Question 1

On the budgeted balance sheet,the number for notes payable will come from the ________.

Accepted Answer

A)  operating budget 
B)  schedule of cash receipts 
C)  cash budget 
D)  cost of goods sold budget 
A)  operating budget 
B)  schedule of cash receipts 
C)  cash budget 
D)  cost of goods sold budget

Question 2

For a merchandising company,the budgeted total sales equals the expected number of units sold multiplied by the budgeted selling price per unit.

Accepted Answer

A) True 
 B)False

Question 3

A budgeting technique that requires managers to justify all revenue and expenses for each new period is called ________.

Accepted Answer

A)  zero-based budgeting 
B)  justification budgeting 
C)  flexible budgeting 
D)  defensive budgeting 
A)  zero-based budgeting 
B)  justification budgeting 
C)  flexible budgeting 
D)  defensive budgeting

Question 4

For a merchandising company,what is the final step in the master budget process?

Accepted Answer

Preparatio

Question 5

Verle,Inc.has a cash balance of $20,000 on April 1.The company is now preparing the cash budget for the second quarter.Budgeted cash collections and payments are as follows: $$\begin{array} { | l | r | r | r | } 
\hline &{ \text { Apr } } & { \text { May } } &{ \text { Jun } } \
\hline \text { Cash collections } & \$ 22,000 & \$ 22,000 & \$ 24,000 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 4600 & 5000 & 6800 \
\hline \text { Operating expenses } & 6000 & 4600 & 6000 \
\hline
\end{array}$$ There are no budgeted capital expenditures or financing transactions during the quarter.Based on the above data,calculate the projected cash balance at the end of May.

Accepted Answer

A)  $22,000 
B)  $53,400 
C)  $48,400 
D)  $43,800 
A)  $22,000 
B)  $53,400 
C)  $48,400 
D)  $43,800

Question 6

The Raw Materials Inventory account must be considered when calculating the amount of direct materials to be purchased.

Accepted Answer

A) True 
 B)False

Question 7

Stratosphere,Inc.has the following budgeted sales for the next quarter.
 $$\begin{array} { | l | r | r | r | } 
\hline \text { Month: } & \mathbf { 1 } & \mathbf { 2 } & \mathbf { 3 } \
\hline \text { Units } & 10,000 & 11,000 & 12,000 \
\hline
\end{array}$$ Inventory of finished goods on hand at the beginning of the quarter is 4,000 units.The company desires to maintain ending inventory equal to beginning inventory plus 1,000 units every month.
Calculate the quantity to be produced during the quarter.

Accepted Answer

Calculation of budgeted production units

Question 8

A manufacturing company's budgeted income statement includes the following data: $\begin{array}{|l|r|r|r|r|}
\hline\text { Data extracted from budgeted } & & & \
\text { income statement } & \text { Mar } & \text { Apr } & \text { May } & \text { Jun }\
\hline \text { Sales revenue } & \$ 120,000 & \$ 90,000 & \$ 130,000 & \$ 110,000 \
\hline \text { Commission expense (10\% of } & & & & \
 \text { sale) } & 12,000 & 9000 & 13,000 & 11,000 \
\hline \text { Salaries expense } & 33,000 & 33,000 & 33,000 & 33,000 \
\hline \begin{array}{l}
\text { Miscellaneous expense }-5 \% \text { of } \
\text { sales }
\end{array} & 6000 & 4500 & 6500 & 5500 \
\hline \text { Rent expense } & 3700 & 3700 & 3700 & 3700 \
\hline \text { Utilities expense } & 2000 & 2000 & 2000 & 2000 \
\hline \text { Insurance expense } & 2900 & 2900 & 2900 & 2900 \
\hline \text { Depreciation expense } & 4500 & 4500 & 4500 & 4500 \
\hline
\end{array}$
 The budget assumes that 60% of commission expenses are paid in the month they were incurred,and the remaining 40% are paid one month later.In addition,50% of salaries expenses are paid in the month incurred and the remaining 50% are paid one month later.Miscellaneous expenses,rent expense,and utilities expenses are assumed to be paid in the same month in which they are incurred.Insurance was prepaid for the year on January 1.How much is the total of the budgeted cash payments for selling and administrative expenses for the month of May?

Accepted Answer

A)  $50,900 
B)  $56,600 
C)  $54,600 
D)  $45,200 
A)  $50,900 
B)  $56,600 
C)  $54,600 
D)  $45,200

Question 9

Gunda Corp.has prepared a preliminary cash budget for the third quarter as shown below: $$\begin{array} { | l | r | r | r | } 
\hline \text { Cash Budget } &{ \text { July } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Beginning cash balance } & \$ 34,000 & \$ 13,000 & \$ 18,500 \
\hline \text { Plus: Cash collections } & \$ 54,000 & \$ 52,000 & \underline { 45,000 } \
\hline \text { Cash available } & 88,000 & \$ 65,000 & \$ 63,500 \
\hline \text { Less: Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 34,000 & 8000 & 11,000 \
\hline \text { Operating expenses } & 40,000 & 30,500 & 30,700 \
\hline \text { Capital expenditures } & \underline { 1000 } & \underline { 8000 } & \underline { 7000 } \
\hline \text { Ending cash balance } & \$ 13,000 & \$ 18,500 & \$ 14,800 \
\hline
\end{array}$$ Subsequently,the marketing department revised its figures for cash collections.New data are as follows: $53,000 in July,$55,000 in August,and $46,000 in September.Based on the new data,calculate the new projected cash balance at the end of August.

Accepted Answer

A)  $20,500 
B)  $18,500 
C)  $12,000 
D)  $17,800 
A)  $20,500 
B)  $18,500 
C)  $12,000 
D)  $17,800

Question 10

Use of advanced technology makes it more cost effective for managers to conduct sensitivity analysis.

Accepted Answer

A) True 
 B)False

Question 11

The financial budgets include the cash budget and the budgeted financial statements-the budgeted income statement and budgeted balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

Tuscarora,Inc.,a merchandising company,has the following budgeted figures:   Calculate the budgeted purchases for the month of January.

Accepted Answer

A)  $23,800 
B)  $50,850 
C)  $23,850 
D)  $3250 
A)  $23,800 
B)  $50,850 
C)  $23,850 
D)  $3250

Question 13

Fedor,Inc.has prepared the following direct materials purchases budget: $$\begin{array} { | l | r | } 
\hline &{ \text { Budgeted DM } } \
\text { Month } & \text { Purchases } \
\hline \text {June } & \$ 67,000 \
\hline \text { July } & 77,000 \
\hline \text { August } & 76,300 \
\hline \text { September } & 78,000 \
\hline \text { October } & 70,200 \
\hline
\end{array}$$ All purchases are paid for as follows: 40% in the month of purchase,50% in the following month,and 10% two months after purchase.Calculate total budgeted cash payments made in October for purchases.

Accepted Answer

A)  $67,080 
B)  $46,630 
C)  $35,710 
D)  $74,710 
A)  $67,080 
B)  $46,630 
C)  $35,710 
D)  $74,710

Question 14

Components of the master budget are the operating budget,the capital expenditures budget,and the financial budget.

Accepted Answer

A) True 
 B)False

Question 15

Nyree Company is preparing its budget for the third quarter.The cash balance on June 30 was $34,000.Additional budgeted data are provided here: $$\begin{array} { | l | r | r | r | } 
\hline & { \text { July } } & { \text { Aug } } &  { \text { Sep } } \
\hline \text { Cash collections } & \$ 52,000 & \$ 52,000 & \$ 54,000 \
\hline \text { Cash payments } & & & \
\hline \text { Purchases of direct materials } & 19,000 & 18,000 & 19,000 \
\hline \text { Operating expenses } & 26,000 & 24,000 & 27,000 \
\hline \text { Capital expenditures } & 11,000 & 10,000 & 14,000 \
\hline
\end{array}$$ What amount should be shown in the cash budget for the cash balance at the end of July?

Accepted Answer

A)  $22,000 
B)  $30,000 
C)  $108,000 
D)  $86,000 
A)  $22,000 
B)  $30,000 
C)  $108,000 
D)  $86,000

Question 16

When preparing the direct labor budget,________.

Accepted Answer

A)  the production manager projects the average direct labor costs 
B)  direct labor hours needed for production are multiplied by the direct labor cost per hour 
C)  the actual direct labor cost per hour must be known 
D)  budgeted units to be produced are multiplied by direct labor cost per hour to determine budgeted direct labor cost 
A)  the production manager projects the average direct labor costs 
B)  direct labor hours needed for production are multiplied by the direct labor cost per hour 
C)  the actual direct labor cost per hour must be known 
D)  budgeted units to be produced are multiplied by direct labor cost per hour to determine budgeted direct labor cost

Question 17

Mary's Mittens,Inc.,a merchandising company,wants to prepare the budgeted balance sheet for the next budget period.For this purpose,the amount of ending cash balance can be retrieved from the ________.

Accepted Answer

A)  capital expenditures budget 
B)  budgeted funds flow statement 
C)  cash budget 
D)  sales budget 
A)  capital expenditures budget 
B)  budgeted funds flow statement 
C)  cash budget 
D)  sales budget

Question 18

Purchases of direct material for May were $105,000,while expected purchases for June and July are $120,000 and $134,000,respectively.All purchases are paid 75% in the month of purchase and 25% the following month.Calculate the budgeted payments for the month of June.

Accepted Answer

A)  $116,250 
B)  $108,750 
C)  $120,000 
D)  $30,000 
A)  $116,250 
B)  $108,750 
C)  $120,000 
D)  $30,000

Question 19

Malachi,Inc.has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } 
\hline & { \text { Jul } } & { \text { Aug } } &{ \text { Sep } } \
\hline \text { Cash collections } & \$ 51,000 & \$ 39,500 & \$ 46,600 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 31,000 & 21,500 & 17,000 \
\hline \text { Operating expenses } & 12,000 & 9000 & 11,300 \
\hline \text { Capital expenditures } & 13,500 & 24,600 & 0 \
\hline
\end{array}$$ The cash balance on June 30 is projected to be $4500.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.Calculate the final projected cash balance at the end of September.

Accepted Answer

A)  $21,584 
B)  $6584 
C)  $8367 
D)  $54,967 
A)  $21,584 
B)  $6584 
C)  $8367 
D)  $54,967

Question 20

Kennison,Inc.has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } 
\hline & { \text { Jul } } &  { \text { Aug } } &  { \text { Sep } } \
\hline \text { Cash collections } & \$ 50,000 & \$ 39,700 & \$ 47,600 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 30,000 & 22,000 & 18,000 \
\hline \text { Operating expenses } & 12,300 & 8700 & 11,700 \
\hline \text { Capital expenditures } & 13,000 & 24,400 & 0 \
\hline
\end{array}$$ The cash balance on June 30 is projected to be $4500.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.How much will the company have to borrow at the end of August?

Accepted Answer

A)  $15,000 
B)  $5,000 
C)  $10,000 
D)  $20,000 
A)  $15,000 
B)  $5,000 
C)  $10,000 
D)  $20,000

On the budgeted balance sheet,the number for notes payable will come from the ________.

For a merchandising company,the budgeted total sales equals the expected number of units sold multiplied by the budgeted selling price per unit.

A budgeting technique that requires managers to justify all revenue and expenses for each new period is called ________.

For a merchandising company,what is the final step in the master budget process?

The Raw Materials Inventory account must be considered when calculating the amount of direct materials to be purchased.

Use of advanced technology makes it more cost effective for managers to conduct sensitivity analysis.

The financial budgets include the cash budget and the budgeted financial statements-the budgeted income statement and budgeted balance sheet.

Tuscarora,Inc.,a merchandising company,has the following budgeted figures: Calculate the budgeted purchases for the month of January.

Components of the master budget are the operating budget,the capital expenditures budget,and the financial budget.

When preparing the direct labor budget,________.

Mary's Mittens,Inc.,a merchandising company,wants to prepare the budgeted balance sheet for the next budget period.For this purpose,the amount of ending cash balance can be retrieved from the ________.

Purchases of direct material for May were $105,000,while expected purchases for June and July are $120,000 and $134,000,respectively.All purchases are paid 75% in the month of purchase and 25% the following month.Calculate the budgeted payments for the month of June.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 22: Master Budgets

On the budgeted balance sheet,the number for notes payable will come from the ________.

For a merchandising company,the budgeted total sales equals the expected number of units sold multiplied by the budgeted selling price per unit.

A budgeting technique that requires managers to justify all revenue and expenses for each new period is called ________.

For a merchandising company,what is the final step in the master budget process?

The Raw Materials Inventory account must be considered when calculating the amount of direct materials to be purchased.

Use of advanced technology makes it more cost effective for managers to conduct sensitivity analysis.

The financial budgets include the cash budget and the budgeted financial statements-the budgeted income statement and budgeted balance sheet.

Tuscarora,Inc.,a merchandising company,has the following budgeted figures: Calculate the budgeted purchases for the month of January.

Components of the master budget are the operating budget,the capital expenditures budget,and the financial budget.

When preparing the direct labor budget,________.

Mary's Mittens,Inc.,a merchandising company,wants to prepare the budgeted balance sheet for the next budget period.For this purpose,the amount of ending cash balance can be retrieved from the ________.

Purchases of direct material for May were $105,000,while expected purchases for June and July are $120,000 and $134,000,respectively.All purchases are paid 75% in the month of purchase and 25% the following month.Calculate the budgeted payments for the month of June.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters