Question 1

Regarding the budgeting process, which of the following statements is true?

Accepted Answer

A) The budget should always be designed by top corporate management. 
B) The budget should be approved by the company's external auditors. 
C) The budget should be designed from the bottom up, with input from employees at all levels. 
D) All of the listed statements are true regarding the budgeting process. 
A) The budget should always be designed by top corporate management. 
B) The budget should be approved by the company's external auditors. 
C) The budget should be designed from the bottom up, with input from employees at all levels. 
D) All of the listed statements are true regarding the budgeting process. C

Question 2

SportSupplies Corporation has budgeted purchases of inventory for December of $140,000. Expected beginning inventory on December 1 and ending inventory on December 31 are $90,000 and $120,000, respectively. If cost of goods sold averages 88% of sales, what are budgeted sales for December?

Accepted Answer

A) $125,000 
B) $96,800 
C) $193,182 
D) $397,727 
A) $125,000 
B) $96,800 
C) $193,182 
D) $397,727 A

Question 3

Eastern Corporation collects 10% in the second month following sale, 55% in the month following sale and 35% of a month's sales in the month of sale. Budgeted sales for the upcoming four months are:   The amount of cash that will be collected in July is budgeted to be

Accepted Answer

A) $63,000. 
B) $204,500. 
C) $173,000. 
D) $197,000. 
A) $63,000. 
B) $204,500. 
C) $173,000. 
D) $197,000. B

Question 4

Purchases for May were $60,000, while expected purchases for June and July are $75,000 and $92,000, respectively. All purchases are paid 35% in the month of purchase and 65% the following month. At what amount are June payments for purchases budgeted?

Accepted Answer

A) $69,750 
B) $65,250 
C) $86,050 
D) $97,450 
A) $69,750 
B) $65,250 
C) $86,050 
D) $97,450

Question 5

All of the following budgets are prepared by service companies except

Accepted Answer

A) cost of goods sold, inventory and purchases. 
B) cash. 
C) operating expense. 
D) sales. 
A) cost of goods sold, inventory and purchases. 
B) cash. 
C) operating expense. 
D) sales.

Question 6

The financial budgets prepared for manufacturers are different than those for merchandising and service companies.

Accepted Answer

A) True 
 B)False

Question 7

A rolling budget is a budget that

Accepted Answer

A) extends 5-10 years into the future. 
B) is continuously updated, so that the next 12 months of operations are always budgeted. 
C) begins with zero for each expense, and then amounts are added in. 
D) is rolled out by upper management. 
A) extends 5-10 years into the future. 
B) is continuously updated, so that the next 12 months of operations are always budgeted. 
C) begins with zero for each expense, and then amounts are added in. 
D) is rolled out by upper management.

Question 8

Sander Enterprises prepared the following sales budget:   The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
What is the budgeted cost of goods sold for May?

Accepted Answer

A) $7,200 
B) $4,800 
C) $2,400 
D) $8,400 
A) $7,200 
B) $4,800 
C) $2,400 
D) $8,400

Question 9

The three components of the operating budget are the sales budget; inventory, purchases and cost of goods sold budget; and the cash budget.

Accepted Answer

A) True 
 B)False

Question 10

Lough Company prepared the following purchases budget:   All purchases are paid for as follows: 20% two months after purchase, 55% in the following month, and 25% in the month of purchase.
What are the total cash disbursements in October for the purchase of merchandise?

Accepted Answer

A) $12,275 
B) $37,575 
C) $41,550 
D) $45,495 
A) $12,275 
B) $37,575 
C) $41,550 
D) $45,495

Question 11

Which of the following is a benefit of budgeting?

Accepted Answer

A) Focuses management's attention on the future 
B) Improved decision-making processes 
C) Improved motivation by employees 
D) All of the above 
A) Focuses management's attention on the future 
B) Improved decision-making processes 
C) Improved motivation by employees 
D) All of the above

Question 12

Which of the following budgets is a major part of the master budget and focuses on the income statement and its supporting schedules?

