Question 1

Which of the following is a reason why top managers want lower-level managers to participate in the budgeting process?

Accepted Answer

A)  To benefit from their experience with the day-to-day aspects of running the business. 
B)  To reduce the time and cost expended in the budgeting process. 
C)  To ensure that they do not introduce any budgetary slack. 
D)  To ensure that the budgets are administered rigidly given the changing market conditions. 
A)  To benefit from their experience with the day-to-day aspects of running the business. 
B)  To reduce the time and cost expended in the budgeting process. 
C)  To ensure that they do not introduce any budgetary slack. 
D)  To ensure that the budgets are administered rigidly given the changing market conditions.

Question 2

Answer the following questions using the information below:
Shamokin Manufacturing produces a Tourbillon watch movement called OM362. Shamokin expects to sell 10,000 units of OM362 and to have an ending finished inventory of 2,000 units. Currently, it has a beginning finished inventory of 800 units. Each unit of OM362 requires two labor operations, one labor hour of assembling and two labor hours of polishing. The direct labor rate for assembling is $10 per assembling hour and the direct labor rate for polishing is $12.50 per polishing hour.
-The expected number of hours of direct labor for OM362 Bigger is ________.

Accepted Answer

A)  8,800 hours of assembling; 17,600 hours of polishing 
B)  11,200 hours of assembling; 22,400 hours of polishing 
C)  17,600 hours of assembling; 8,800 hours of polishing 
D)  22,400 hours of assembling; 11,200 hours of polishing 
A)  8,800 hours of assembling; 17,600 hours of polishing 
B)  11,200 hours of assembling; 22,400 hours of polishing 
C)  17,600 hours of assembling; 8,800 hours of polishing 
D)  22,400 hours of assembling; 11,200 hours of polishing

Question 3

Budgeting includes only the financial aspects of the plan and NOT any nonfinancial aspects such as the number of physical units manufactured.

Accepted Answer

A) True 
 B)False

Question 4

Kaizen budgeting does NOT make sense for cost centers.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is true of budgets?

Accepted Answer

A)  Master budgets express management's operating and financial plans. 
B)  Financial budgets are prepared before the master budget is prepared. 
C)  Operating budgets are prepared independently of the master budget. 
D)  Financial budgets are working documents at the core of the budgeting process. 
A)  Master budgets express management's operating and financial plans. 
B)  Financial budgets are prepared before the master budget is prepared. 
C)  Operating budgets are prepared independently of the master budget. 
D)  Financial budgets are working documents at the core of the budgeting process.

Question 6

Budgeted production equals ________.

Accepted Answer

A)  beginning finished goods inventory + budgeted unit sales - targeted ending finished goods inventory 
B)  targeted ending finished goods inventory + beginning finished goods inventory - budgeted unit sales 
C)  budgeted unit sales + targeted ending finished goods inventory - beginning finished goods inventory 
D)  budgeted unit sales + targeted ending finished goods inventory + beginning finished goods inventory 
A)  beginning finished goods inventory + budgeted unit sales - targeted ending finished goods inventory 
B)  targeted ending finished goods inventory + beginning finished goods inventory - budgeted unit sales 
C)  budgeted unit sales + targeted ending finished goods inventory - beginning finished goods inventory 
D)  budgeted unit sales + targeted ending finished goods inventory + beginning finished goods inventory

Question 7

The number of units in the sales budget and the production budget may differ because of a change in ________.

Accepted Answer

A)  finished goods inventory levels 
B)  overhead charges 
C)  direct material inventory levels 
D)  sales returns and allowances 
A)  finished goods inventory levels 
B)  overhead charges 
C)  direct material inventory levels 
D)  sales returns and allowances

Question 8

Bottom-up budgets entrusts senior managers to prepare budgets and lower-level managers to execute them.

Accepted Answer

A) True 
 B)False

Question 9

A master budget forces managers to examine the business as they plan,so they can ________.

Accepted Answer

A)  detect inaccurate historical records to avoid errors in budgets 
B)  set expectations against which actual results can be compared 
C)  complete the budgeting task on time 
D)  ensure that only financial risks and opportunities are incorporated 
A)  detect inaccurate historical records to avoid errors in budgets 
B)  set expectations against which actual results can be compared 
C)  complete the budgeting task on time 
D)  ensure that only financial risks and opportunities are incorporated

Question 10

A packaging department is most likely a profit center.

Accepted Answer

A) True 
 B)False

Question 11

Answer the following questions using the information below:
Meridian Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,000 units of Prime and 1,000 units of Luxuria in 2016.The following estimates are given for 2016:
 $$\begin{array} { l r r } 
& \text { Prime } & \text { Luxuria } \
\text { Selling price } & \$ 200 & \$ 500 \
\text { Direct materials } & 20 & 50 \
\text { Direct labor } & 40 & 150 \
\text { Manufacturing overhead } & 40 & 100
\end{array}$$ Meridian had an inventory of 200 units of Prime and 75 units of Luxuria at the end of 2015. It has decided that as a measure to counter stock outages it will maintain ending inventory of 350 units of Prime and 200 units of Luxuria.
Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $10. There were 100 units of Crimpson in stock at the end of 2015.The management does not want to have any stock of Crimpson at the end of 2016.
-What is the total budgeted cost of goods manufactured in 2016?

Accepted Answer

A)  $600,000 
B)  $625,500 
C)  $652,500 
D)  $667,500 
A)  $600,000 
B)  $625,500 
C)  $652,500 
D)  $667,500

Question 12

In which order are the following developed? First to last: $A =$ Production bud get
$\mathrm { B } =$ Direct materials costs budget
$\mathrm { C } =$ Budgeted income statement
$\mathrm { D } =$ Revenues budget

Accepted Answer

A)  ABDC 
B)  DABC 
C)  DCAB 
D)  CABD 
A)  ABDC 
B)  DABC 
C)  DCAB 
D)  CABD

Question 13

Even in the face of changing conditions,attaining the original budget is critical.

Accepted Answer

A) True 
 B)False

Question 14

Sensitivity analysis helps managers evaluate risks ________.

Accepted Answer

A)  by showing the effects of changes to the original data or an underlying assumption 
B)  by identifying inconsistencies in underlying assumptions and actual conditions 
C)  by removing the effects of foreign currency exposure and other uncontrollable factors 
D)  by identifying gaps in the production process using information on setups needed to manufacture products 
A)  by showing the effects of changes to the original data or an underlying assumption 
B)  by identifying inconsistencies in underlying assumptions and actual conditions 
C)  by removing the effects of foreign currency exposure and other uncontrollable factors 
D)  by identifying gaps in the production process using information on setups needed to manufacture products

Question 15

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 
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

Question 16

Answer the following questions using the information below:
The following information pertains to the January operating budget for Casey Corporation, a retailer:
Budgeted sales are $200,000 for January
Collections of sales are 50% in the month of sale and 50% the next month
Cost of goods sold averages 70% of sales
Merchandise purchases total $150,000 in January
Marketing costs are $3,000 each month
Distribution costs are $5,000 each month
Administrative costs are $10,000 each month
-For January,the amount budgeted for the nonmanufacturing costs budget is ________.

Accepted Answer

A)  $78,000 
B)  $10,000 
C)  $168,000 
D)  $18,000 
A)  $78,000 
B)  $10,000 
C)  $168,000 
D)  $18,000

Question 17

Economics suggests that a decrease in the selling price of a product will decrease revenue.

Accepted Answer

A) True 
 B)False

Question 18

Tom Magic Company manufactures various kinds of toys for different age groups.The company's flagship product is Rx.The company currently requires 8.50 labor hours to manufacture per unit of Rx.The company believes that because of numerous small improvements in the process,it will require 0.10 labor-hours less and hence will only 8.40 labor-hours in the next quarter.It will require 8.35 and 8.25 labor-hours in third and fourth quarter.The company has adopted ________.

Accepted Answer

A)  activity based budgeting 
B)  kaizen budgeting 
C)  zero-based budgeting 
D)  cost-based budgeting 
A)  activity based budgeting 
B)  kaizen budgeting 
C)  zero-based budgeting 
D)  cost-based budgeting

Question 19

The Japanese use the term kaizen when referring to________.

Accepted Answer

A)  scarce resources 
B)  pro forma financial statements 
C)  continuous improvement 
D)  the sales forecast 
A)  scarce resources 
B)  pro forma financial statements 
C)  continuous improvement 
D)  the sales forecast

Question 20

Which of the following is true of budgets when they are administered thoughtfully?

Accepted Answer

A)  They eliminate subjectivity in performance evaluation. 
B)  They can eliminate the uncertainty faced by a company. 
C)  They promote coordination within the subunits of a company. 
D)  They are a substitute the planning and coordination functions of management. 
A)  They eliminate subjectivity in performance evaluation. 
B)  They can eliminate the uncertainty faced by a company. 
C)  They promote coordination within the subunits of a company. 
D)  They are a substitute the planning and coordination functions of management.

Which of the following is a reason why top managers want lower-level managers to participate in the budgeting process?

Budgeting includes only the financial aspects of the plan and NOT any nonfinancial aspects such as the number of physical units manufactured.

Kaizen budgeting does NOT make sense for cost centers.

Which of the following statements is true of budgets?

Budgeted production equals ________.

The number of units in the sales budget and the production budget may differ because of a change in ________.

Bottom-up budgets entrusts senior managers to prepare budgets and lower-level managers to execute them.

A master budget forces managers to examine the business as they plan,so they can ________.

A packaging department is most likely a profit center.

In which order are the following developed? First to last: $A =$ Production bud get $\mathrm { B } =$ Direct materials costs budget $\mathrm { C } =$ Budgeted income statement $\mathrm { D } =$ Revenues budget

Even in the face of changing conditions,attaining the original budget is critical.

Sensitivity analysis helps managers evaluate risks ________.

The cash budget is a schedule of expected cash receipts and disbursements that ________.

Economics suggests that a decrease in the selling price of a product will decrease revenue.

The Japanese use the term kaizen when referring to________.

Which of the following is true of budgets when they are administered thoughtfully?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 6: Master Budget and Responsibility Accounting

Which of the following is a reason why top managers want lower-level managers to participate in the budgeting process?

Budgeting includes only the financial aspects of the plan and NOT any nonfinancial aspects such as the number of physical units manufactured.

Kaizen budgeting does NOT make sense for cost centers.

Which of the following statements is true of budgets?

Budgeted production equals ________.

The number of units in the sales budget and the production budget may differ because of a change in ________.

Bottom-up budgets entrusts senior managers to prepare budgets and lower-level managers to execute them.

A master budget forces managers to examine the business as they plan,so they can ________.

A packaging department is most likely a profit center.

In which order are the following developed? First to last: A=A =A= Production bud get B=\mathrm { B } =B= Direct materials costs budget C=\mathrm { C } =C= Budgeted income statement D=\mathrm { D } =D= Revenues budget

Even in the face of changing conditions,attaining the original budget is critical.

Sensitivity analysis helps managers evaluate risks ________.

The cash budget is a schedule of expected cash receipts and disbursements that ________.

Economics suggests that a decrease in the selling price of a product will decrease revenue.

The Japanese use the term kaizen when referring to________.

Which of the following is true of budgets when they are administered thoughtfully?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

In which order are the following developed? First to last: $A =$ Production bud get $\mathrm { B } =$ Direct materials costs budget $\mathrm { C } =$ Budgeted income statement $\mathrm { D } =$ Revenues budget