Dahl Manufacturing is making its operating budget for the 4S1U1P1thS1S1P0 quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows: \[\begin{array} { l l l } \text { Variable: } & \text { Miscellaneous: } & 5 \% \text { of sales } \\ \text { Fixed: } & \text { Salary expense: } & \$ 12,600 \text { per month } \\ & \text { Rent expense: } & \$ 5,200 \text { per month } \\ & \text { Depreciation expense: } & \$ 4,000 \text { per month } \\ & \text { Admin expense: } & \$ 5,000 \text { per month } \end{array}\] - How much is the net operating income/(loss) in December?

A) $6,200 B) $11,700 C) $7,480 D) $8,950 A) $6,200 B) $11,700 C) $7,480 D) $8,950

Dahl Manufacturing is making its operating budget for the 4S1U1P1thS1S1P0 quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows: \[\begin{array} { l l l } \text { Variable: } & \text { Miscellaneous: } & 5 \% \text { of sales } \\ \text { Fixed: } & \text { Salary expense: } & \$ 12,600 \text { per month } \\ & \text { Rent expense: } & \$ 5,200 \text { per month } \\ & \text { Depreciation expense: } & \$ 4,000 \text { per month } \\ & \text { Admin expense: } & \$ 5,000 \text { per month } \end{array}\] - How much are the total operating expenses in October?

A) $29,800 B) $30,300 C) $30,050 D) $29,990 A) $29,800 B) $30,300 C) $30,050 D) $29,990

Chaterlain Company is preparing its budget for the 3S1U1P1rdS1S1P0 quarter. Cash balance at June 30 was $11,000. Additional budgeted data is provided here: \[\begin{array} { | l | r | r | r | } \hline &{ \text { Jul } } & { \text { Aug } } & { \text { Sep } } \\ \hline \text { Cash collections } & \$ 42,000 & \$ 51,000 & \$ 39,000 \\ \hline \text { Cash payments: } & & & \\ \hline \text { Purdhrses of invertory } & 14,000 & 9,000 & 11,000 \\ \hline \text { Operating Experses } & 25,000 & 22,700 & 30,900 \\ \hline \text { Capital expenditures } & 5,200 & 9,000 & 14,000 \\ \hline \end{array}\] - What amount should be shown in the cash budget for the cash balance at the end of July?

A) $19,100 B) $8,800 C) $9,050 D) $2,200 A) $19,100 B) $8,800 C) $9,050 D) $2,200

Pentangle Company has prepared a preliminary cash budget for the 3S1U1P1rdS1S1P0 quarter as shown below: $\begin{array}{|l|r|r|r|} \hline\text { Cash Burdget } & \text { Jul } & \text { Aug } & \text { Sep } \\ \hline \text { Beginning cash balance } & \$ 32,000 & \$ 4,400 & \$ 6,900 \\ \hline\text { Cash collections } & 49,400 & 51,000 & 44,600 \\ \hline \text { Cash available } & 81,400 & 55,400 & 51,500 \\ \hline\text { Cash payments: }\\ \hline \text { Purchases of inventory } & 36,000 & 9,000 & 11,000 \\ \hline \text { Operating expenses } & 41,000 & 30,500 & 30,900 \\ \hline \text { Capital expenditures } & 0 & 9,000 & 7,700 \\ \hline \text { Total cash payments } & \$ 77,000 & \$ 48,500 & \$ 49,600 \\ \hline \text { Ending cash balance } & \$ 4,400 & \$ 6,900 & \$ 1,900 \\ \hline \end{array}$ Subsequently, the marketing department revised its figures for cash collections. New data are as follows: $52,000 in July, $50,000 in August, and $42,000 in September. -Based on the new data, what is the new projected cash balance at the end of July?

A) $8,500 B) $2,400 C) $7,000 D) $900 A) $8,500 B) $2,400 C) $7,000 D) $900

Dahl Manufacturing is making its operating budget for the 4S1U1P1thS1S1P0 quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows: \[\begin{array} { l l l } \text { Variable: } & \text { Miscellaneous: } & 5 \% \text { of sales } \\ \text { Fixed: } & \text { Salary expense: } & \$ 12,600 \text { per month } \\ & \text { Rent expense: } & \$ 5,200 \text { per month } \\ & \text { Depreciation expense: } & \$ 4,000 \text { per month } \\ & \text { Admin expense: } & \$ 5,000 \text { per month } \end{array}\] - How much is the net operating income/(loss) in October?

A) $6,200 B) $11,700 C) $7,480 D) $8,950 A) $6,200 B) $11,700 C) $7,480 D) $8,950

Della Company prepared the following purchases budget: $\begin{array}{|l|r|} \hline\text { Month } & \text { Budgeted Purchases } \\ \hline \text { June } & \$ 67,000 \\ \hline \text { July } & \$ 72,500 \\ \hline \text { August } & \$ 76,300 \\ \hline \text { September } & \$ 73,700 \\ \hline \text { October } & \$ 69,200\\\hline \end{array}$ All purchases are paid for as follows: 10% in the month of purchase, 50% in the following month, and 40% two months after purchase. - What are the total cash payments made in October for purchases?

A) $77,680 B) $79,480 C) $69,330 D) $74,290 A) $77,680 B) $79,480 C) $69,330 D) $74,290

Exam 22: The Master Budget and Responsibility Accounting

Dahl Manufacturing is making its operating budget for the 4^th quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows: Variable: Miscellaneous: 5\% of sales Fixed: Salary expense: \ 12,600 per month Rent expense: \ 5,200 per month Depreciation expense: \ 4,000 per month Admin expense: \ 5,000 per month - How much is the net operating income/(loss) in December?

(Multiple Choice)

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Question 101

The cash budget can be prepared before the sales budget.

(True/False)

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Question 102

Caskill Company forecasts $40,000 of sales in January, $38,000 in February, $30,000 in March, and $32,000 in April. Cost of goods sold is budgeted at 75% of sales. Caskill should have inventory on hand at the end of each month equal to $5,000 plus 20% of the following month's cost of goods sold. How much are budgeted purchases for January?

(Multiple Choice)

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Question 103

Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions-Construction, Manufacturing, and Military. The Construction Division has been allocated a total of $192,000 of costs from the procurement department. Of that amount, 75% is considered traceable to the three product types within the division-Civil Construction, Residential Construction, and Commercial Construction. The division will calculate an allocation rate to assign the traceable costs to each of the three product types based on number of purchase orders processed within each product type. Please refer to the following information: Construction Division Product lines Revenues Variable Expenses Purchase Orders Civil \ 36,000 \ 24,000 450 Residential \ 98,000 \ 41,000 900 Commercial \ 216,000 \ 60,000 1,860 Total \ 360,000 \ 125,000 3,200 -The amount allocated to the Commercial Construction Product Line should be:

(Multiple Choice)

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Question 104

Which of the following describes a responsibility center?

(Multiple Choice)

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Question 105

Argyle Company forecasts sales of $50,000 in January, $60,000 in February, $70,000 in March, and $75,000 in April. The inventory balance at January 1 is $12,000. Cost of goods sold is budgeted at 40% of sales revenue. Argyle wishes to have inventory levels at the end of each month equal to 60% of the cost of goods sold for the following month, plus a "safety cushion" of $1,000. How much should be budgeted for inventory purchases in January?

(Multiple Choice)

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Question 106

Caskill Company forecasts $40,000 of sales in January, $38,000 in February, $30,000 in March, and $32,000 in April. Cost of goods sold is budgeted at 75% of sales. Caskill should have inventory on hand at the end of each month equal to $5,000 plus 20% of the following month's cost of goods sold. How much are budgeted purchases for March?

(Multiple Choice)

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Question 107

Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions: Construction, Manufacturing, and Military. The Construction Division has been allocated a total of $192,000 of costs from the procurement department. Of that amount, $144,000 is considered traceable to the three product types within the division: Civil Construction, Residential Construction, and Commercial Construction. The traceable amounts are further allocated to the three product types within the division as shown here: $\text { Construction Division }$ Product lines Revenues Variable Assigned Costs Expenses Civil \ 36,000 \ 24,000 \ 20,250 Residential \ 98,000 \ 41,000 \ 40,500 Commerdal \ 216,000 \ 60,000 \ 83,250 Total \ 350,000 \ 125,000 \ 144,000 -The above information is used to complete a performance report, the divisional income statement, for the Construction Division. On that report, the product margin for the Commercial Construction product type is:

(Multiple Choice)

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Question 108

Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions-Construction, Manufacturing, and Military. The Construction Division has been allocated a total of $192,000 of costs from the procurement department. Of that amount, 75% is considered traceable to the three product types within the division-Civil Construction, Residential Construction, and Commercial Construction. The division will calculate an allocation rate to assign the traceable costs to each of the three product types based on number of purchase orders processed within each product type. Please refer to the following information: Construction Division Product lines Revenues Variable Expenses Purchase Orders Civil \ 36,000 \ 24,000 450 Residential \ 98,000 \ 41,000 900 Commercial \ 216,000 \ 60,000 1,860 Total \ 360,000 \ 125,000 3,200 -The amount allocated to the Residential Construction Product Line should be:

(Multiple Choice)

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Question 109

Dahl Manufacturing is making its operating budget for the 4^th quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows: Variable: Miscellaneous: 5\% of sales Fixed: Salary expense: \ 12,600 per month Rent expense: \ 5,200 per month Depreciation expense: \ 4,000 per month Admin expense: \ 5,000 per month - How much are the total operating expenses in October?

(Multiple Choice)

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Question 110

Chaterlain Company is preparing its budget for the 3^rd quarter. Cash balance at June 30 was $11,000. Additional budgeted data is provided here: Jul Aug Sep Cash collections \ 42,000 \ 51,000 \ 39,000 Cash payments: Purdhrses of invertory 14,000 9,000 11,000 Operating Experses 25,000 22,700 30,900 Capital expenditures 5,200 9,000 14,000 - What amount should be shown in the cash budget for the cash balance at the end of July?

(Multiple Choice)

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Question 111

Pentangle Company has prepared a preliminary cash budget for the 3^rd quarter as shown below: Cash Burdget Jul Aug Sep Beginning cash balance \ 32,000 \ 4,400 \ 6,900 Cash collections 49,400 51,000 44,600 Cash available 81,400 55,400 51,500 Cash payments: Purchases of inventory 36,000 9,000 11,000 Operating expenses 41,000 30,500 30,900 Capital expenditures 0 9,000 7,700 Total cash payments \ 77,000 \ 48,500 \ 49,600 Ending cash balance \ 4,400 \ 6,900 \ 1,900 Subsequently, the marketing department revised its figures for cash collections. New data are as follows: $52,000 in July, $50,000 in August, and $42,000 in September. -Based on the new data, what is the new projected cash balance at the end of July?

(Multiple Choice)

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Question 112

Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions-Construction, Manufacturing, and Military. The Construction Division has been allocated a total of $192,000 of costs from the procurement department. Of that amount, $144,000 is considered traceable to the three product types within the division-Civil Construction, Residential Construction, and Commercial Construction. The traceable amounts are further allocated to the three product types within the division as shown here: $\text { Construction Division }$ Product lines Revenues Variable Assigned Costs Expenses Civil \ 36,000 \ 24,000 \ 20,250 Residential \ 98,000 \ 41,000 \ 40,500 Commerdal \ 216,000 \ 60,000 \ 83,250 Total \ 350,000 \ 125,000 \ 144,000 -The above information is used to complete a performance report, the divisional income statement, for the Construction Division. On that report, the product margin for the Civil Construction product type is:

(Multiple Choice)

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Question 113

Dahl Manufacturing is making its operating budget for the 4^th quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows: Variable: Miscellaneous: 5\% of sales Fixed: Salary expense: \ 12,600 per month Rent expense: \ 5,200 per month Depreciation expense: \ 4,000 per month Admin expense: \ 5,000 per month - How much is the net operating income/(loss) in October?

(Multiple Choice)

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Question 114

Assume that AAA Company's Payroll and Human Resources Department is a centralized service department serving all the various business units of the company. If AAA wished to assign the costs of the department to the company's various business units, which of the following would be the MOST appropriate cost driver or assignment basis?

(Multiple Choice)

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Question 115

When the different business units at a company use differently structured reporting formats for their business unit budgets, it is more difficult for the company to consolidate the business unit data into a companywide budget.

(True/False)

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Question 116

A goal of the budgeting process is to communicate a consistent set of plans throughout the company.

(True/False)

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Question 117

Della Company prepared the following purchases budget: Month Budgeted Purchases June \ 67,000 July \ 72,500 August \ 76,300 September \ 73,700 October \ 69,200 All purchases are paid for as follows: 10% in the month of purchase, 50% in the following month, and 40% two months after purchase. - What are the total cash payments made in October for purchases?

(Multiple Choice)

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Question 118

Which of the following best describes the term sensitivity analysis?

(Multiple Choice)

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Question 119

Which of the following BEST describes a business unit where the manager is responsible for both controlling costs and generating sales revenue?

(Multiple Choice)

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Question 120

The cash budget can be prepared before the sales budget.

Which of the following describes a responsibility center?

When the different business units at a company use differently structured reporting formats for their business unit budgets, it is more difficult for the company to consolidate the business unit data into a companywide budget.

A goal of the budgeting process is to communicate a consistent set of plans throughout the company.

Which of the following best describes the term sensitivity analysis?

Which of the following BEST describes a business unit where the manager is responsible for both controlling costs and generating sales revenue?

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

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