Accepted Answer

A) cash 
B) operating 
C) capital expenditures 
D) financial 
A) cash 
B) operating 
C) capital expenditures 
D) financial

Question 13

McCoy Company wants to have an ending inventory of 7,000 units. McCoy Company has beginning inventory of 9,000 units and expects to sell 33,000 units. How many units should McCoy Company produce?

Accepted Answer

A) 31,000 
B) 35,000 
C) 49,000 
D) 40,000 
A) 31,000 
B) 35,000 
C) 49,000 
D) 40,000

Question 14

The cash budget is prepared before the budgeted balance sheet is prepared.

Accepted Answer

A) True 
 B)False

Question 15

PotatoState Manufacturing is preparing its cash payments budget for the coming month. The following information pertains to the cash payments:
a. PotatoState Manufacturing pays for 70% of its direct materials purchases in the month of purchase and the remainder the following month. Last month's direct material purchases were $40,000, while FirstState Manufacturing anticipates $45,000 of direct material purchases this coming month.
b. Direct labor for the upcoming month is budgeted to be $25,000 and will be paid at the end of the upcoming month.
c. Overhead is estimated to be 150% of direct labor cost each month and is paid in the month in which it is incurred. This monthly estimate includes $8,000 of depreciation on the plant and equipment.
d. Monthly operating expenses for next month are expected to be $27,500, which includes $1,500 of depreciation on office equipment and $2,000 of bad debt expense. These monthly operating expenses are paid during the month in which they are incurred.
e. PotatoState Manufacturing will be making an estimated tax payment of $6,000 next month.
Required:
Prepare a cash payments budget for the month.

Accepted Answer

The answer of PotatoState Manufacturing is preparing its cash payments...

Question 16

Fosnight Enterprises prepared the following sales budget:   The expected gross profit rate is 30% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
What is the budgeted cost of goods sold for May?

Accepted Answer

A) $3,600 
B) $4,200 
C) $2,400 
D) $8,400 
A) $3,600 
B) $4,200 
C) $2,400 
D) $8,400

Question 17

Wriston Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $12,000. Budgeted cash disbursements are $70,500, while budgeted cash receipts are $86,100. Wriston Company wants to have an ending cash balance of $40,000. The excess (deficiency)of cash available over disbursements for the month would be

Accepted Answer

A) $27,600. 
B) $168,600. 
C) $(27,600). 
D) $110,500. 
A) $27,600. 
B) $168,600. 
C) $(27,600). 
D) $110,500.

Question 18

Victoria Corporation manufactures quality vases. Budgeted sales and production data for the vases are as follows:   The ending inventory for each month should be equal to 20% of the next month's production needs. Each vase requires one pound of clay in its manufacture. Victoria Corporation has a policy that the inventory of clay at the end of each month needs to be equal to 20% of the production needs for the following month. At the beginning of January, 480 pounds of clay were in inventory. How many pounds of clay would Victoria Corporation need to purchase in February?

Accepted Answer

A) 2,660 
B) 2,940 
C) 3,620 
D) 2,840 
A) 2,660 
B) 2,940 
C) 3,620 
D) 2,840

Question 19

Lakewood Jet Skis has budgeted sales for June and July at $420,000 and $480,000, respectively. Sales are 75% credit, of which 40% is collected in the month of sale and 60% is collected in the following month. What is the accounts receivable balance on July 31?

Accepted Answer

A) $189,000 
B) $288,000 
C) $216,000 
D) $360,000 
A) $189,000 
B) $288,000 
C) $216,000 
D) $360,000

Question 20

Strategic planning involves setting short-term goals extending three to four months into the future.

Accepted Answer

A) True 
 B)False

Regarding the budgeting process, which of the following statements is true?

SportSupplies Corporation has budgeted purchases of inventory for December of $140,000. Expected beginning inventory on December 1 and ending inventory on December 31 are $90,000 and $120,000, respectively. If cost of goods sold averages 88% of sales, what are budgeted sales for December?

