 per unit    Manufacturing overhead                $0.95 per unit Fixed costs per month     Depreciation                                       $  6,000     Supervisory salaries                             13,500     Other fixed costs                                    3,850 Estimate manufacturing costs for production levels of 25,000 units, 30,000 units, and 35,000 units per month.

A variant of fiscal-year budgeting whereby a twelve-month projection into the future is maintained at all times is termed

The task of preparing a budget should be the sole task of the most important department in an organization.

Which of the following budgets is not directly associated with the production budget?

The budget procedures used by a large manufacturer of automobiles would probably not differ from those used by a small manufacturer of paper products.

For February, sales revenue is $700,000; sales commissions are 5% of sales; the sales manager's salary is $96,000; advertising expenses are $90,000; shipping expenses total 2% of sales; and miscellaneous selling expenses are $2,500 plus 1/2 of 1% of sales. Total selling expenses for the month of February are

Production estimates for August are as follows: For each unit produced, the direct materials requirements are as follows: The number of pounds of Materials A and B required for August production is:

Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem?

Production estimates for July are as follows: For each unit produced, the direct materials requirements are as follows: The total direct materials purchases of materials A and B (assuming no beginning or ending material inventory) required for July production is

The master budget of a small manufacturer would normally include all component budgets that impact on the financial statements.

Supervisor salaries, maintenance, and indirect factory wages would normally appear in the operating expenses budget.

If Division Inc. expects to sell 200,000 units in the current year, desires ending inventory of 24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted volume of production for the year is 202,000 units.