Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Picture Pretty manufactures picture frames. Sales for August are expected to be 10,000 units of various sizes. Historically, the average frame requires four metres of framing, one square metre of glass, and two square metres of backing. Beginning inventory includes 1,500 metre of framing, 500 square metres of glass, and 500 square metres of backing. Current prices are $0.30 per metre of framing, $6.00 per square metre of glass, and $2.25 per square metre of backing. Ending inventory should be 150% of beginning inventory. Purchases are paid for in the month acquired.
Required:
a. Determine the quantity of framing, glass, and backing that is to be purchased during August.
b. Determine the total costs of direct materials for August purchases.

Accepted Answer

a.
 @#IMG-DLM& b.
Co

Question 3

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

Accepted Answer

A well-prepared operating budget should

Question 4

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.
-How much cash will be disbursed in total in March?

Accepted Answer

A)  $21,000 
B)  $25,000 
C)  $48,200 
D)  $44,200 
E)  $45,800 
A)  $21,000 
B)  $25,000 
C)  $48,200 
D)  $44,200 
E)  $45,800

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Rick Christensen is the new division manager of Fastfood Sales. His division is considered a responsibility centre, and he has control over all costs and revenue of the division. His predecessor had been dismissed from the company because he could not keep the revenues and costs with acceptable variances on a quarterly basis. However, the former manager had relatively good annual reports. Christensen is very concerned about the situation because Fastfood has a somewhat seasonal business and it is very difficult to keep sales up during the winter months. He is considering changing jobs after only a few months but wants some advice as to the likelihood that he will be able to keep revenue and costs under control throughout the year.
Required:
Distinguish between controllable and uncontrollable aspects of revenue and costs. Can a manager totally control all revenue and costs? Why or why not?

Accepted Answer

Although no revenue or cost can be total

Question 7

What will be Country Heather's total costs incurred for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 2007?

Accepted Answer

A)  $0; $40,000; $16,000 
B)  $0; $41,000; $16,000 
C)  $80,000; $40,000; $16,000 
D)  $82,000; $41,000; $16,400 
E)  $84,000; $40,000; $16,400 
A)  $0; $40,000; $16,000 
B)  $0; $41,000; $16,000 
C)  $80,000; $40,000; $16,000 
D)  $82,000; $41,000; $16,400 
E)  $84,000; $40,000; $16,400

Question 8

How many boxes should Berry's Boxes produce in 2012?

Accepted Answer

A)  24,000 boxes 
B)  20,000 boxes 
C)  19,500 boxes 
D)  20,500 boxes 
E)  22,500 boxes 
A)  24,000 boxes 
B)  20,000 boxes 
C)  19,500 boxes 
D)  20,500 boxes 
E)  22,500 boxes

Question 9

Use the information below to answer the following question(s).
Grinnell Manufacturing Company has the following information for 2012:
   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 2011 sales were $110,000.
-What is the budgeted net operating income for the first quarter of 2012?

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

Question 10

Use the information below to answer the following question(s).
Konrade Inc. expects to sell 30,000 athletic uniforms for $80 each in 2012. 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 2012:
  
-What is the amount budgeted for cost of goods sold in 2012?

Accepted Answer

A)  $1,156,000 
B)  $986,000 
C)  $840,000 
D)  $2,400,000 
E)  $1,020,000 
A)  $1,156,000 
B)  $986,000 
C)  $840,000 
D)  $2,400,000 
E)  $1,020,000

Question 11

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 12

The Doran Company prepared the following revenue budget:
   In addition, the gross profit rate is 40 percent and the desired inventory level is 30 percent of next month's cost of goods sold.
Required:
Prepare a purchases budget for April through June.

Accepted Answer

The answer of The Doran Company prepared the following revenue...

Question 13

Few costs are clearly under the sole influence of one manager.

Accepted Answer

A) True 
 B)False

Question 14

Spirit Company sells three products with the following seasonal sales pattern:
   The annual sales budget shows forecasts for the different products and their expected selling price per unit as follows:
   Required:
Prepare a sales budget, in units and dollars, by quarters for the company for the coming year.

Accepted Answer

@#IMG-DLM& Product A

Question 15

Kaizen budgeting, adapted from the Japanese, provides that

Accepted Answer

A)  activity costs are budgeted based on current practices, methods, and costs. 
B)  continuous budgeting methods are employed. 
C)  target pricing is key to budget preparation. 
D)  continuous improvements are incorporated into the budget. 
E)  a rolling budget is employed to keep a handle on management. 
A)  activity costs are budgeted based on current practices, methods, and costs. 
B)  continuous budgeting methods are employed. 
C)  target pricing is key to budget preparation. 
D)  continuous improvements are incorporated into the budget. 
E)  a rolling budget is employed to keep a handle on management.

Question 16

The cash budget helps avoid unnecessary idle cash and at the same time maintain minimum cash balances.

Accepted Answer

A) True 
 B)False

Question 17

One of the criticisms of traditional budgeting is not using budgets to evaluate performance until the end of the budget period. Which of the following proposals for change would address this criticism?

Accepted Answer

A)  Link budgeting explicitly to strategy. 
B)  Use Kaizen budgeting to guide areas for cost reduction before the end of the budget period. 
C)  Inform employees of the need for continuous improvement in performance within the budget period. 
D)  Balance financial aspects with non-financial aspects (such as quality and time). 
E)  Rely strictly on extrapolation of past performance. 
A)  Link budgeting explicitly to strategy. 
B)  Use Kaizen budgeting to guide areas for cost reduction before the end of the budget period. 
C)  Inform employees of the need for continuous improvement in performance within the budget period. 
D)  Balance financial aspects with non-financial aspects (such as quality and time). 
E)  Rely strictly on extrapolation of past performance.

Question 18

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.
-How much cash will be collected from customers in March?

Accepted Answer

A)  $47,000 
B)  $45,000 
C)  $50,000 
D)  $33,000 
E)  $43,000 
A)  $47,000 
B)  $45,000 
C)  $50,000 
D)  $33,000 
E)  $43,000

Question 19

Russell Company has the following projected account balances for June 30, 2012:
   Required:
a. Prepare a budgeted income statement for June 2012.
b. Prepare a budgeted balance sheet as of June 30, 2012.

Accepted Answer

a.
 @#IMG-DLM& @#IMG-DLM& Cost of goods sold:
 @#IMG-DLM& Op

Question 20

Which of the following statements is true concerning controllability of costs?

Accepted Answer

A)  Fixed costs are controllable costs. 
B)  Controllable costs are easy to identify with much accuracy. 
C)  Senior managers rarely differ in their reliance on controllable costs for performance measurement. 
D)  All costs are controllable, given a sufficiently long time period. 
E)  Most costs are under the sole influence of any one manager. 
A)  Fixed costs are controllable costs. 
B)  Controllable costs are easy to identify with much accuracy. 
C)  Senior managers rarely differ in their reliance on controllable costs for performance measurement. 
D)  All costs are controllable, given a sufficiently long time period. 
E)  Most costs are under the sole influence of any one manager.

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

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

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

What will be Country Heather's total costs incurred for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 2007?

How many boxes should Berry's Boxes produce in 2012?

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

The Doran Company prepared the following revenue budget: In addition, the gross profit rate is 40 percent and the desired inventory level is 30 percent of next month's cost of goods sold. Required: Prepare a purchases budget for April through June.

Few costs are clearly under the sole influence of one manager.

Kaizen budgeting, adapted from the Japanese, provides that

The cash budget helps avoid unnecessary idle cash and at the same time maintain minimum cash balances.

One of the criticisms of traditional budgeting is not using budgets to evaluate performance until the end of the budget period. Which of the following proposals for change would address this criticism?

Russell Company has the following projected account balances for June 30, 2012: Required: a. Prepare a budgeted income statement for June 2012. b. Prepare a budgeted balance sheet as of June 30, 2012.

Which of the following statements is true concerning controllability of costs?

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

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.

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

What will be Country Heather's total costs incurred for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 2007?

How many boxes should Berry's Boxes produce in 2012?

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

The Doran Company prepared the following revenue budget: In addition, the gross profit rate is 40 percent and the desired inventory level is 30 percent of next month's cost of goods sold. Required: Prepare a purchases budget for April through June.

Few costs are clearly under the sole influence of one manager.

Kaizen budgeting, adapted from the Japanese, provides that

The cash budget helps avoid unnecessary idle cash and at the same time maintain minimum cash balances.

One of the criticisms of traditional budgeting is not using budgets to evaluate performance until the end of the budget period. Which of the following proposals for change would address this criticism?

Russell Company has the following projected account balances for June 30, 2012: Required: a. Prepare a budgeted income statement for June 2012. b. Prepare a budgeted balance sheet as of June 30, 2012.

Which of the following statements is true concerning controllability of costs?

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