Question 1

In the cash budget, the cash excess (surplus) or deficiency (deficit) is calculated using which of the following formulas?

Accepted Answer

A)  beginning cash + receipts - disbursements 
B)  beginning cash + receipts - disbursements - minimum cash balance + loan proceeds 
C)  beginning cash + receipts - disbursements - minimum cash balance 
D)  total cash needed - cash disbursements 
A)  beginning cash + receipts - disbursements 
B)  beginning cash + receipts - disbursements - minimum cash balance + loan proceeds 
C)  beginning cash + receipts - disbursements - minimum cash balance 
D)  total cash needed - cash disbursements

Question 2

Which of the following is a financial budget?

Accepted Answer

A)  budgeted balance sheet 
B)  cash receivables budget 
C)  production budget 
D)  cost of goods sold budget 
A)  budgeted balance sheet 
B)  cash receivables budget 
C)  production budget 
D)  cost of goods sold budget

Question 3

Which of the following is referred to as the bottom-up aspect of the budgeting process?

Accepted Answer

A)  lower-level managers setting their individual targets that aggregate to be the company-wide target 
B)  senior managers consulting middle- and lower-level managers to investigate any deviations from the budget 
C)  lower-level managers implementing the budgets with senior managers monitoring progress and investigating deviations 
D)  lower-level managers providing inputs to the budgeting process based on their specialized knowledge and familiarity of the operation 
A)  lower-level managers setting their individual targets that aggregate to be the company-wide target 
B)  senior managers consulting middle- and lower-level managers to investigate any deviations from the budget 
C)  lower-level managers implementing the budgets with senior managers monitoring progress and investigating deviations 
D)  lower-level managers providing inputs to the budgeting process based on their specialized knowledge and familiarity of the operation

Question 4

Budgets are sometimes called targets or commitments by some companies and as such are "set in stone" to provide effective benchmarks for management.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true of responsibility accounting?

Accepted Answer

A)  It is a system that measures the plans, budgets, actions, and actual results of a responsibility center. 
B)  It is an arrangement of lines of responsibility and authority within a responsibility center. 
C)  It explicitly incorporates continuous improvement and changes due to learning curve. 
D)  It examines how a result will change if the original plan is not achieved. 
A)  It is a system that measures the plans, budgets, actions, and actual results of a responsibility center. 
B)  It is an arrangement of lines of responsibility and authority within a responsibility center. 
C)  It explicitly incorporates continuous improvement and changes due to learning curve. 
D)  It examines how a result will change if the original plan is not achieved.

Question 6

In the cash budget, the total cash available for needs is calculated using which of the following formulas?

Accepted Answer

A)  ending cash + receipts 
B)  beginning cash + receipts 
C)  beginning cash + receipts - disbursements 
D)  beginning cash + projected depreciation expense 
A)  ending cash + receipts 
B)  beginning cash + receipts 
C)  beginning cash + receipts - disbursements 
D)  beginning cash + projected depreciation expense

Question 7

When the operating budget is used as a control device, managers are less likely to be motivated to budget higher sales than actually anticipated.

Accepted Answer

A) True 
 B)False

Question 8

Activity-based budgeting, with its focus on cost drivers and the cost of activities, provides better decision-making information than budgeting based solely on output-based cost drivers (units produced, units sold, or revenues).

Accepted Answer

A) True 
 B)False

Question 9

J & S Manufacturing expects to produce and sell 13,000 units of Big, its only product, for $20 each. Direct material cost is $3 per unit, direct labor cost is $14 per unit, and variable manufacturing overhead is $10 per unit. Fixed manufacturing overhead is $26,000 in total. Variable selling and administrative expenses are $3 per unit, and fixed selling and administrative costs are $3,000 in total. According to generally accepted accounting principles, inventoriable cost per unit of Big would be ________.

Accepted Answer

A)  $17.00 per unit 
B)  $20.00 per unit 
C)  $29.00 per unit 
D)  $27.00 per unit 
A)  $17.00 per unit 
B)  $20.00 per unit 
C)  $29.00 per unit 
D)  $27.00 per unit

Question 10

Antique Brass Company has budgeted sales volume of 122,000 units and budgeted production of 114,000 units, while 24,000 units are in beginning finished goods inventory. How many units are targeted for ending finished goods inventory?

Accepted Answer

A)  24,000 units 
B)  32,000 units 
C)  8,000 units 
D)  16,000 units 
A)  24,000 units 
B)  32,000 units 
C)  8,000 units 
D)  16,000 units

Question 11

Which of the following statements is true in the case of budgeting for multinational companies?

Accepted Answer

A)  While budgeting for multinational companies, managers consider difference in tax statutes as an uncontrollable factor. 
B)  While budgeting for multinational companies, managers do not account for foreign exchange fluctuations as the operating profits are reported in different currencies. 
C)  While budgeting for multinational companies, managers must be aware that budgets will not be used for evaluating performance. 
D)  While budgeting for multinational companies, managers are not concerned about the domestic factors of the different countries in which they operate. 
A)  While budgeting for multinational companies, managers consider difference in tax statutes as an uncontrollable factor. 
B)  While budgeting for multinational companies, managers do not account for foreign exchange fluctuations as the operating profits are reported in different currencies. 
C)  While budgeting for multinational companies, managers must be aware that budgets will not be used for evaluating performance. 
D)  While budgeting for multinational companies, managers are not concerned about the domestic factors of the different countries in which they operate.

Question 12

The following information pertains to Monroe Company:
 
-Cash is collected from customers in the following manner:
Month of sale35%
Month following the sale65%
-40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
-Labor costs are 30% of sales. Other operating costs are $38,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred.
-The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.
How much cash will be paid to suppliers in March?

Accepted Answer

A)  $46,400 
B)  $56,000 
C)  $96,000 
D)  $102,400 
A)  $46,400 
B)  $56,000 
C)  $96,000 
D)  $102,400

Question 13

Which one of the following budgets would be prepared using activity based budgeting techniques?

Accepted Answer

A)  direct materials purchase budget 
B)  revenues budget 
C)  manufacturing overhead cost budget 
D)  production budget 
A)  direct materials purchase budget 
B)  revenues budget 
C)  manufacturing overhead cost budget 
D)  production budget

Question 14

Budgeting based on cost for specific activities is a key building block of the master budget for companies that use the Kaizen approach.

Accepted Answer

A) True 
 B)False

Question 15

Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,200 units of Prime and 1,300 units of Luxuria in 2019.The following estimates are given for 2019:
 
Nantucket had an inventory of 230 units of Prime and 85 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 370 units of Prime and 200 units of Luxuria.
Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $11. There were 140 units of Crimpson in stock at the end of 2018.The management does not want to have any stock of Crimpson at the end of 2019.
How many units of Prime watches must be produced in 2019?

Accepted Answer

A)  3,570 units 
B)  3,340 units 
C)  3,200 units 
D)  2,970 units 
A)  3,570 units 
B)  3,340 units 
C)  3,200 units 
D)  2,970 units

Question 16

Bradford, Inc., expects to sell 6,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $10, and manufacturing overhead is $3 per vase. The following inventory levels apply to 2019:
 
How many ceramic vases should be produced in 2019?

Accepted Answer

A)  5,800 vases 
B)  6,200 vases 
C)  11,000 vases 
D)  6,000 vases 
A)  5,800 vases 
B)  6,200 vases 
C)  11,000 vases 
D)  6,000 vases

Question 17

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget.
1.Capital expenditures budget
2.Cost of goods sold budget
3.Revenues budget
4.Budgeted statement of cash flows
5.Distribution costs budget
6.Marketing costs budget
7.Cash budget
8.Direct materials cost budget
9.Budgeted balance sheet
10.Budgeted income statement

Accepted Answer

1.F
2.O
3.

Question 18

Bottom-up budgets entrusts senior managers to prepare budgets and lower-level managers to execute them.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following departments is most likely to be a cost center?

