Question 1

Participation of employees in the budgeting process helps ________.

Accepted Answer

A)  create greater commitment towards the budget 
B)  create demanding but achievable budget 
C)  decrease deviations from the budget 
D)  secure communication of sensitive information 
A)  create greater commitment towards the budget 
B)  create demanding but achievable budget 
C)  decrease deviations from the budget 
D)  secure communication of sensitive information

Question 2

Most costs can be easily controlled because they are under the sole influence of one manager.

Accepted Answer

A) True 
 B)False

Question 3

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,budgeted gross margin is ________.

Accepted Answer

A)  $100,000 
B)  $140,000 
C)  $60,000 
D)  $50,000 
A)  $100,000 
B)  $140,000 
C)  $60,000 
D)  $50,000

Question 4

Answer the following questions using the information below:
Finmin Company has the following sales budget for the last six months of 2015:
 $\begin{array}{lrlr}
\text { July } & \$ 200,000 & \text { October } & \$ 180,000 \
\text { August } & 160,000 & \text { November } & 200,000 \
\text { September } & 200,000 & \text { December } & 180,000
\end{array}$ Sales are immediately due, however the cash collection of sales, historically, has been as follows:
65% of sales collected in the month of sale,
25% of sales collected in the month following the sale,
8% of sales collected in the second month following the sale, and
2% of sales are uncollectible.
-Cash collections for October are ________.

Accepted Answer

A)  $117,000 
B)  $179,800 
C)  $194,000 
D)  $176,400 
A)  $117,000 
B)  $179,800 
C)  $194,000 
D)  $176,400

Question 5

Challenging budgets tend to ________.

Accepted Answer

A)  discourage out-of-the-box and creative thinking as there is very little room for error 
B)  set unrealistic expectations and are perceived as overly ambitious and unachievable 
C)  increase anxiety without motivation not meeting them is viewed as a failure 
D)  motivate improved performance as employees work more intensely to avoid failure 
A)  discourage out-of-the-box and creative thinking as there is very little room for error 
B)  set unrealistic expectations and are perceived as overly ambitious and unachievable 
C)  increase anxiety without motivation not meeting them is viewed as a failure 
D)  motivate improved performance as employees work more intensely to avoid failure

Question 6

The manufacturing labor budget depends on wage rates,production methods,and hiring plans.

Accepted Answer

A) True 
 B)False

Question 7

Silas has been recently promoted to head his department.He is responsible for maximizing the profits of the department and to ensure that the earnings are ploughed back into the business.Silas is most likely to head a (n)________.

Accepted Answer

A)  revenue center 
B)  investment center 
C)  cost center 
D)  profit center 
A)  revenue center 
B)  investment center 
C)  cost center 
D)  profit center

Question 8

Allscott Company is developing its budgets for 2016 and,for the first time,will use the kaizen approach.The initial 2016 income statement,based on static data from 2015,is as follows:
 $\begin{array}{lr}
\text { Sales (140,000 units) } & \$ 420,000 \
\text { Less: Cost of goods sold } & 280,000\
\text { Gross margin } & 140,000 \
\text { Operating expenses (includes } \$ 28,000 \text { of depreciation) } & \underline{112,000}\
\text { Net income }&\$28,000
\end{array}$ Selling prices for 2016 are expected to increase by 8%,and sales volume in units will decrease by 10%.The cost of goods sold as estimated by the kaizen approach will decline by 10% per unit.Other than depreciation,all other operating costs are expected to decline by 5%.
Required:
Prepare a kaizen-based budgeted income statement for 2016.

Accepted Answer

The answer of Allscott Company is developing its budgets for...

Question 9

Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better.

Accepted Answer

A) True 
 B)False

Question 10

Answer the following questions using the information below:
The following information pertains to the January operating budget for Casey Corporation.
• Budgeted sales for January $200,000 and February $100,000.
• Collections for sales are 60% in the month of sale and 40% the next month.
• Gross margin is 30% of sales.
• Administrative costs are $10,000 each month.
• Beginning accounts receivable is $20,000.
• Beginning inventory is $14,000.
• Beginning accounts payable is $65,000. (All from inventory purchases.)
• Purchases are paid in full the following month.
• Desired ending inventory is 20% of next month's cost of goods sold (COGS).
-For January,budgeted cost of goods sold is ________.

Accepted Answer

A)  $200,000 
B)  $140,000 
C)  $126,000 
D)  $112,000 
A)  $200,000 
B)  $140,000 
C)  $126,000 
D)  $112,000

Question 11

Answer the following questions using the information below:
Kason, Inc., expects to sell 20,000 pool cues for $12.00 each. Direct materials costs are $2.00, direct manufacturing labor is $4.00, and manufacturing overhead is $0.80 per pool cue. The following inventory levels apply to 2016:
 $$\begin{array} { l r r } 
& \text { Beginning inventory } & \text { Ending inventory } \
\text { Direct materials } & 24,000 \text { units } & 24,000 \text { units } \
\text { Work-in-process inventory } & 0 \text { units } & 0 \text { units } \
\text { Finished goods inventory } & 2,000 \text { units } & 2,500 \text { units }
\end{array}$$
-On the 2016 budgeted income statement,what amount will be reported for cost of goods sold?

Accepted Answer

A)  $139,800 
B)  $136,000 
C)  $132,600 
D)  $153,000 
A)  $139,800 
B)  $136,000 
C)  $132,600 
D)  $153,000

Question 12

Tiger Pride produces two product lines: T-shirts and Sweatshirts.Product profitability is analyzed as follows: $\begin{array}{lrr}&\text { T-SHIRTS }&\text { SWEATSHIRTS }\
\text { Production and sales volume } & 60,000 \text { units } & 35,000 \text { units } \
\text { Selling price } & \$ 16.00 & \$ 29.00 \
\text { Direct material } & \$ 2.00 & \$ 5.00 \
\text { Direct labor } & \$ 4.50 & \$ 7.20 \
\text { Manufacturing overhead } & \$ 2.00 & \$ 3.00 \
\text { Gross profit } & \$ 7.50 & \$ 13.80 \
\text { Selling and administrative } & \$ 4.00 & \$ 7.00 \
\text { Operating profit } & \$ 3.50 & \$ 6.80
\end{array}$ What is the projected decline in operating income if the direct materials costs of T-Shirts increase to $3.50 per unit and direct labor costs of Sweatshirts increase to $13.00 per unit?

Accepted Answer

A)  $293,000 
B)  $90,000 
C)  $203,000 
D)  $473,000 
A)  $293,000 
B)  $90,000 
C)  $203,000 
D)  $473,000

Question 13

When performing a sensitivity analysis,if the selling price per unit is increased,then the ________.

Accepted Answer

A)  per unit fixed administrative costs will increase 
B)  per unit direct materials purchase price will increase 
C)  total volume of sales will increase 
D)  total costs for sales commissions and other nonmanufacturing variable costs will increase 
A)  per unit fixed administrative costs will increase 
B)  per unit direct materials purchase price will increase 
C)  total volume of sales will increase 
D)  total costs for sales commissions and other nonmanufacturing variable costs will increase

Question 14

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 sold for Meridian Industries in 2016?

Accepted Answer

A)  $500,000 
B)  $600,000 
C)  $700,000 
D)  $800,000 
A)  $500,000 
B)  $600,000 
C)  $700,000 
D)  $800,000

Question 15

Activity-based costing analysis takes a long-run perspective and treats all activity costs as variable costs.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true in the case of budgeting for multinational companies?

Accepted Answer

A)  While budgeting for multinational companies, managers consider difference in tax statutes as an uncontrollable factor. 
B)  While budgeting for multinational companies, managers do not account for foreign exchange fluctuations as the operating profits are reported in different currencies. 
C)  While budgeting for multinational companies, managers must be aware that budgets will not be used for evaluating performance. 
D)  While budgeting for multinational companies, managers are not concerned about the domestic factors of the different countries in which they operate. 
A)  While budgeting for multinational companies, managers consider difference in tax statutes as an uncontrollable factor. 
B)  While budgeting for multinational companies, managers do not account for foreign exchange fluctuations as the operating profits are reported in different currencies. 
C)  While budgeting for multinational companies, managers must be aware that budgets will not be used for evaluating performance. 
D)  While budgeting for multinational companies, managers are not concerned about the domestic factors of the different countries in which they operate.

Question 17

High inventory levels increase the ________.

Accepted Answer

A)  cost of carrying inventory, the costs of quality, and shrinkage costs 
B)  revenues and expected profits 
C)  cost of equity, cost of debt, and cost of short-term funds 
D)  cost of materials, the costs of overhead, and opportunity costs 
A)  cost of carrying inventory, the costs of quality, and shrinkage costs 
B)  revenues and expected profits 
C)  cost of equity, cost of debt, and cost of short-term funds 
D)  cost of materials, the costs of overhead, and opportunity costs

Question 18

Describe the concept of kaizen budgeting.

Accepted Answer

Kaizen budgeting explicitly incorporates

Question 19

Which one of the following is a benefit of activity-based budgeting?

Accepted Answer

A)  It uses a single cost driver for batch-level activities or higher. 
B)  It is the most convenient method of budgeting as it requires minimal effort. 
C)  It provides detailed information that improves decision making. 
D)  It is the most efficient method to budget direct costs and trace them to individual cost objects. 
A)  It uses a single cost driver for batch-level activities or higher. 
B)  It is the most convenient method of budgeting as it requires minimal effort. 
C)  It provides detailed information that improves decision making. 
D)  It is the most efficient method to budget direct costs and trace them to individual cost objects.

Question 20

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

Participation of employees in the budgeting process helps ________.

Most costs can be easily controlled because they are under the sole influence of one manager.

Challenging budgets tend to ________.

The manufacturing labor budget depends on wage rates,production methods,and hiring plans.

Silas has been recently promoted to head his department.He is responsible for maximizing the profits of the department and to ensure that the earnings are ploughed back into the business.Silas is most likely to head a (n)________.

Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better.

When performing a sensitivity analysis,if the selling price per unit is increased,then the ________.

Activity-based costing analysis takes a long-run perspective and treats all activity costs as variable costs.

Which of the following statements is true in the case of budgeting for multinational companies?

High inventory levels increase the ________.

Describe the concept of kaizen budgeting.

Which one of the following is a benefit of activity-based budgeting?

Distinguish between controllable and uncontrollable aspects of revenue and costs.Can a manager totally control all revenue and costs? Why or why not?

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

Participation of employees in the budgeting process helps ________.

Most costs can be easily controlled because they are under the sole influence of one manager.

Challenging budgets tend to ________.

The manufacturing labor budget depends on wage rates,production methods,and hiring plans.

Silas has been recently promoted to head his department.He is responsible for maximizing the profits of the department and to ensure that the earnings are ploughed back into the business.Silas is most likely to head a (n)________.

Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better.

When performing a sensitivity analysis,if the selling price per unit is increased,then the ________.

Activity-based costing analysis takes a long-run perspective and treats all activity costs as variable costs.

Which of the following statements is true in the case of budgeting for multinational companies?

High inventory levels increase the ________.

Describe the concept of kaizen budgeting.

Which one of the following is a benefit of activity-based budgeting?

Distinguish between controllable and uncontrollable aspects of revenue and costs.Can a manager totally control all revenue and costs? Why or why not?

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