Question 1

Which of the following statements is false regarding sales forecasting?

Accepted Answer

A)  It may involve the use of elaborate planning models and regression analysis. 
B)  It may rely heavily on the intuition and opinions of managers. 
C)  Other budgets are rarely affected by errors in sales forecasts. 
D)  The usual starting point is last year's level of sales. 
A)  It may involve the use of elaborate planning models and regression analysis. 
B)  It may rely heavily on the intuition and opinions of managers. 
C)  Other budgets are rarely affected by errors in sales forecasts. 
D)  The usual starting point is last year's level of sales.

Question 2

Select Manufacturing sells a variety of office products including two-drawer file cabinets.On 30 June,the company had 300 cabinets in inventory.The company's policy is to maintain a cabinet 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:
$$\begin{array} { l l } 
\text { Juy } & \text { 3000 cabinets } \
\text { August } & 4000 \text { cabinets } \
\text { September } & 4800 \text { cabinets }
\end{array}$$
In addition,October's sales are projected to be 5000 cabinets.What is the total required production for the third quarter?

Accepted Answer

A)  12 980 cabinets 
B)  12 300 cabinets 
C)  12 000 cabinets 
D)  11 800 cabinets 
A)  12 980 cabinets 
B)  12 300 cabinets 
C)  12 000 cabinets 
D)  11 800 cabinets

Question 3

In 2008,Wingen Inc.sold 650 000 units at $3 each.Sales volume is expected to increase by 20 per cent in 2009 while the price of each unit is expected to decrease by 20 per cent.The expected sales revenue for 2009 is:

Accepted Answer

A)  $ 780 000 
B)  $1 872 000 
C)  $1 950 000 
D)  $1 560 000 
A)  $ 780 000 
B)  $1 872 000 
C)  $1 950 000 
D)  $1 560 000

Question 4

Griswald Inc.would like to prepare a summary cash budget for the first quarter of 2009.The following information from the cash receipts and cash disbursements budgets are available:
$\begin{array}{rrr}
&\underline{\text { January}} &\underline{\text { February } }&\underline{\text {  March }}\
\text { Cash receipts }&\$ 50000 & \$ 72000 & \$ 80000 \
\text { Cash disbursements }&42000 & 75000& 71000
\end{array}$ 
The company has a beginning cash balance on 1 January 2009 of $5000.No other receipts and disbursements in the first quarter are expected.What is the cash balance at the end of March expected to be?

Accepted Answer

A)  $14 000 
B)  $19 000 
C)  $ 9000 
D)  $34 000 
A)  $14 000 
B)  $19 000 
C)  $ 9000 
D)  $34 000

Question 5

Last year,Garrison Manufacturing sold 500 000 units at $4 each.Both sales volume and sales price are expected to increase by 10 per cent in the upcoming year.The expected sales revenue for the upcoming year is:

Accepted Answer

A)  $2 420 000 
B)  $2 200 000 
C)  $2 255 000 
D)  $2 000 000 
A)  $2 420 000 
B)  $2 200 000 
C)  $2 255 000 
D)  $2 000 000

Question 6

Vestal Products Inc.had the following information available for 2009:
$\begin{array}{lr}
  \text {Budgeted sales for 2009  } & \text { 90000 units } \
 \text {  Units in beginning inventory (1/1/08)} &\text { 4000 units }\
 \text { Units produced during 2009 } &\text { 100000 units }\
 \text { Units in ending inventory (31/12/08) } &\text {6000 units}\
\end{array}$

How many units should Vestal's 2009 flexible sales budget be based upon?

Accepted Answer

A)  100 000 
B)  102 000 
C)  98 000 
D)  90 000 
A)  100 000 
B)  102 000 
C)  98 000 
D)  90 000

Question 7

The comparison of actual outcomes with desired outcomes is an example of a(n):

Accepted Answer

A)  planning activity. 
B)  control activity. 
C)  operating activity. 
D)  static activity. 
A)  planning activity. 
B)  control activity. 
C)  operating activity. 
D)  static activity.

Question 8

Talley Inc.had the following purchases budgeted for the last quarter of the current year:
$\begin{array}{lr}
\text { October } & \$ 230000 \
\text { November } & 300000 \
\text { December } & 375000
\end{array}$
 
Talley pays for one-quarter of a month's purchases in the month of purchase and the remainder in the following month.What are expected cash disbursements for the month of December?

Accepted Answer

None

Question 9

Leigh Manufacturing produces widgets.Prior to the start of September,the company's controller estimated September's production to be 900 units.Each unit requires two hours of direct labour at a cost of $12 per direct labour hour.
At the end of September,it was determined that actual production was 860 units and actual direct labour cost was $19 500.
Required:
A. Prepare a static budget for September.
B. Prepare a flexible budget for September.
C. Which type of budget should be compared to the actual direct labour cost for control purposes? Explain.

Accepted Answer

@#IMG-DLM&
B.@#IMG-DLM&

C. The flexible budget should be us

Question 10

Budgets are:

Accepted Answer

A)  future oriented. 
B)  for managers only. 
C)  required by GAAP. 
D)  typically not used by small business. 
A)  future oriented. 
B)  for managers only. 
C)  required by GAAP. 
D)  typically not used by small business.

Question 11

Merrell Enterprises had the following purchases budgeted for the last six months of 2009:
$\begin{array}{lr}
\text { July } & \$ 100000 \
\text { August } & 80000 \
\text { September } & 90000 \
\text { October } & 70000 \
\text { November } & 90000 \
\text { December } & 100000
\end{array}$ 
Merrell pays one-half of a month's purchases in the month of purchase and the remainder in the following month.What are expected total cash disbursements for the last quarter of 2009?

Accepted Answer

A)  $210 000 
B)  $255 000 
C)  $130 000 
D)  $260 000 
A)  $210 000 
B)  $255 000 
C)  $130 000 
D)  $260 000

Question 12

Which of the following is an advantage of the budgeting process?

Accepted Answer

A)  It requires very little input from various departmental managers,leaving them more time to devote to day-to-day activities. 
B)  It can communicate to employees specific goals and objectives that may be used in evaluating their job performance. 
C)  It forces management to focus on the past and not be distracted by the day-to-day operations of the business. 
D)  It requires no communication between various managers in the organisation. 
A)  It requires very little input from various departmental managers,leaving them more time to devote to day-to-day activities. 
B)  It can communicate to employees specific goals and objectives that may be used in evaluating their job performance. 
C)  It forces management to focus on the past and not be distracted by the day-to-day operations of the business. 
D)  It requires no communication between various managers in the organisation.

Question 13

Pellini Products Inc.is a manufacturer of paper products.For which of the following activities would Pellini be more likely to use a flexible budget than a static budget?

Accepted Answer

A)  For planning the quantity of direct materials that will be need to be purchased in the upcoming year 
B)  For planning the estimated cash receipts in the upcoming year 
C)  For planning the number of direct labour hours employees will need to work in the upcoming year 
D)  For the evaluation of whether or not employees made the most efficient use of their time during the year 
A)  For planning the quantity of direct materials that will be need to be purchased in the upcoming year 
B)  For planning the estimated cash receipts in the upcoming year 
C)  For planning the number of direct labour hours employees will need to work in the upcoming year 
D)  For the evaluation of whether or not employees made the most efficient use of their time during the year

Question 14

Browning Inc.has projected the following sales information for the fourth quarter of 2009:
$\begin{array}{rr}
&\underline{\text { October }} &\underline{ \text { November }}&\underline{ \text { December }}\
\text {Cash sales}&\$19000&\$ 26000 & \$ 32000 \
 \text {Credit sales}&\underline{35000}&\underline{45000} & \underline{ 60000} \
\text { Total sales}&\underline{\$54000}&\underline{\$71000}&\underline{ \$ 92000}
\end{array}$
Credit sales are collected over a two-month period,with 60 per cent collected in the month of sale and 40 per cent collected in the month following sale.
Total cash collections for December are:

Accepted Answer

A)  $86 000 
B)  $54 000 
C)  $83 600 
D)  $68 000 
A)  $86 000 
B)  $54 000 
C)  $83 600 
D)  $68 000

Question 15

Sellars Inc.manufactures widgets.At 30 June,the company had 2000 widgets in inventory.The company's policy is to maintain a widget ending inventory equal to 10 per cent of next month's sales.In addition,each widget manufactured requires 6 minutes of assembly and inspecting time at a cost of $.25 per minute.
The company expects the following sales activity for the third quarter of the year:
$\begin{array}{ll}
\text { July } & 25000 \text { units } \
\text { August } & 38000 \text { units } \
\text { September } & 30000 \text { units }
\end{array}$ 
What is the projected direct labour cost for August?

Accepted Answer

A)  $55 800 
B)  $57 000 
C)  $61 500 
D)  $58 200 
A)  $55 800 
B)  $57 000 
C)  $61 500 
D)  $58 200

Question 16

Grisham Products Inc.manufactures engines for small scooters.At 30 September,the company had 2500 engines in inventory.The company's policy is to maintain an ending inventory equal to 8 per cent of next month's sales.Each engine manufactured requires 45 minutes of assembly and inspecting time at a cost of $.30 per minute.Grisham applies overhead to engines at a rate of $.15 per direct labour minute.
The company expects the following sales activity for the fourth quarter of the year:
$\begin{array}{ll}
\text { October } & 12000 \text { units } \
\text { November } & 20000 \text { units } \
\text { December } & 35000 \text { units }
\end{array}$

What is the projected applied manufacturing overhead cost for November?

Accepted Answer

A)  $153 900 
B)  $143 100 
C)  $ 42 930 
D)  $126 900 
A)  $153 900 
B)  $143 100 
C)  $ 42 930 
D)  $126 900

Question 17

Which of the following would not appear on a budgeted income statement?

Accepted Answer

A)  Net income 
B)  Depreciation expense 
C)  Cost of goods sold 
D)  Cash received from bank loan 
A)  Net income 
B)  Depreciation expense 
C)  Cost of goods sold 
D)  Cash received from bank loan

Question 18

Which of the following budgets would probably not be prepared using information provided by the production budget?

Accepted Answer

A)  Direct materials budget 
B)  Direct labour budget 
C)  Manufacturing overhead budget 
D)  Sales budget 
A)  Direct materials budget 
B)  Direct labour budget 
C)  Manufacturing overhead budget 
D)  Sales budget

Question 19

Which of the following is not a consideration in the preparation of a sales budget or sales forecast?

Accepted Answer

A)  General economic trends 
B)  Anticipated marketing or advertising plans 
C)  Issuance of the current year's financial statements 
D)  Anticipated price changes in both purchasing costs and sales prices 
A)  General economic trends 
B)  Anticipated marketing or advertising plans 
C)  Issuance of the current year's financial statements 
D)  Anticipated price changes in both purchasing costs and sales prices

Question 20

Grainger Manufacturing Inc.produces outdoor grills.On 31 March,the company had 120 grills in inventory.The company's policy is to maintain a grill inventory equal to 15 per cent of next month's sales.The company expects the following sales activity for the second quarter of the year:
$\begin{array}{lr}
\text { April } & 800 \text { units } \
\text { May } & 2000 \text { units } \
\text { June } & 2600 \text { units }
\end{array}$  
Sales for July and August are expected to be 1800 units and 1400 units,respectively.Each completed unit of finished product requires 3 kilos of a heat resistant plastic material which costs $4.00 per kilo.The company has determined that it needs 20 per cent of next month's raw material needs on hand at the end of each month.The company had 600 kilos of plastic on hand at the end of March.
Required: A. Prepare a production budget far the second quarter of the year.
B. Prepare a budiget far the second quarter of the year showing the prajected cost of the direct materials (plastic) that will be needed.

Accepted Answer

None

Which of the following statements is false regarding sales forecasting?

In 2008,Wingen Inc.sold 650 000 units at $3 each.Sales volume is expected to increase by 20 per cent in 2009 while the price of each unit is expected to decrease by 20 per cent.The expected sales revenue for 2009 is:

Last year,Garrison Manufacturing sold 500 000 units at $4 each.Both sales volume and sales price are expected to increase by 10 per cent in the upcoming year.The expected sales revenue for the upcoming year is:

The comparison of actual outcomes with desired outcomes is an example of a(n):

Budgets are:

Which of the following is an advantage of the budgeting process?

Pellini Products Inc.is a manufacturer of paper products.For which of the following activities would Pellini be more likely to use a flexible budget than a static budget?

Which of the following would not appear on a budgeted income statement?

Which of the following budgets would probably not be prepared using information provided by the production budget?

Which of the following is not a consideration in the preparation of a sales budget or sales forecast?

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 statements is false regarding sales forecasting?

In 2008,Wingen Inc.sold 650 000 units at $3 each.Sales volume is expected to increase by 20 per cent in 2009 while the price of each unit is expected to decrease by 20 per cent.The expected sales revenue for 2009 is:

Last year,Garrison Manufacturing sold 500 000 units at $4 each.Both sales volume and sales price are expected to increase by 10 per cent in the upcoming year.The expected sales revenue for the upcoming year is:

The comparison of actual outcomes with desired outcomes is an example of a(n):

Budgets are:

Which of the following is an advantage of the budgeting process?

Pellini Products Inc.is a manufacturer of paper products.For which of the following activities would Pellini be more likely to use a flexible budget than a static budget?

Which of the following would not appear on a budgeted income statement?

Which of the following budgets would probably not be prepared using information provided by the production budget?

Which of the following is not a consideration in the preparation of a sales budget or sales forecast?

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