Accepted Answer

A)  sales department of a company selling industrial tools 
B)  call center of a company that serves customers and cross-sells other products 
C)  maintenance department of a luxury resort 
D)  research department of a company providing consultancy services 
A)  sales department of a company selling industrial tools 
B)  call center of a company that serves customers and cross-sells other products 
C)  maintenance department of a luxury resort 
D)  research department of a company providing consultancy services

Question 20

Freemore Company has the following sales budget for the last six months of 2018:
 
Sales are immediately due, however the cash collection of sales, historically, has been as follows:
55% of sales collected in the month of sale,
35% of sales collected in the month following the sale,
7% of sales collected in the second month following the sale, and
3% of sales are uncollectible.
Cash collections for October are ________.

Accepted Answer

A)  $102,850 
B)  $186,360 
C)  $199,450 
D)  $181,390 
A)  $102,850 
B)  $186,360 
C)  $199,450 
D)  $181,390

In the cash budget, the cash excess (surplus) or deficiency (deficit) is calculated using which of the following formulas?

Which of the following is a financial budget?

Which of the following is referred to as the bottom-up aspect of the budgeting process?

Budgets are sometimes called targets or commitments by some companies and as such are "set in stone" to provide effective benchmarks for management.

Which of the following is true of responsibility accounting?

In the cash budget, the total cash available for needs is calculated using which of the following formulas?

When the operating budget is used as a control device, managers are less likely to be motivated to budget higher sales than actually anticipated.

Activity-based budgeting, with its focus on cost drivers and the cost of activities, provides better decision-making information than budgeting based solely on output-based cost drivers (units produced, units sold, or revenues).

Antique Brass Company has budgeted sales volume of 122,000 units and budgeted production of 114,000 units, while 24,000 units are in beginning finished goods inventory. How many units are targeted for ending finished goods inventory?

Which of the following statements is true in the case of budgeting for multinational companies?

Which one of the following budgets would be prepared using activity based budgeting techniques?

Budgeting based on cost for specific activities is a key building block of the master budget for companies that use the Kaizen approach.

Bradford, Inc., expects to sell 6,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $10, and manufacturing overhead is $3 per vase. The following inventory levels apply to 2019: How many ceramic vases should be produced in 2019?

Bottom-up budgets entrusts senior managers to prepare budgets and lower-level managers to execute them.

Which of the following departments is most likely to be a cost center?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 6: Master Budget and Responsibility Accounting

In the cash budget, the cash excess (surplus) or deficiency (deficit) is calculated using which of the following formulas?

Which of the following is a financial budget?

Which of the following is referred to as the bottom-up aspect of the budgeting process?

Budgets are sometimes called targets or commitments by some companies and as such are "set in stone" to provide effective benchmarks for management.

Which of the following is true of responsibility accounting?

In the cash budget, the total cash available for needs is calculated using which of the following formulas?

When the operating budget is used as a control device, managers are less likely to be motivated to budget higher sales than actually anticipated.

Activity-based budgeting, with its focus on cost drivers and the cost of activities, provides better decision-making information than budgeting based solely on output-based cost drivers (units produced, units sold, or revenues).

Antique Brass Company has budgeted sales volume of 122,000 units and budgeted production of 114,000 units, while 24,000 units are in beginning finished goods inventory. How many units are targeted for ending finished goods inventory?

Which of the following statements is true in the case of budgeting for multinational companies?

Which one of the following budgets would be prepared using activity based budgeting techniques?

Budgeting based on cost for specific activities is a key building block of the master budget for companies that use the Kaizen approach.

Bradford, Inc., expects to sell 6,000 ceramic vases for $21 each. Direct materials costs are $3, direct manufacturing labor is $10, and manufacturing overhead is $3 per vase. The following inventory levels apply to 2019: How many ceramic vases should be produced in 2019?

Bottom-up budgets entrusts senior managers to prepare budgets and lower-level managers to execute them.

Which of the following departments is most likely to be a cost center?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters