Question 1

What will be Country Heather's budgeted revenue?

Accepted Answer

A)  $216,000 
B)  $240,000 
C)  $312,000 
D)  $318,000 
E)  $300,500 
A)  $216,000 
B)  $240,000 
C)  $312,000 
D)  $318,000 
E)  $300,500

Question 2

Benchmarks encourage the setting of stretch goals.

Accepted Answer

A) True 
 B)False

Question 3

How is budgeting for a multinational corporation different than budgeting for a corporation that is strictly domestic?

Accepted Answer

Budgeting for a multinational corporatio

Question 4

Stretch goals in budgeting tend to

Accepted Answer

A)  decrease line-management participation in attaining corporate goals. 
B)  increase failure. 
C)  increase anxiety without motivation. 
D)  motivate improved performance beyond the status quo. 
E)  improve communication and coordination. 
A)  decrease line-management participation in attaining corporate goals. 
B)  increase failure. 
C)  increase anxiety without motivation. 
D)  motivate improved performance beyond the status quo. 
E)  improve communication and coordination.

Question 5

Responsibility accounting focuses on information and knowledge, not control.

Accepted Answer

A) True 
 B)False

Question 6

Cooper Company has a production schedule of 18,000 units and a budgeted sales volume of 20,000 units for the current year. In addition, 4,000 units are in beginning finished goods inventory. How many units are targeted for ending finished goods inventory?

Accepted Answer

A)  20,000 units 
B)  14,000 units 
C)  6,000 units 
D)  2,000 units 
E)  1,900 units 
A)  20,000 units 
B)  14,000 units 
C)  6,000 units 
D)  2,000 units 
E)  1,900 units

Question 7

Favata Company has the following information:
   In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales.
Required:
Prepare a purchases budget for July through September.

Accepted Answer

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

Question 8

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 2012:
  
-On the 2012 budgeted income statement, what amount will be reported for gross margin?

Accepted Answer

A)  $124,000 
B)  $104,000 
C)  $312,000 
D)  $160,000 
E)  $400,000 
A)  $124,000 
B)  $104,000 
C)  $312,000 
D)  $160,000 
E)  $400,000

Question 9

Unit sales of Product 1 are currently 20,000, while unit sales of Product 2 are currently double those of Product 1. What will the company's sales forecast be assuming sales of Product 1 increase by 10 percent and those of Product 2 go up by 8,000 units from the current level?

Accepted Answer

A)  20,000 and 40,000 units, respectively 
B)  22,000 and 44,000 units, respectively 
C)  22,000 and 46,000 units, respectively 
D)  76,000 units 
E)  22,000 and 48,000 units, respectively 
A)  20,000 and 40,000 units, respectively 
B)  22,000 and 44,000 units, respectively 
C)  22,000 and 46,000 units, respectively 
D)  76,000 units 
E)  22,000 and 48,000 units, respectively

Question 10

Describe some of the drawbacks of using the operating budget as a control device.

Accepted Answer

When the operating budget is used as a c

Question 11

Answer the following question(s) using the information below.
The following information pertains to Tiffany Company:
   • Cash is collected from customers in the following manner:
   • 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
• Labour costs are 20% of sales. Other operating costs are $15,000 per month (including $4,000 of depreciation). Both of these are paid in the month incurred.
• The cash balance on March 1 is $4,000. A minimum cash balance of $3,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.
-What is the ending cash balance for March after borrowing, if required?

Accepted Answer

A)  $4,000 
B)  $3,800 
C)  $3,200 
D)  $2,800 
E)  $3,000 
A)  $4,000 
B)  $3,800 
C)  $3,200 
D)  $2,800 
E)  $3,000

Question 12

Use the information below to answer the following question(s).
Daniel Inc. expects to sell 6,000 ceramic vases for $20 each in 2012. Direct materials costs are $2, direct manufacturing labour is $10, and manufacturing overhead is $3 per vase. Each vase 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 vase 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 2012:
  
-On the 2012 budgeted income statement, what amount will be reported for gross margin?

Accepted Answer

A)  $122,000 
B)  $90,000 
C)  $48,000 
D)  $30,000 
E)  $120,000 
A)  $122,000 
B)  $90,000 
C)  $48,000 
D)  $30,000 
E)  $120,000

Question 13

Sensitivity analysis helps to evaluate outcomes from changes in data or assumptions.

Accepted Answer

A) True 
 B)False

Question 14

In a profit centre the manager is responsible for investments, revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Budgets that change (rolling or continuous) are better for the planning than budgets that do not change.

Accepted Answer

A) True 
 B)False

Question 17

How many flowerpots should Country Heather produce in 2007?

Accepted Answer

A)  48,000 flowerpots 
B)  44,000 flowerpots 
C)  41,000 flowerpots 
D)  39,000 flowerpots 
E)  18,000 flowerpots 
A)  48,000 flowerpots 
B)  44,000 flowerpots 
C)  41,000 flowerpots 
D)  39,000 flowerpots 
E)  18,000 flowerpots

Question 18

Use the information below to answer the following question(s).
Copper Corporation has the following sales budget for the last six months of 2012:
   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 19

The operating budget includes the

Accepted Answer

A)  capital budget. 
B)  cash budget. 
C)  budgeted balance sheet. 
D)  budgeted cash flow statement. 
E)  production budget. 
A)  capital budget. 
B)  cash budget. 
C)  budgeted balance sheet. 
D)  budgeted cash flow statement. 
E)  production budget.

Question 20

Boone Hobbies gross margin for next month is expected to be

Accepted Answer

A)  $280,000. 
B)  $336,000. 
C)  $356,000. 
D)  $360,000. 
E)  $240,000. 
A)  $280,000. 
B)  $336,000. 
C)  $356,000. 
D)  $360,000. 
E)  $240,000.

Exam 6: Master Budget and Responsibility Accounting

What will be Country Heather's budgeted revenue?

Benchmarks encourage the setting of stretch goals.

How is budgeting for a multinational corporation different than budgeting for a corporation that is strictly domestic?

Stretch goals in budgeting tend to

Responsibility accounting focuses on information and knowledge, not control.

Cooper Company has a production schedule of 18,000 units and a budgeted sales volume of 20,000 units for the current year. In addition, 4,000 units are in beginning finished goods inventory. How many units are targeted for ending finished goods inventory?

Favata Company has the following information: In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales. Required: Prepare a purchases budget for July through September.

Unit sales of Product 1 are currently 20,000, while unit sales of Product 2 are currently double those of Product 1. What will the company's sales forecast be assuming sales of Product 1 increase by 10 percent and those of Product 2 go up by 8,000 units from the current level?

Describe some of the drawbacks of using the operating budget as a control device.

Sensitivity analysis helps to evaluate outcomes from changes in data or assumptions.

In a profit centre the manager is responsible for investments, revenues and expenses.

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?

Budgets that change (rolling or continuous) are better for the planning than budgets that do not change.

How many flowerpots should Country Heather produce in 2007?

Use the information below to answer the following question(s). Copper Corporation has the following sales budget for the last six months of 2012: Historically, the cash collection of sales has been as follows: -Cash collections for September are

The operating budget includes the

Boone Hobbies gross margin for next month is expected to be

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

Quantitative Analyses of Cost Functions

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

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters