Question 1

Which of the following budget development approaches can be used by management?

Accepted Answer

A)  Top-down approach 
B)  Bottom-up approach 
C)  A combination of top-down and bottom-up 
D)  All of these can be used 
A)  Top-down approach 
B)  Bottom-up approach 
C)  A combination of top-down and bottom-up 
D)  All of these can be used D

Question 2

If it takes 20 hours to make a boat motor and direct labor employees are paid $10 per hour, how much does it cost for labor to make 100 motors?

Accepted Answer

A)  $1,000 
B)  $2,000 
C)  $16,600 
D)  $20,000 
A)  $1,000 
B)  $2,000 
C)  $16,600 
D)  $20,000 D

Question 3

Percy's Plants plans to sell 500 tomato plants during April. If it currently has 60 tomato plants on hand and must maintain an inventory of 90, how many tomato plants must the firm purchase during April?

Accepted Answer

A)  530 
B)  500 
C)  470 
D)  590 
A)  530 
B)  500 
C)  470 
D)  590 A

Question 4

Exhibit 18-2 Makeby Corporation makes sharbees. The following data are available on December 1, 2011:
 
-Refer to Exhibit 18-2. Given the information above, cost of materials to be used in December is:

Accepted Answer

A)  $5,256 
B)  $9,928 
C)  $4,672 
D)  $8,064 
A)  $5,256 
B)  $9,928 
C)  $4,672 
D)  $8,064

Question 5

Which of the following is NOT an advantage of bottom-up budgeting as compared to top-down budgeting?

Accepted Answer

A)  Segment managers know the strategic direction 
B)  Segment managers have the best information about current operations 
C)  Participation in the process can lead to positive motivation 
D)  It is good training for managers 
A)  Segment managers know the strategic direction 
B)  Segment managers have the best information about current operations 
C)  Participation in the process can lead to positive motivation 
D)  It is good training for managers

Question 6

Which of the following budgets contains the sales volume (or production) for a service firm?

Accepted Answer

A)  Supplies budget 
B)  Revenue budget 
C)  Overhead budget 
D)  Wages and salaries budget 
A)  Supplies budget 
B)  Revenue budget 
C)  Overhead budget 
D)  Wages and salaries budget

Question 7

Which of the following costs are generally allocated evenly to each quarter?

Accepted Answer

A)  Estimated fixed costs 
B)  Labor costs for part-time employees 
C)  Estimated production costs 
D)  Indirect materials costs 
A)  Estimated fixed costs 
B)  Labor costs for part-time employees 
C)  Estimated production costs 
D)  Indirect materials costs

Question 8

Exhibit 18-2 Makeby Corporation makes sharbees. The following data are available on December 1, 2011:

- Refer to Exhibit 18-2. Given the information above, budgeted production for December is:

Accepted Answer

A)  142 sharbees 
B)  144 sharbees 
C)  146 sharbees 
D)  164 sharbees 
A)  142 sharbees 
B)  144 sharbees 
C)  146 sharbees 
D)  164 sharbees

Question 9

Mark-A-Date Corporation makes pocket and wall calendars. The production budget for the next three months for each of the calendars is as follows:
  
From past experience, Mark-A-Date's management knows that it takes approximately 5 minutes to make a pocket calendar and 3 minutes to make a wall calendar. Mark-A-Date pays its employees $14 per hour. Prepare a direct labor budget for each of the three months in both hours and costs.

Accepted Answer

From past experience, Mark-A-Date's mana

Question 10

Producing outside the relevant range can result in:

Accepted Answer

A)  Expected differences in per-unit variable and total fixed costs 
B)  Higher direct materials costs 
C)  Lower direct labor costs 
D)  Higher manufacturing overhead costs 
A)  Expected differences in per-unit variable and total fixed costs 
B)  Higher direct materials costs 
C)  Lower direct labor costs 
D)  Higher manufacturing overhead costs

Question 11

To develop a budget that has the proper behavioral considerations, management must ensure all of the following EXCEPT:

Accepted Answer

A)  Participation by as many managers and employees as possible 
B)  Constructive response to budget deviations 
C)  Support of the budget process by top management 
D)  Plenty of slack in the budget 
A)  Participation by as many managers and employees as possible 
B)  Constructive response to budget deviations 
C)  Support of the budget process by top management 
D)  Plenty of slack in the budget

Question 12

Burke Corporation had accounts receivable of $44,400 on April 1 and $33,600 on April 30. How much cash was collected from accounts receivable during April if Burke's April sales on account totaled $134,400?

Accepted Answer

A)  $123,600 
B)  $134,400 
C)  $145,200 
D)  $100,800 
A)  $123,600 
B)  $134,400 
C)  $145,200 
D)  $100,800

Question 13

Given the following projected information for Lacey Inc. for 2011, prepare a pro-forma balance sheet and income statement.

Accepted Answer

The answer of Given the following projected information for Lacey...

Question 14

LeMinton Company expects the following credit sales for the first five months of the year: January, $25,000; February, $40,000; March, $30,000; April, $36,000, May $40,000. Experience has shown that payment for the credit sales is received as follows: 60% in the month of sale, 25% in the first month after sale, 12% in the second month after sale, and the remainder is uncollectible. How much cash can LeMinton Company expect to collect in March as a result of credit sales?

Accepted Answer

A)  $18,000 
B)  $28,600 
C)  $30,000 
D)  $31,000 
A)  $18,000 
B)  $28,600 
C)  $30,000 
D)  $31,000

Question 15

Exhibit 18-9 Winthrop Merchandising is preparing its budget for 2011 (its first year of operation). Sales for the year are budgeted at $1,500,000; 20% are cash sales and 80% are credit sales. The company expects to collect 60% of all credit sales in 2011. Budgeted expenses are $1,200,000. These expenditures include $37,500 for depreciation and $745,500 for variable manufacturing overhead.
-
Refer to Exhibit 18-9. Given the information above, total cash outflows for 2011 would be:

Accepted Answer

A)  $417,000 
B)  $454,500 
C)  $1,162,500 
D)  $1,200,000 
A)  $417,000 
B)  $454,500 
C)  $1,162,500 
D)  $1,200,000

Question 16

Exhibit 18-3 Thorne Chemicals makes cleaning solution. The following information is available on December 1, 2011:

- Refer to Exhibit 18-3. Given the information above, the cost of materials used in production for the month of December will be:

Accepted Answer

A)  $3,246 
B)  $3,120 
C)  $3,266 
D)  $994 
A)  $3,246 
B)  $3,120 
C)  $3,266 
D)  $994

Question 17

What is budgetary slack?

Accepted Answer

A)  Deviations from the budget 
B)  A budget with easy targets 
C)  Budget process not supported by top management 
D)  A bottom-up approach to budgeting 
A)  Deviations from the budget 
B)  A budget with easy targets 
C)  Budget process not supported by top management 
D)  A bottom-up approach to budgeting

Question 18

A pro-forma income statement usually includes all of the following EXCEPT:

Accepted Answer

A)  Budgeted selling and administrative expenses 
B)  Budgeted sales revenue 
C)  Budgeted operating expenses 
D)  Budgeted capital expenditures 
A)  Budgeted selling and administrative expenses 
B)  Budgeted sales revenue 
C)  Budgeted operating expenses 
D)  Budgeted capital expenditures

Question 19

The master budget includes all the following schedules EXCEPT the:

Accepted Answer

A)  Capital expenditures budget 
B)  Production budget 
C)  Selling and administrative expense budget 
D)  Direct materials budget 
A)  Capital expenditures budget 
B)  Production budget 
C)  Selling and administrative expense budget 
D)  Direct materials budget

Question 20

When determining the amount of cash payments for manufacturing overhead, which costs are removed from the budgeted manufacturing overhead?

Accepted Answer

A)  Depreciation 
B)  Direct labor 
C)  Direct materials 
D)  Sales commissions 
A)  Depreciation 
B)  Direct labor 
C)  Direct materials 
D)  Sales commissions

Exam 18: Budgeting and Control

Which of the following budget development approaches can be used by management?

If it takes 20 hours to make a boat motor and direct labor employees are paid $10 per hour, how much does it cost for labor to make 100 motors?

Percy's Plants plans to sell 500 tomato plants during April. If it currently has 60 tomato plants on hand and must maintain an inventory of 90, how many tomato plants must the firm purchase during April?

Exhibit 18-2 Makeby Corporation makes sharbees. The following data are available on December 1, 2011: -Refer to Exhibit 18-2. Given the information above, cost of materials to be used in December is:

Which of the following is NOT an advantage of bottom-up budgeting as compared to top-down budgeting?

Which of the following budgets contains the sales volume (or production) for a service firm?

Which of the following costs are generally allocated evenly to each quarter?

Exhibit 18-2 Makeby Corporation makes sharbees. The following data are available on December 1, 2011: - Refer to Exhibit 18-2. Given the information above, budgeted production for December is:

Producing outside the relevant range can result in:

To develop a budget that has the proper behavioral considerations, management must ensure all of the following EXCEPT:

Burke Corporation had accounts receivable of $44,400 on April 1 and $33,600 on April 30. How much cash was collected from accounts receivable during April if Burke's April sales on account totaled $134,400?

Given the following projected information for Lacey Inc. for 2011, prepare a pro-forma balance sheet and income statement.

Exhibit 18-3 Thorne Chemicals makes cleaning solution. The following information is available on December 1, 2011: - Refer to Exhibit 18-3. Given the information above, the cost of materials used in production for the month of December will be:

What is budgetary slack?

A pro-forma income statement usually includes all of the following EXCEPT:

The master budget includes all the following schedules EXCEPT the:

When determining the amount of cash payments for manufacturing overhead, which costs are removed from the budgeted manufacturing overhead?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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