Eastern Corporation collects 10% in the second month following sale, 55% in the month following sale and 35% of a month's sales in the month of sale. Budgeted sales for the upcoming four months are: The amount of cash that will be collected in July is budgeted to be

Purchases for May were $60,000, while expected purchases for June and July are $75,000 and $92,000, respectively. All purchases are paid 35% in the month of purchase and 65% the following month. At what amount are June payments for purchases budgeted?

All of the following budgets are prepared by service companies except

The financial budgets prepared for manufacturers are different than those for merchandising and service companies.

A rolling budget is a budget that

Sander Enterprises prepared the following sales budget: The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What is the budgeted cost of goods sold for May?

The three components of the operating budget are the sales budget; inventory, purchases and cost of goods sold budget; and the cash budget.

Lough Company prepared the following purchases budget: All purchases are paid for as follows: 20% two months after purchase, 55% in the following month, and 25% in the month of purchase. What are the total cash disbursements in October for the purchase of merchandise?

Which of the following is a benefit of budgeting?

Which of the following budgets is a major part of the master budget and focuses on the income statement and its supporting schedules?

McCoy Company wants to have an ending inventory of 7,000 units. McCoy Company has beginning inventory of 9,000 units and expects to sell 33,000 units. How many units should McCoy Company produce?

The cash budget is prepared before the budgeted balance sheet is prepared.

Fosnight Enterprises prepared the following sales budget: The expected gross profit rate is 30% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What is the budgeted cost of goods sold for May?

Lakewood Jet Skis has budgeted sales for June and July at $420,000 and $480,000, respectively. Sales are 75% credit, of which 40% is collected in the month of sale and 60% is collected in the following month. What is the accounts receivable balance on July 31?

Strategic planning involves setting short-term goals extending three to four months into the future.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 9: The Master Budget

Regarding the budgeting process, which of the following statements is true?

SportSupplies Corporation has budgeted purchases of inventory for December of $140,000. Expected beginning inventory on December 1 and ending inventory on December 31 are $90,000 and $120,000, respectively. If cost of goods sold averages 88% of sales, what are budgeted sales for December?

Eastern Corporation collects 10% in the second month following sale, 55% in the month following sale and 35% of a month's sales in the month of sale. Budgeted sales for the upcoming four months are: The amount of cash that will be collected in July is budgeted to be

Purchases for May were $60,000, while expected purchases for June and July are $75,000 and $92,000, respectively. All purchases are paid 35% in the month of purchase and 65% the following month. At what amount are June payments for purchases budgeted?

All of the following budgets are prepared by service companies except

The financial budgets prepared for manufacturers are different than those for merchandising and service companies.

A rolling budget is a budget that

Sander Enterprises prepared the following sales budget: The expected gross profit rate is 40% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What is the budgeted cost of goods sold for May?

The three components of the operating budget are the sales budget; inventory, purchases and cost of goods sold budget; and the cash budget.

Lough Company prepared the following purchases budget: All purchases are paid for as follows: 20% two months after purchase, 55% in the following month, and 25% in the month of purchase. What are the total cash disbursements in October for the purchase of merchandise?

Which of the following is a benefit of budgeting?

Which of the following budgets is a major part of the master budget and focuses on the income statement and its supporting schedules?

McCoy Company wants to have an ending inventory of 7,000 units. McCoy Company has beginning inventory of 9,000 units and expects to sell 33,000 units. How many units should McCoy Company produce?

The cash budget is prepared before the budgeted balance sheet is prepared.

Fosnight Enterprises prepared the following sales budget: The expected gross profit rate is 30% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What is the budgeted cost of goods sold for May?

Lakewood Jet Skis has budgeted sales for June and July at $420,000 and $480,000, respectively. Sales are 75% credit, of which 40% is collected in the month of sale and 60% is collected in the following month. What is the accounts receivable balance on July 31?

Strategic planning involves setting short-term goals extending three to four months into the future.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters