Question 1

Which of the following budgets would be prepared by manufacturing companies but not merchandising companies?

Accepted Answer

A)  Sales budget 
B)  Cash receipts budget 
C)  Production budget 
D)  Selling and administrative expenses budget 
A)  Sales budget 
B)  Cash receipts budget 
C)  Production budget 
D)  Selling and administrative expenses budget

Question 2

Other than prior years' sales,list two other factors that are often used in the development of a sales forecast.

Accepted Answer

Factors include: (pick two)
 ?Historical

Question 3

Which of the following statements regarding cash flows is true?

Accepted Answer

A)  Many managers consider cash flow budgets to be the least important of all the budgets. 
B)  As long as accounting revenues exceed accounting expenses,cash flow budgets do not have to be prepared. 
C)  It is possible for cash receipts to exceed revenues earned in a given month. 
D)  As long as a manager is confident that there will eventually be a cash receipt from a customer,the timing of the cash receipt is not important. 
A)  Many managers consider cash flow budgets to be the least important of all the budgets. 
B)  As long as accounting revenues exceed accounting expenses,cash flow budgets do not have to be prepared. 
C)  It is possible for cash receipts to exceed revenues earned in a given month. 
D)  As long as a manager is confident that there will eventually be a cash receipt from a customer,the timing of the cash receipt is not important.

Question 4

Cicero Manufacturing Inc.sells gloves at local ski resorts during the winter months.Each pair of gloves sells for $15.The following sales forecast (in units)has been prepared for October 2008 through March 2009:
$\begin{array}{lr}
\text { October } & 500 \
\text { November } & 800 \
\text { December } & 1000 \
\text { January } & 1200 \
\text { February } & 900 \
\text { March } & 600
\end{array}$ 
Historically,the cash collection of sales has been as follows: 60 per cent in the month of sale,35 per cent in the month following sale,and 4 per cent in the second month following sale.The remaining 1 per cent is uncollectible.
Cash receipts for January are expected to be:

Accepted Answer

A)  $13 170 
B)  $51 975 
C)  $10 800 
D)  $16 530 
A)  $13 170 
B)  $51 975 
C)  $10 800 
D)  $16 530

Question 5

Which of the following statements regarding budgeting is false?

Accepted Answer

A)  The focus of budgeting is planning. 
B)  Many companies use enterprise resource planning (ERP)systems as a budgeting tool. 
C)  Budgeting is a bookkeeping task. 
D)  Budgeting helps managers determine the resources needed to meet their goals and objectives. 
A)  The focus of budgeting is planning. 
B)  Many companies use enterprise resource planning (ERP)systems as a budgeting tool. 
C)  Budgeting is a bookkeeping task. 
D)  Budgeting helps managers determine the resources needed to meet their goals and objectives.

Question 6

Global Products produces and sells limited edition decorative plates.The company's controller has the following information available from the static budget of one of the product lines for the month of April:
$\begin{array}{lr}
\text { Estimated production } & 2000 \text { units } \
\text { Direct material per unit } & 10 \text { ounces } \
\text { Direct material cost per unit } & \$ .25 \text { per ounce }
\end{array}$

Actual production during April was 1900 units and actual direct materials cost was $4940.
If the company prepares a flexible budget for April,direct materials cost is estimated to be:

Accepted Answer

A)  $5200 
B)  $4940 
C)  $5000 
D)  $4750 
A)  $5200 
B)  $4940 
C)  $5000 
D)  $4750

Question 7

Newman Products is preparing their first quarter production budget.The desired ending inventory of finished goods for the month of January becomes:

Accepted Answer

A)  the required production for the month of January. 
B)  the budgeted sales for the month of February. 
C)  the beginning inventory for the month of February. 
D)  the required production for the month of February. 
A)  the required production for the month of January. 
B)  the budgeted sales for the month of February. 
C)  the beginning inventory for the month of February. 
D)  the required production for the month of February.

Question 8

In order to prepare a sales budget,a _______________ is required.

Accepted Answer

A)  production budget 
B)  sales forecast 
C)  static budget 
D)  flexible budget 
A)  production budget 
B)  sales forecast 
C)  static budget 
D)  flexible budget

Question 9

Ingalls Mercantile Inc.sells bolts of fabric to retailers for $80 per bolt.The company's accountant has prepared the following sales forecast (in bolts)for the first quarter of 2009:
$\begin{array}{lr}
\text { January } & 600 \text { bolts } \
\text { February } & 1000 \text { bolts } \
\text { March } & 700 \text { bolts }
\end{array}$ 
Historically,the cash collection of sales has been as follows: 60 per cent in the month of sale,30 per cent in the month following sale,and 9 per cent in the second month following sale.
Cash receipts for March are expected to be:

Accepted Answer

A)  $ 61 920 
B)  $182 160 
C)  $ 33 600 
D)  $ 57 840 
A)  $ 61 920 
B)  $182 160 
C)  $ 33 600 
D)  $ 57 840

Question 10

Which of the following statements is true regarding budgeting?

Accepted Answer

A)  It is primarily focused on past performance. 
B)  It is primarily a bookkeeping task. 
C)  It should be built from the ground up each year. 
D)  It involves input from a broad range of managers. 
A)  It is primarily focused on past performance. 
B)  It is primarily a bookkeeping task. 
C)  It should be built from the ground up each year. 
D)  It involves input from a broad range of managers.

Question 11

Dante Enterprises sells hot sauce to restaurants throughout the south.Dante sells each jar of hot sauce for $.90.The company's accountant has prepared the following sales forecast (in units)for the fourth quarter of the current year:
$$\begin{array} { l c } 
\text { October } & \text { 8000 urits } \
\text { November } & 15 \text { d00 urits } \
\text { December } & 18000 \text { urite }
\end{array}$$ 
Historically,the cash collection of sales has been as follows: 40 per cent in the month of sale,50 per cent in the month following sale,and 10 per cent in the second month following sale.
Required: Compute projected cash receipts for the month of December.

Accepted Answer

None

Question 12

The usual starting point when developing a sales forecast is:

Accepted Answer

A)  the production budget. 
B)  the cash budget. 
C)  last year's level of sales. 
D)  competitor budget information. 
A)  the production budget. 
B)  the cash budget. 
C)  last year's level of sales. 
D)  competitor budget information.

Question 13

Colorado Springs Ltd.produces and sells bottled water.The company's controller has the following information available from the static budget of one of the product lines for the month of April:
$\begin{array}{lr}
\text { Estimated production } & 20000 \text { units } \
\text { Direct material per unit } & 2 \text { ounces } \
\text { Direct material cost per unit } & \$ .15 \text { per ounce }
\end{array}$

Actual production during April was 18 000 units and actual direct materials cost was $6300.
If the company prepares a flexible budget for April,direct materials cost is estimated to be:

Accepted Answer

A)  $7000 
B)  $6300 
C)  $5400 
D)  $6000 
A)  $7000 
B)  $6300 
C)  $5400 
D)  $6000

Question 14

Franklin Corp.sells glass vases to various florists throughout the country.Each vase sells for $.50.The following sales forecast (in units)has been prepared for the first six months of 2009:
$$\begin{array} { l l } 
\text { January } & 3000 \
\text { February } & 6000 \
\text { March } & 5000 \
\text { April } & 3000 \
\text { May } & 5000 \
\text { June } & 2000
\end{array}$$ 
Historically,the cash collection of sales has been as follows: 60 per cent in the month of sale,35 per cent in the month following sale,and 4 per cent in the second month following sale.The remaining 1 per cent is uncollectible.
Required: Prepare a cash receipts budget for the second quarter of 2009 (April through June).

Accepted Answer

The answer of Franklin Corp.sells glass vases to various florists...

Question 15

Prior to the start of 2009,Proctor Inc.estimated budgeted sales at 225 000 units.At the start of 2009,there were 8000 units in beginning finished goods.During 2009,215 000 units were produced and 220 000 units were sold.How many units should Proctor's 2009 flexible sales budget be based upon?

Accepted Answer

A)  225 000 
B)  220 000 
C)  215 000 
D)  212 000 
A)  225 000 
B)  220 000 
C)  215 000 
D)  212 000

Question 16

Cash paid for the retirement of long-term debt will be shown:

Accepted Answer

A)  in the financing activity section of the cash summary budget. 
B)  in the investing activity section of the cash summary budget. 
C)  on the cash disbursements budget. 
D)  in the operating activity section of the cash summary budget. 
A)  in the financing activity section of the cash summary budget. 
B)  in the investing activity section of the cash summary budget. 
C)  on the cash disbursements budget. 
D)  in the operating activity section of the cash summary budget.

Question 17

Homestyle Interiors sells a variety of home furnishings including sleeper sofas.At 31 March,the company had 400 sofas in inventory.The company's policy is to maintain a sleeper sofa inventory equal to 2 per cent of next month's sales.The company expects the following sales activity for the second quarter of the year:
$\begin{array}{ll}
\text { April } & 1000 \text { sofas } \
\text { May } & 1400 \text { sofas } \
\text { June } & 2000 \text { sofas }
\end{array}$

What is the projected production for May?

Accepted Answer

A)  1332 sofas 
B)  1468 sofas 
C)  1388 sofas 
D)  1412 sofas 
A)  1332 sofas 
B)  1468 sofas 
C)  1388 sofas 
D)  1412 sofas

Question 18

DSP Products Inc.makes and sells boat tarps.The purchasing manager has prepared the production budget for the second quarter of 2009 as follows:
$$\begin{array} { l l } 
\text { April } & \text { 2500 urits } \
\text { May } & 4000 \text { urits } \
\text { June } & 6800 \

\end{array}$$ 
Production for both July and August is expected to be 7000 units each.Each completed unit of finished product requires 50 metres of a heavy-duty plastic material which costs $1.40 per metre.The company has determined that it needs 15 per cent of next month's raw material needs on hand at the end of each month.The company had 18 750 metres of plastic material on hand at the end of March.
It is the company's policy to pay for one-half of a month's direct materials purchases in the month of purchase and the remainder in the following month.
Required:
 A. Prepare a direct matenals purchases budget for the second quarter of 2009.
B. Assuming all cash disbursements in the month of June will be for direct materials, prepare a cash disbursements budget for the month of June.

Accepted Answer

None

Question 19

In September of 2009,Mitford Products Inc.began doing business as a corporation.The company plans to start making its first purchases in October of 2009.They have the following purchases budgeted for the last quarter of 2009:
$\begin{array}{lr}
\text { October } & \$ 850000 \
\text { November } & 600000 \
\text { December } & 720000
\end{array}$ 
Mitford has worked out agreements with its various suppliers to pay for one-third of a month's purchases each month,beginning in the month of purchase,until the purchases are paid in full.No purchases were made prior to October.
What are expected total cash disbursements for the last quarter of 2009?

Accepted Answer

A)  $1 490 000 
B)  $ 723 333 
C)  $1 006 667 
D)  $1 446 667 
A)  $1 490 000 
B)  $ 723 333 
C)  $1 006 667 
D)  $1 446 667

Question 20

Keep-it-Hot Inc.manufactures popular thermos flasks.On 30 June,the company had 1000 thermos flasks in inventory.Each thermos sells for $8.00.The company's policy is to maintain a thermos inventory equal to 10 per cent of next month's sales.The company expects the following sales activity for the third quarter of the year:
$\begin{array}{lc}
\text { July } & 7000 \text { units } \
\text { August } & 15000 \text { units } \
\text { September } & 10000 \text { units }
\end{array}$  
In addition,October's sales are expected to be 9000 units.
Required:
A. Prepare a sales budget for the third quarter of the year.
B. Prepare a production budget for the third quarter of the year

Accepted Answer

None

Which of the following budgets would be prepared by manufacturing companies but not merchandising companies?

Other than prior years' sales,list two other factors that are often used in the development of a sales forecast.

Which of the following statements regarding cash flows is true?

Which of the following statements regarding budgeting is false?

Newman Products is preparing their first quarter production budget.The desired ending inventory of finished goods for the month of January becomes:

In order to prepare a sales budget,a _______________ is required.

Which of the following statements is true regarding budgeting?

The usual starting point when developing a sales forecast is:

Prior to the start of 2009,Proctor Inc.estimated budgeted sales at 225 000 units.At the start of 2009,there were 8000 units in beginning finished goods.During 2009,215 000 units were produced and 220 000 units were sold.How many units should Proctor's 2009 flexible sales budget be based upon?

Cash paid for the retirement of long-term debt will be shown:

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, cost Terminology and Cost Flows

Cost Behaviour

Job Costing and Overhead Costing Systems

Process Costing Systems

Service and Operations Costing

Departmental Overhead Costing

Activity-Based Costing

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investmentdecisions

Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis

Decentralisation and Modern Performance Management Systems the Balanced Scorecard

Accounting for Sustainability Social Reporting,environmental Reporting and Management Accounting

Filters

Exam 12: Fixed and Rolling Budgets for Planning and Decision Making

Which of the following budgets would be prepared by manufacturing companies but not merchandising companies?

Other than prior years' sales,list two other factors that are often used in the development of a sales forecast.

Which of the following statements regarding cash flows is true?

Which of the following statements regarding budgeting is false?

Newman Products is preparing their first quarter production budget.The desired ending inventory of finished goods for the month of January becomes:

In order to prepare a sales budget,a _______________ is required.

Which of the following statements is true regarding budgeting?

The usual starting point when developing a sales forecast is:

Prior to the start of 2009,Proctor Inc.estimated budgeted sales at 225 000 units.At the start of 2009,there were 8000 units in beginning finished goods.During 2009,215 000 units were produced and 220 000 units were sold.How many units should Proctor's 2009 flexible sales budget be based upon?

Cash paid for the retirement of long-term debt will be shown:

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, cost Terminology and Cost Flows

Cost Behaviour

Job Costing and Overhead Costing Systems

Process Costing Systems

Service and Operations Costing

Departmental Overhead Costing

Activity-Based Costing

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investmentdecisions

Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis

Decentralisation and Modern Performance Management Systems the Balanced Scorecard

Accounting for Sustainability Social Reporting,environmental Reporting and Management Accounting

Filters