Question 1

Which of the following would not be used in preparing a cash budget for October?

Accepted Answer

A)  beginning cash balance on October 1 
B)  budgeted salaries expense for October 
C)  estimated depreciation expense for October 
D)  budgeted sales and collections for October 
A)  beginning cash balance on October 1 
B)  budgeted salaries expense for October 
C)  estimated depreciation expense for October 
D)  budgeted sales and collections for October

Question 2

The first budget to be prepared is usually the cash budget.

Accepted Answer

A) True 
 B)False

Question 3

The dollar amount of Material B used in production during the year is

Accepted Answer

A)  $1,057,400 
B)  $1,193,400 
C)  $1,026,800 
D)  $1,224,000 
A)  $1,057,400 
B)  $1,193,400 
C)  $1,026,800 
D)  $1,224,000

Question 4

Big Wheel,Inc.collects 25% of its sales on account in the month of the sale and 75% in the month following the sale.Sales on account are budgeted to be $225,000 for March and $250,000 for April.What are the budgeted cash receipts from sales on account for April?

Accepted Answer

The answer of Big Wheel,Inc.collects 25% of its sales on...

Question 5

Budgetary slack can be avoided if lower and mid-level managers are requested to support all of their spending requirements with specific operational plans.

Accepted Answer

A) True 
 B)False

Question 6

The cash collections expected in October are

Accepted Answer

A)  $320,000 
B)  $248,000 
C)  $304,250 
D)  $382,500 
A)  $320,000 
B)  $248,000 
C)  $304,250 
D)  $382,500

Question 7

For February,sales revenue is $700,000; sales commissions are 5% of sales; the sales manager's salary is $96,000; advertising expenses are $90,000; shipping expenses total 2% of sales; and miscellaneous selling expenses are $2,500 plus 1 / 2 of 1% of sales.Total selling expenses for the month of February are

Accepted Answer

A)  $161,000 
B)  $237,500 
C)  $235,000 
D)  $241,000 
A)  $161,000 
B)  $237,500 
C)  $235,000 
D)  $241,000

Question 8

Principal components of a master budget include

Accepted Answer

A)  production budget 
B)  sales budget 
C)  capital expenditures budget 
D)  all of these 
A)  production budget 
B)  sales budget 
C)  capital expenditures budget 
D)  all of these

Question 9

The treasurer of Calico Dreams Company has accumulated the following budget information for the first two months of the coming fiscal year:
​​
   The company expects to sell about 35% of its merchandise for cash.Of sales on account,80% are collected in full in the month of the sale,and the remainder in the month following the sale.One-fourth of the manufacturing costs are paid in the month in which they are incurred,and the other three-fourths in the following month.Depreciation,insurance,and property taxes represent $6,400 of the monthly selling and administrative expenses.Insurance is paid in February,and property taxes are paid yearly in September.A $40,000 installment on income taxes is to be paid in April.Of the remainder of the selling and administrative expenses,one-half are to be paid in the month in which they are incurred and the balance in the following month.Capital additions of $250,000 are paid in March.
Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000.Current liabilities as of March 1 are accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses).Management desires to maintain a minimum cash balance of $25,000.
Prepare a monthly cash budget for March and April.

Accepted Answer

@#IMG-DLM& *$450,000 × 0.35 = $157,500 $

Question 10

A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future is called continuous budgeting.

Accepted Answer

A) True 
 B)False

Question 11

The master budget of a small manufacturer would normally include all necessary component budgets except the budgeted balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

Detailed supplemental schedules based on department responsibility are often prepared for major items in the operating expenses budget.

Accepted Answer

A) True 
 B)False

Question 13

The budgeted volume of production is based on the sum of (1)the expected sales volume and (2)the desired ending inventory,less (3)the estimated beginning inventory.

Accepted Answer

A) True 
 B)False

Question 14

Planning for capital expenditures is necessary for all of the following reasons except

Accepted Answer

A)  machinery and other fixed assets wear out 
B)  expansion may be necessary to meet increased demand 
C)  amounts spent for office equipment may be immaterial 
D)  fixed assets may fall below minimum standards of efficiency 
A)  machinery and other fixed assets wear out 
B)  expansion may be necessary to meet increased demand 
C)  amounts spent for office equipment may be immaterial 
D)  fixed assets may fall below minimum standards of efficiency

Question 15

A formal written statement of management's plans for the future,expressed in financial terms,is called a budget.

Accepted Answer

A) True 
 B)False

Question 16

A capital expenditures budget is prepared before the operating budgets.

Accepted Answer

A) True 
 B)False

Question 17

Budgeting supports the planning process by encouraging all of the following activities except

Accepted Answer

A)  requiring all organizational units to establish their goals for the upcoming period 
B)  increasing the motivation of managers and employees by providing agreed-upon expectations 
C)  directing and coordinating operations during the period 
D)  improving overall decision making by considering all viewpoints,options,and cost reduction possibilities 
A)  requiring all organizational units to establish their goals for the upcoming period 
B)  increasing the motivation of managers and employees by providing agreed-upon expectations 
C)  directing and coordinating operations during the period 
D)  improving overall decision making by considering all viewpoints,options,and cost reduction possibilities

Question 18

The sales budget is derived from the production budget.

Accepted Answer

A) True 
 B)False

Question 19

Budgeted production of Product B for the year would be

Accepted Answer

A)  24,500 units 
B)  22,500 units 
C)  26,500 units 
D)  23,200 units 
A)  24,500 units 
B)  22,500 units 
C)  26,500 units 
D)  23,200 units

Question 20

Chelsa Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power.Total fixed costs are $23,000.At 8,000 units of production,a flexible budget would show

Accepted Answer

A)  variable costs of $64,000,and $28,000 of fixed costs 
B)  variable costs of $64,000,and $23,000 of fixed costs 
C)  variable costs of $72,000,and $23,000 of fixed costs 
D)  variable and fixed costs totaling $107,000 
A)  variable costs of $64,000,and $28,000 of fixed costs 
B)  variable costs of $64,000,and $23,000 of fixed costs 
C)  variable costs of $72,000,and $23,000 of fixed costs 
D)  variable and fixed costs totaling $107,000

Exam 21: Budgeting

Which of the following would not be used in preparing a cash budget for October?

The first budget to be prepared is usually the cash budget.

The dollar amount of Material B used in production during the year is

Big Wheel,Inc.collects 25% of its sales on account in the month of the sale and 75% in the month following the sale.Sales on account are budgeted to be $225,000 for March and $250,000 for April.What are the budgeted cash receipts from sales on account for April?

Budgetary slack can be avoided if lower and mid-level managers are requested to support all of their spending requirements with specific operational plans.

The cash collections expected in October are

Principal components of a master budget include

A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future is called continuous budgeting.

The master budget of a small manufacturer would normally include all necessary component budgets except the budgeted balance sheet.

Detailed supplemental schedules based on department responsibility are often prepared for major items in the operating expenses budget.

The budgeted volume of production is based on the sum of (1)the expected sales volume and (2)the desired ending inventory,less (3)the estimated beginning inventory.

Planning for capital expenditures is necessary for all of the following reasons except

A formal written statement of management's plans for the future,expressed in financial terms,is called a budget.

A capital expenditures budget is prepared before the operating budgets.

Budgeting supports the planning process by encouraging all of the following activities except

The sales budget is derived from the production budget.

Budgeted production of Product B for the year would be

Chelsa Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power.Total fixed costs are $23,000.At 8,000 units of production,a flexible budget would show

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current,installment Notes,and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

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