Question 1

A rolling budget encourages management to be thinking about the next 12 months.

Accepted Answer

A) True 
 B)False

Question 2

Describe the benefits to an organization of preparing an operating budget.

Accepted Answer

A well-prepared operating budget should

Question 3

Use the information below to answer the following question(s).Grinnell Manufacturing Company has the following information for 2020:
   Budget Expenses per Month
   Note: All cash expenses are paid as incurred; Collections from sales are 50% in the month of sale and 50% in the month following the sale; December 2019 sales were $110,000.
-What is the expected total cash disbursements for expenses in February?

Accepted Answer

A) $33,400 
B) $30,000 
C) $30,200 
D) $30,400 
E) $27,000 
A) $33,400 
B) $30,000 
C) $30,200 
D) $30,400 
E) $27,000

Question 4

Use the information below to answer the following question(s).Gold Corporation has the following sales budget for the last six months of 2019:
   Historically, the cash collection of sales has been as follows:
  
-The cash budget is a schedule of expected cash receipts and disbursements that

Accepted Answer

A) requires an aging of accounts receivable and accounts payable. 
B) is a self-liquidating cycle. 
C) is prepared immediately after the sales forecast. 
D) predicts the effect on the cash position at given levels of operations. 
E) is prepared by the organization's bank. 
A) requires an aging of accounts receivable and accounts payable. 
B) is a self-liquidating cycle. 
C) is prepared immediately after the sales forecast. 
D) predicts the effect on the cash position at given levels of operations. 
E) is prepared by the organization's bank.

Question 5

Describe operating and financial budgets and give at least two examples of each discussed in the textbook.

Accepted Answer

Operating budgets specify the expected o

Question 6

Long-run planning (strategic plans)involves the preparation of the

Accepted Answer

A) operating budget. 
B) cash budget. 
C) budget standards. 
D) profit plan. 
E) capital budget. 
A) operating budget. 
B) cash budget. 
C) budget standards. 
D) profit plan. 
E) capital budget.

Question 7

Listed below are elements of the master budget.Determine whether each budget is an operating budget or a financial budget.Place an O for operating budget or F for a financial budget.
1.Capital expenditures budget
2.Cost of goods sold budget
3.Revenues budget
4.Budgeted statement of cash flows
5.Distribution costs budget
6.Marketing costs budget
7.Cash budget
8.Direct materials cost budget
9.Budgeted balance sheet
10.Budgeted income statement

Accepted Answer

1.F, 2.O,

Question 8

A criticism of traditional budgeting is "Excessive reliance on extrapolating past trends." Which of the following is a proposal for change to address this criticism?

Accepted Answer

A) Use activity-based budgeting. 
B) Balance financial aspects with nonfinancial. 
C) Signal to all employees the need for continuous improvement. 
D) Adopt a cross-functional approach. 
E) Link budgeting explicitly to strategy. 
A) Use activity-based budgeting. 
B) Balance financial aspects with nonfinancial. 
C) Signal to all employees the need for continuous improvement. 
D) Adopt a cross-functional approach. 
E) Link budgeting explicitly to strategy.

Question 9

Responsibility accounting is a budgeting system that measures the plans and objectives of managers.

Accepted Answer

A) True 
 B)False

Question 10

Activity-based budgeting is a strategy

Accepted Answer

A) used to determine production targets. 
B) that requires budgeting each functional organizational unit. 
C) that requires determining the budgetary slack for the activity being measured. 
D) that does not require an understanding of value added activities. 
E) that focuses on the cost of activities necessary to produce and sell products and services. 
A) used to determine production targets. 
B) that requires budgeting each functional organizational unit. 
C) that requires determining the budgetary slack for the activity being measured. 
D) that does not require an understanding of value added activities. 
E) that focuses on the cost of activities necessary to produce and sell products and services.

Question 11

The revenue budget and the budgeted income statement are used to prepare the budgeted balance sheet and the budgeted statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 12

Responsibility accounting is a system that

Accepted Answer

A) deals mainly with revenues. 
B) requires subdividing all management levels. 
C) is most appropriate at the top levels of the organization. 
D) is closely tied to the master budget. 
E) measures the plans and actions of responsibility centres. 
A) deals mainly with revenues. 
B) requires subdividing all management levels. 
C) is most appropriate at the top levels of the organization. 
D) is closely tied to the master budget. 
E) measures the plans and actions of responsibility centres.

Question 13

Use the information below to answer the following question(s).Capable Inc.expects to sell 35,000 athletic uniforms for $80 each in 2019.Direct materials costs are $20, direct manufacturing labour is $8, and manufacturing overhead is $6 for each uniform.Each uniform requires 2.0 square metres (sq.m.)of material which is all added at the start of production.The following inventory levels are expected to apply to 2019:
  
-What is the amount budgeted for cost of goods manufactured in 2019?

Accepted Answer

A) $1,020,000 
B) $986,000 
C) $1,292,000 
D) $1,088,000 
E) $1,054,000 
A) $1,020,000 
B) $986,000 
C) $1,292,000 
D) $1,088,000 
E) $1,054,000

Question 14

What is budgetary slack?
What are the pros and cons of building slack into the budget from the point of view of (a)an employee and (b)a senior manager?

Accepted Answer

Budgetary slack refers to the practice o

Question 15

Disk Company was very profitable for the first ten years of its existence, but the company has fallen on hard times with the growth of compact disks.In 2017 Jean Adams was appointed head of the Product Research Department.She began a number of product development projects.Although the department has developed several good ideas that led to the introduction of several promising products, Ms.Adams was criticized for poor cost control.The financial performance reports of the department under Ms.Adams leadership were consistently unfavourable.Management was quite concerned about cost control because profits for the company were low and the cash budget indicated that additional borrowing would be required during the next year.Because of her inability to control costs, Ms.Adams was relieved of her responsibilities in 2018 and Fran Jones became head of the department.Ms.Jones promised to improve performance of Product Research and scaled back the developmental activities to obtain favourable financial performance.By the end of 2018 Ms.Jones was showing a favourable financial variance.Required:
If the Product Research Department is classified as a responsibility centre, what unique problems are associated with evaluating its financial performance?

Accepted Answer

Because there does not appear to be any

Question 16

Use the information below to answer the following question(s).Copper Corporation has the following sales budget for the last six months of 2019:
   Historically, the cash collection of sales has been as follows:
  
-Cash collections for September are

Accepted Answer

A) $143,000. 
B) $161,400. 
C) $199,000. 
D) $204,000. 
E) $240,000. 
A) $143,000. 
B) $161,400. 
C) $199,000. 
D) $204,000. 
E) $240,000.

Question 17

Use the information below to answer the following question(s).Marguerite Inc..expects to sell 20,000 pool cues for $20.00 each.Direct materials costs are $2.00, direct manufacturing labour is $12.00, and manufacturing overhead is $0.80 per pool cue.Each pool cue requires 0.5 kilograms (kg)of material which is all added at the start of production.The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started..Each pool cue requires one hour of direct labour, and manufacturing overhead is allocated based on direct labour hours.The following inventory levels are expected to apply to 2019:
  
-On the 2019 budgeted income statement, what amount will be reported for cost of goods sold?

Accepted Answer

A) $296,000 
B) $280,000 
C) $276,000 
D) $290,000 
E) $292,000 
A) $296,000 
B) $280,000 
C) $276,000 
D) $290,000 
E) $292,000

Question 18

Perry Company has the following information:
   In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month's cost of sales.Required:
Prepare a purchases budget for April through June.

Accepted Answer

The answer of Perry Company has the following information:
 ...

Question 19

Answer the following question(s)using the information below.Fiscal Company has the following sales budget for the last six months of 2018:
   Historically, the cash collection of sales has been as follows:
  
-Cash collections for September are

Accepted Answer

A) $71,500 
B) $86,700 
C) $110,000 
D) $102,000 
E) $99,500 
A) $71,500 
B) $86,700 
C) $110,000 
D) $102,000 
E) $99,500

Question 20

Use the information below to answer the following question(s).Grinnell Manufacturing Company has the following information for 2020:
   Budget Expenses per Month
   Note: All cash expenses are paid as incurred; Collections from sales are 50% in the month of sale and 50% in the month following the sale; December 2019 sales were $110,000.
-What is the budgeted net operating income for the first quarter of 2020?

Accepted Answer

A) $132,640 
B) $135,280 
C) $172,160 
D) $123,640 
E) $140,560 
A) $132,640 
B) $135,280 
C) $172,160 
D) $123,640 
E) $140,560

A rolling budget encourages management to be thinking about the next 12 months.

Describe the benefits to an organization of preparing an operating budget.

Use the information below to answer the following question(s).Gold Corporation has the following sales budget for the last six months of 2019: Historically, the cash collection of sales has been as follows: -The cash budget is a schedule of expected cash receipts and disbursements that

Describe operating and financial budgets and give at least two examples of each discussed in the textbook.

Long-run planning (strategic plans)involves the preparation of the

A criticism of traditional budgeting is "Excessive reliance on extrapolating past trends." Which of the following is a proposal for change to address this criticism?

Responsibility accounting is a budgeting system that measures the plans and objectives of managers.

Activity-based budgeting is a strategy

The revenue budget and the budgeted income statement are used to prepare the budgeted balance sheet and the budgeted statement of cash flows.

Responsibility accounting is a system that

What is budgetary slack? What are the pros and cons of building slack into the budget from the point of view of (a)an employee and (b)a senior manager?

Use the information below to answer the following question(s).Copper Corporation has the following sales budget for the last six months of 2019: Historically, the cash collection of sales has been as follows: -Cash collections for September are

Perry Company has the following information: In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month's cost of sales.Required: Prepare a purchases budget for April through June.

Answer the following question(s)using the information below.Fiscal Company has the following sales budget for the last six months of 2018: Historically, the cash collection of sales has been as follows: -Cash collections for September are

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 6: Master Budget and Responsibility Accounting

A rolling budget encourages management to be thinking about the next 12 months.

Describe the benefits to an organization of preparing an operating budget.

Use the information below to answer the following question(s).Gold Corporation has the following sales budget for the last six months of 2019: Historically, the cash collection of sales has been as follows: -The cash budget is a schedule of expected cash receipts and disbursements that

Describe operating and financial budgets and give at least two examples of each discussed in the textbook.

Long-run planning (strategic plans)involves the preparation of the

A criticism of traditional budgeting is "Excessive reliance on extrapolating past trends." Which of the following is a proposal for change to address this criticism?

Responsibility accounting is a budgeting system that measures the plans and objectives of managers.

Activity-based budgeting is a strategy

The revenue budget and the budgeted income statement are used to prepare the budgeted balance sheet and the budgeted statement of cash flows.

Responsibility accounting is a system that

What is budgetary slack? What are the pros and cons of building slack into the budget from the point of view of (a)an employee and (b)a senior manager?

Use the information below to answer the following question(s).Copper Corporation has the following sales budget for the last six months of 2019: Historically, the cash collection of sales has been as follows: -Cash collections for September are

Perry Company has the following information: In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month's cost of sales.Required: Prepare a purchases budget for April through June.

Answer the following question(s)using the information below.Fiscal Company has the following sales budget for the last six months of 2018: Historically, the cash collection of sales has been as follows: -Cash collections for September are

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters