Question 1

Budgeting requires managers to develop overall business goals and budget for specific actions to achieve the goals.

Accepted Answer

A) True 
 B)False

Question 2

Caplico Company has prepared the following sales budget:
 
Cost of goods sold is budgeted at 60% of sales,and the inventory at the end of February was $35,000.Desired inventory levels at the end of each month are 20% of the next month's cost of goods sold.What is the desired beginning inventory on June 1?

Accepted Answer

A) $46,400 
B) $26,400 
C) $130,200 
D) $27,840 
A) $46,400 
B) $26,400 
C) $130,200 
D) $27,840

Question 3

A company has prepared the operating budget,the cash budget,and the budgeted income statement and is now preparing the budgeted balance sheet.The balance of Retained Earnings can be taken from the ________.

Accepted Answer

A) inventory,purchases,and cost of goods sold budget 
B) operating budget 
C) cash budget 
D) budgeted income statement and the balance sheet of the previous year 
A) inventory,purchases,and cost of goods sold budget 
B) operating budget 
C) cash budget 
D) budgeted income statement and the balance sheet of the previous year

Question 4

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 5

The manufacturing overhead budget calculates the budgeted overhead cost for the year,but not the predetermined overhead allocation rate for the year.

Accepted Answer

A) True 
 B)False

Question 6

Norton Manufacturing expects to produce 2,800 units in January and 3,900 units in February.Norton budgets $45 per unit for direct materials.Indirect materials are insignificant and not considered for budgeting purposes.The balance in the Raw Materials Inventory account (all direct materials)on January 1 is $37,950.Norton desires the ending balance in Raw Materials Inventory to be 60% of the next month's direct materials needed for production.Desired ending balance for February is $51,000.What is the cost of budgeted purchases of direct materials needed for January?

Accepted Answer

A) $126,000 
B) $231,300 
C) $193,350 
D) $163,650 
A) $126,000 
B) $231,300 
C) $193,350 
D) $163,650

Question 7

Keeping merchandise inventory at the maximum level that meets the needs of providing goods to customers,with turning over the merchandise inventory efficiently,helps reduce inventory storage costs,insurance costs,and warehousing costs.

Accepted Answer

A) True 
 B)False

Question 8

The selling and administrative expense budget separates fixed and variable expenses.

Accepted Answer

A) True 
 B)False

Question 9

Search Engine Corp.has provided the following details concerning budgeted sales:
Budgeted Sales
   
The collection policy of the company is to collect 20% in the month of sale,40% in the following month,and remaining 40% in the second month after the month of sale.All sales are made on account.
Calculate the cash receipts from customers for the first six months.

Accepted Answer

Calculation of cash receipts f

Question 10

Which of the following statements is true of the budgeting process?

Accepted Answer

A) If a company carefully plans for its future,there will be no need to make modifications during the budget period. 
B) It is a continuous process that encourages communication. 
C) It shows the actual performance of the business. 
D) Managers and employees are motivated to accept the budget's goals because they enjoy having their work monitored and evaluated. 
A) If a company carefully plans for its future,there will be no need to make modifications during the budget period. 
B) It is a continuous process that encourages communication. 
C) It shows the actual performance of the business. 
D) Managers and employees are motivated to accept the budget's goals because they enjoy having their work monitored and evaluated.

Question 11

Stockett,Inc.has prepared its third quarter budget and provided the following data:
 
The cash balance on June 30 is projected to be $4,000.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 5%.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

Question 12

The level of forecasted sales has little effect on other elements of the master budget.

Accepted Answer

A) True 
 B)False

Question 13

In a company with different business units,individual managers make decisions by changing various assumptions of its budget in order to determine how the modifications would affect the operational and financial results.This is an example of ________.

Accepted Answer

A) financial statement analysis 
B) responsibility accounting 
C) sensitivity analysis 
D) zero-based budgeting 
A) financial statement analysis 
B) responsibility accounting 
C) sensitivity analysis 
D) zero-based budgeting

Question 14

When preparing the selling and administrative expense budget,there is no need to separate mixed costs into the fixed and variable components.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following describes the production budget?

Accepted Answer

A) It aids in planning to ensure the company has adequate inventory and cash on hand. 
B) It provides the quantity of finished goods to be produced during a budget period. 
C) It depicts the breakdown of sales on the basis of terms and conditions of collection of sales revenue. 
D) It helps in planning to ensure the business has adequate cash. 
A) It aids in planning to ensure the company has adequate inventory and cash on hand. 
B) It provides the quantity of finished goods to be produced during a budget period. 
C) It depicts the breakdown of sales on the basis of terms and conditions of collection of sales revenue. 
D) It helps in planning to ensure the business has adequate cash.

Question 16

While preparing the budgeted income statement of a merchandising company,the amount of cost of goods sold can be taken from the ________.

Accepted Answer

A) budgeted balance sheet 
B) budgeted cash flow statement 
C) inventory,purchases,and cost of goods sold budget 
D) capital expenditures budget 
A) budgeted balance sheet 
B) budgeted cash flow statement 
C) inventory,purchases,and cost of goods sold budget 
D) capital expenditures budget

Question 17

A strategic budget will be as detailed as an operational budget.

Accepted Answer

A) True 
 B)False

Question 18

All organizations use one standardized budgeting process.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is true of the capital expenditures budget?

Accepted Answer

A) It is a part of the financial budget. 
B) It must be completed after the budgeted income statement is prepared. 
C) It includes the sales budget. 
D) It must be completed before the cash budget is prepared. 
A) It is a part of the financial budget. 
B) It must be completed after the budgeted income statement is prepared. 
C) It includes the sales budget. 
D) It must be completed before the cash budget is prepared.

Question 20

The Finished Goods Inventory account must be considered when calculating the amount of materials to be purchased.

Accepted Answer

A) True 
 B)False

Exam 22: Master Budgets

Budgeting requires managers to develop overall business goals and budget for specific actions to achieve the goals.

A company has prepared the operating budget,the cash budget,and the budgeted income statement and is now preparing the budgeted balance sheet.The balance of Retained Earnings can be taken from the ________.

When preparing the direct labor budget,________.

The manufacturing overhead budget calculates the budgeted overhead cost for the year,but not the predetermined overhead allocation rate for the year.

Keeping merchandise inventory at the maximum level that meets the needs of providing goods to customers,with turning over the merchandise inventory efficiently,helps reduce inventory storage costs,insurance costs,and warehousing costs.

The selling and administrative expense budget separates fixed and variable expenses.

Which of the following statements is true of the budgeting process?

The level of forecasted sales has little effect on other elements of the master budget.

In a company with different business units,individual managers make decisions by changing various assumptions of its budget in order to determine how the modifications would affect the operational and financial results.This is an example of ________.

When preparing the selling and administrative expense budget,there is no need to separate mixed costs into the fixed and variable components.

Which of the following describes the production budget?

While preparing the budgeted income statement of a merchandising company,the amount of cost of goods sold can be taken from the ________.

A strategic budget will be as detailed as an operational budget.

All organizations use one standardized budgeting process.

Which of the following statements is true of the capital expenditures budget?

The Finished Goods Inventory account must be considered when calculating the amount of materials to be purchased.

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

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