Question 1

Which of the following is an advantage of budgeting?

Accepted Answer

A)  Forces managers to plan. 
B)  Provides information useful for control. 
C)  Provides information for improved decision making. 
D)  Improves communication. 
E)  All of these. 
A)  Forces managers to plan. 
B)  Provides information useful for control. 
C)  Provides information for improved decision making. 
D)  Improves communication. 
E)  All of these.

Question 2

A firm should develop a strategic plan before preparing a budget.

Accepted Answer

A) True 
 B)False

Question 3

The output of the cost of goods sold budget is entered into the pro forma balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

$\begin{array}{ll}
\text { April } & 45,000 \
\text { May } & 38,000 \
\text { June } & 42,000
\end{array}$ Each unit requires four pounds of raw material. Saphire's policy is to have 30% of the following month's production needs for materials in inventory. This policy was met in March.
-Refer to Figure 9-1. Raw materials purchases budgeted for May in pounds equal:

Accepted Answer

A)  156,800 
B)  202,400 
C)  45,600 
D)  171,600 
E)  225,600 
A)  156,800 
B)  202,400 
C)  45,600 
D)  171,600 
E)  225,600

Question 5

Planning is looking ahead to see what actions should be taken to realize particular goals.

Accepted Answer

A) True 
 B)False

Question 6

A strategic plan identifies strategies for future activities and operations, generally covering at least five years.

Accepted Answer

A) True 
 B)False

Question 7

A company has provided a sales budget for the next four months. It bases its production budget on the sales budget, and has a policy that each month's ending inventory of finished product must be equal to 25% of the following month's sales needs. The direct materials purchases budget is based on the production budget. The company's policy for each month's ending inventory of raw materials is that they must be equal to 10% of the following month's production needs for raw materials. Given this information, the company can prepare direct materials purchases budgets for how many months?

Accepted Answer

A)  One 
B)  Two 
C)  Three 
D)  Four 
E)  Five 
A)  One 
B)  Two 
C)  Three 
D)  Four 
E)  Five

Question 8

The production budget is prepared in units and in dollars.

Accepted Answer

A) True 
 B)False

Question 9

Monetary incentives include salary increases, bonuses, and promotions.

Accepted Answer

A) True 
 B)False

Question 10

Budgets are prepared in which of the following orders?

Accepted Answer

A)  production budget, sales budget, direct labor budget 
B)  production budget, cost of goods sold budget, direct labor budget 
C)  sales budget, cash budget, production budget 
D)  sales budget, production budget, direct materials purchases budget 
E)  production budget, cash budget, direct materials purchases budget 
A)  production budget, sales budget, direct labor budget 
B)  production budget, cost of goods sold budget, direct labor budget 
C)  sales budget, cash budget, production budget 
D)  sales budget, production budget, direct materials purchases budget 
E)  production budget, cash budget, direct materials purchases budget

Question 11

Identify each item as either part of the operating budget or the financial budget.
-sales budget

Accepted Answer

A) Operating Budget 
B) Financial Budget 
A) Operating Budget 
B) Financial Budget

Question 12

Which of the following appears on the budgeted balance sheet?

Accepted Answer

A)  Estimated sales 
B)  Estimated cost of goods sold 
C)  Estimated ending accounts receivable 
D)  Estimated fixed selling expense 
E)  Estimated fixed factory overhead 
A)  Estimated sales 
B)  Estimated cost of goods sold 
C)  Estimated ending accounts receivable 
D)  Estimated fixed selling expense 
E)  Estimated fixed factory overhead

Question 13

$\begin{array}{ll}
\text { April } & 45,000 \
\text { May } & 38,000 \
\text { June } & 42,000
\end{array}$ Each unit requires four pounds of raw material. Saphire's policy is to have 30% of the following month's production needs for materials in inventory. This policy was met in March.
-Refer to Figure 9-1. Desired ending inventory for April in pounds equals:

Accepted Answer

A)  45,600 
B)  11,400 
C)  10.500 
D)  38,300 
E)  54,000 
A)  45,600 
B)  11,400 
C)  10.500 
D)  38,300 
E)  54,000

Question 14

Which of the following is an operating budget?

Accepted Answer

A)  Budgeted statement of cash flows 
B)  Capital expenditures budget 
C)  Budgeted income statement 
D)  Cash budget 
A)  Budgeted statement of cash flows 
B)  Capital expenditures budget 
C)  Budgeted income statement 
D)  Cash budget

Question 15

______________ are the means an organization uses to influence a manager to exert effort to achieve an organization's goals.

Accepted Answer

The answer of ______________ are the means an organization uses...

Question 16

The budget that describes how many units must be produced in order to meet sales needs and ending inventory objectives is the

Accepted Answer

A)  production budget. 
B)  direct materials purchases budget. 
C)  cash budget. 
D)  budgeted income statement. 
E)  none of these. 
A)  production budget. 
B)  direct materials purchases budget. 
C)  cash budget. 
D)  budgeted income statement. 
E)  none of these.

Question 17

Cash receipts must be at least as much as sales.

Accepted Answer

A) True 
 B)False

Question 18

Miller Corporation has the following sales budget for the first four months of the current year:
   Historically, the following trend has been established regarding cash collection of sales:
65% in month of sale
25% in month following sale
8% in second month following sale
2% uncollectible
The company allows a 2% cash discount for payments made by customers during the month of the sale. November and December sales were $400,000 and $240,000, respectively. All sales are on account.
Required: Prepare a schedule of budgeted cash collections from sales for January, February, and March.

Accepted Answer

The answer of Miller Corporation has the following sales budget...

Question 19

Control is achieved by comparing actual results with budgeted results on a periodic basis.

Accepted Answer

A) True 
 B)False

Question 20

$\begin{array}{lrr}&\text { SR200 }&TX 500\
\text { May } & 8,000 & 20,000 \
\text { June } & 13,000 & 32,000 \
\text { July } & 11,000 & 39,000 \
\text { August } & 18,000 & 46,000
\end{array}$ Kenner's ending inventory policy is that SR200 should have 15% of next month's sales in ending inventory and TX500 should have 40% of next month's sales in ending inventory. On May 1, there were 1,200 units of SR200 and 9,000 units of TX500.TX500 requires 6 units of component A. (SR200 does not use component A.) There were 30,000 units of component A in inventory on May 1. Kenner wants to have 20% of the following month's production needs in inventory for Component A.
-Refer to Figure 9-2. What is the desired ending inventory of component A for May?

Accepted Answer

A)  86,000 
B)  180,000 
C)  58,500 
D)  41,760 
E)  30,000 
A)  86,000 
B)  180,000 
C)  58,500 
D)  41,760 
E)  30,000

Which of the following is an advantage of budgeting?

A firm should develop a strategic plan before preparing a budget.

The output of the cost of goods sold budget is entered into the pro forma balance sheet.

April 45,000 May 38,000 June 42,000 Each unit requires four pounds of raw material. Saphire's policy is to have 30% of the following month's production needs for materials in inventory. This policy was met in March. -Refer to Figure 9-1. Raw materials purchases budgeted for May in pounds equal:

Planning is looking ahead to see what actions should be taken to realize particular goals.

A strategic plan identifies strategies for future activities and operations, generally covering at least five years.

The production budget is prepared in units and in dollars.

Monetary incentives include salary increases, bonuses, and promotions.

Budgets are prepared in which of the following orders?

Identify each item as either part of the operating budget or the financial budget. -sales budget

Which of the following appears on the budgeted balance sheet?

April 45,000 May 38,000 June 42,000 Each unit requires four pounds of raw material. Saphire's policy is to have 30% of the following month's production needs for materials in inventory. This policy was met in March. -Refer to Figure 9-1. Desired ending inventory for April in pounds equals:

Which of the following is an operating budget?

______________ are the means an organization uses to influence a manager to exert effort to achieve an organization's goals.

The budget that describes how many units must be produced in order to meet sales needs and ending inventory objectives is the

Cash receipts must be at least as much as sales.

Control is achieved by comparing actual results with budgeted results on a periodic basis.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 9: Profit Planning

Which of the following is an advantage of budgeting?

A firm should develop a strategic plan before preparing a budget.

The output of the cost of goods sold budget is entered into the pro forma balance sheet.

April 45,000 May 38,000 June 42,000 Each unit requires four pounds of raw material. Saphire's policy is to have 30% of the following month's production needs for materials in inventory. This policy was met in March. -Refer to Figure 9-1. Raw materials purchases budgeted for May in pounds equal:

Planning is looking ahead to see what actions should be taken to realize particular goals.

A strategic plan identifies strategies for future activities and operations, generally covering at least five years.

The production budget is prepared in units and in dollars.

Monetary incentives include salary increases, bonuses, and promotions.

Budgets are prepared in which of the following orders?

Identify each item as either part of the operating budget or the financial budget. -sales budget

Which of the following appears on the budgeted balance sheet?

April 45,000 May 38,000 June 42,000 Each unit requires four pounds of raw material. Saphire's policy is to have 30% of the following month's production needs for materials in inventory. This policy was met in March. -Refer to Figure 9-1. Desired ending inventory for April in pounds equals:

Which of the following is an operating budget?

______________ are the means an organization uses to influence a manager to exert effort to achieve an organization's goals.

The budget that describes how many units must be produced in order to meet sales needs and ending inventory objectives is the

Cash receipts must be at least as much as sales.

Control is achieved by comparing actual results with budgeted results on a periodic basis.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters