Question 1

Which of the following is true of a flexible budget?

Accepted Answer

A)  It is prepared by large firms only. 
B)  It is used to measure whether or not a manager accomplishes his or her goals. 
C)  It is usually not a good choice for benchmarks while preparing a performance report. 
D)  It is a budget created in advance that is based on a particular level of activity. 
E)  It enables a firm to compute expected costs for a range of activity levels. 
A)  It is prepared by large firms only. 
B)  It is used to measure whether or not a manager accomplishes his or her goals. 
C)  It is usually not a good choice for benchmarks while preparing a performance report. 
D)  It is a budget created in advance that is based on a particular level of activity. 
E)  It enables a firm to compute expected costs for a range of activity levels.

Question 2

Individual behavior that is in basic conflict with the goals of the organization is called goal congruence.

Accepted Answer

A) True 
 B)False

Question 3

The master budget is composed of operating budgets and financial budgets.

Accepted Answer

A) True 
 B)False

Question 4

The alignment of managerial and organizational goals is often referred to as _______________.

Accepted Answer

The answer of The alignment of managerial and organizational goals...

Question 5

The ________________ budget is based on the actual level of activity.

Accepted Answer

The answer of The ________________ budget is based on the...

Question 6

Foray Company finds that typically 40% of a month's sales are for cash.Payments on accounts receivable are 70% in the month of sale and 28% in the month following sale.Budgeted sales for June are $120,000, for July $160,000, and for August $140,000.What are the total cash receipts budgeted for July?

Accepted Answer

A)  $151,360 
B)  $85,400 
C)  $122,000 
D)  $262,000 
E)  $140,000 
A)  $151,360 
B)  $85,400 
C)  $122,000 
D)  $262,000 
E)  $140,000

Question 7

Montgomery Company has developed the following flexible budget formulas for its four overhead items: 
  ?
Montgomery normally produces 15,000 units (each unit requires 0.30 direct labor hours); however, this year 19,000 units were produced with the following actual costs:

- Calculate the after-the-fact budget for the actual level of activity.

Accepted Answer

A)  $91,600 
B)  $115,000 
C)  $118,600 
D)  $77,400 
E)  None of these. 
A)  $91,600 
B)  $115,000 
C)  $118,600 
D)  $77,400 
E)  None of these.

Question 8

Yummy Jams Company produces a line of jams.Yummy's estimated production of jars of jam for the fourth quarter of the year is as follows: ?
  Each jar requires half a pound of berries.Yummy prefers to buy the freshest berries, so its policy is to have just 3% of the following month's production needs in ending inventory.On October 1, the company had 1,125 pounds of berries in inventory.Yummy's pays $0.60 per pound of berries.It buys all berries on account and typically pays 40% of a month's purchases in that month, and the remaining 60% the following month.
-What is the dollar cost of purchases for October?

Accepted Answer

A)  $19,925 
B)  $22,707 
C)  $18,450 
D)  $23,300 
E)  $33,320 
A)  $19,925 
B)  $22,707 
C)  $18,450 
D)  $23,300 
E)  $33,320

Question 9

The selling and administrative expenses budget includes

Accepted Answer

A)  cost of goods sold. 
B)  overhead. 
C)  fixed production expense. 
D)  variable cost of selling. 
E)  all of these. 
A)  cost of goods sold. 
B)  overhead. 
C)  fixed production expense. 
D)  variable cost of selling. 
E)  all of these.

Question 10

Which of the following is an advantage of participative budgeting?

Accepted Answer

A)  It ensures only superficial participation from lower-level managers. 
B)  It rules out the possibility of building budgetary slack. 
C)  It helps managers to set the budgets that are either too loose or too tight. 
D)  It fosters a sense of responsibility and encourages creativity. 
E)  There are no advantages of participative budgeting. 
A)  It ensures only superficial participation from lower-level managers. 
B)  It rules out the possibility of building budgetary slack. 
C)  It helps managers to set the budgets that are either too loose or too tight. 
D)  It fosters a sense of responsibility and encourages creativity. 
E)  There are no advantages of participative budgeting.

Question 11

Matching
Identify each item as an advantage or disadvantage of budgeting.
-forces managers to plan

Accepted Answer

A) advantage 
B) disadvantage 
A) advantage 
B) disadvantage

Question 12

Sully Company provided the following information for last month. ?
  
-There were no beginning and ending inventories.What is gross margin for Sully Company last month?

Accepted Answer

A)  $54,000 
B)  $64,600 
C)  $32,400 
D)  $47,400 
E)  $60,400 
A)  $54,000 
B)  $64,600 
C)  $32,400 
D)  $47,400 
E)  $60,400

Question 13

Lambert Company purchased $140,000 of goods in September and expects to purchase $130,000 of goods in October.Lambert typically pays for 20% of purchases in the month of purchase and 80% in the following month. Every month, Lambert must make the following payments:
 
  In mid-October, Lambert expects to buy a new computer for $4,500 using the company credit card.Typically, the credit card bill is paid in full in the following month.September credit card purchases totaled $6,000.
-What is Lambert's expected cash disbursement in October for purchases of goods?

Accepted Answer

A)  $140,000 
B)  $130,000 
C)  $112,000 
D)  $138,000 
E)  $26,000 
A)  $140,000 
B)  $130,000 
C)  $112,000 
D)  $138,000 
E)  $26,000

Question 14

Jason, Inc.produces leather purses.Jason has developed a static budget for the first quarter, based on 20,000 direct labor hours.During the quarter, the actual activity was 22,000 direct labor hours.Data for the first quarter are summarized as follows: 
 
- What is the flexible budget amount for the first quarter?

Accepted Answer

A)  $288,000 
B)  $311,000 
C)  $312,000 
D)  $261,000 
E)  Cannot be determined. 
A)  $288,000 
B)  $311,000 
C)  $312,000 
D)  $261,000 
E)  Cannot be determined.

Question 15

When top management assumes total control of the budgeting process and only seeks superficial participation from lower-level managers this is known as ________________.

Accepted Answer

The answer of When top management assumes total control of...

Question 16

Kenner Company produces two products: SR200 and TX500.Budgeted sales for four months are as follows:  
  Kenner's ending inventory policy is that SR200 should have 15% of next month's sales in ending inventory and TX500 should have 40% of next month's sales in ending inventory.On May 1, there were 1,200 units of SR200 and 9,000 units of TX500.
TX500 requires 6 units of component A.(SR200 does not use component A.) There were 30,000 units of component A in inventory on May 1.Kenner wants to have 20% of the following month's production needs in inventory for Component A.
-How many units of TX500 are budgeted for production in June?

Accepted Answer

A)  47,600 
B)  34,800 
C)  32,000 
D)  45,000 
E)  12,800 
A)  47,600 
B)  34,800 
C)  32,000 
D)  45,000 
E)  12,800

Question 17

A firm acquires information that can be used to improve decision making from a budgetary system.

Accepted Answer

A) True 
 B)False

Question 18

Budgets improve _________________.

Accepted Answer

The answer of Budgets improve _________________....

Question 19

A _____________________ compares actual costs with budgeted costs.

Accepted Answer

The answer of A _____________________ compares actual costs with budgeted...

Question 20

Which of the following is a use of budgets for control?

Accepted Answer

A)  Plans can be made for the future. 
B)  If conditions change between the formation of the budget and the current time, budgets can be quickly adapted. 
C)  Budgets set a standard against which results can be compared. 
D)  Communication is improved. 
E)  All of these. 
A)  Plans can be made for the future. 
B)  If conditions change between the formation of the budget and the current time, budgets can be quickly adapted. 
C)  Budgets set a standard against which results can be compared. 
D)  Communication is improved. 
E)  All of these.

Which of the following is true of a flexible budget?

Individual behavior that is in basic conflict with the goals of the organization is called goal congruence.

The master budget is composed of operating budgets and financial budgets.

The alignment of managerial and organizational goals is often referred to as _______________.

The ________________ budget is based on the actual level of activity.

Foray Company finds that typically 40% of a month's sales are for cash.Payments on accounts receivable are 70% in the month of sale and 28% in the month following sale.Budgeted sales for June are $120,000, for July $160,000, and for August $140,000.What are the total cash receipts budgeted for July?

The selling and administrative expenses budget includes

Which of the following is an advantage of participative budgeting?

Matching Identify each item as an advantage or disadvantage of budgeting. -forces managers to plan

Sully Company provided the following information for last month. ? -There were no beginning and ending inventories.What is gross margin for Sully Company last month?

When top management assumes total control of the budgeting process and only seeks superficial participation from lower-level managers this is known as ________________.

A firm acquires information that can be used to improve decision making from a budgetary system.

Budgets improve _________________.

A _____________________ compares actual costs with budgeted costs.

Which of the following is a use of budgets for control?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior, Cost Forecasting, and Segmented Income Statements

Job-Order Costing and Normal Cost Overhead Application

Activity-Based Costing and Management

Process Costing

Cost-Volume-Profit Analysis

Tactical Decision-Making and Relevant Costing

Standard Costing and Variance Analysis

Performance Evaluation and Decentralization

Capital Investment Decisions

Emerging Topics in Managerial Accounting: Sustainability, Quality Cost, Lean Accounting, International Issues, Enterprise Risk Management, the Managerial Accountant in Forensicfraud Accounting

Statement of Cash Flows

Financial Statement Analysis

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Exam 9: Profit Planning and Flexible Budgets

Which of the following is true of a flexible budget?

Individual behavior that is in basic conflict with the goals of the organization is called goal congruence.

The master budget is composed of operating budgets and financial budgets.

The alignment of managerial and organizational goals is often referred to as _______________.

The ________________ budget is based on the actual level of activity.

The selling and administrative expenses budget includes

Which of the following is an advantage of participative budgeting?

Matching Identify each item as an advantage or disadvantage of budgeting. -forces managers to plan

Sully Company provided the following information for last month. ? -There were no beginning and ending inventories.What is gross margin for Sully Company last month?

When top management assumes total control of the budgeting process and only seeks superficial participation from lower-level managers this is known as ________________.

A firm acquires information that can be used to improve decision making from a budgetary system.

Budgets improve _________________.

A _____________________ compares actual costs with budgeted costs.

Which of the following is a use of budgets for control?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior, Cost Forecasting, and Segmented Income Statements

Job-Order Costing and Normal Cost Overhead Application

Activity-Based Costing and Management

Process Costing

Cost-Volume-Profit Analysis

Tactical Decision-Making and Relevant Costing

Standard Costing and Variance Analysis

Performance Evaluation and Decentralization

Capital Investment Decisions

Emerging Topics in Managerial Accounting: Sustainability, Quality Cost, Lean Accounting, International Issues, Enterprise Risk Management, the Managerial Accountant in Forensicfraud Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters