Question 1

The process of developing a master budget differs among manufacturing,retail,and service organizations in terms of preparation of

Accepted Answer

A) cash budget. 
B) capital expenditures budget. 
C) income statement. 
D) operating budgets. 
A) cash budget. 
B) capital expenditures budget. 
C) income statement. 
D) operating budgets.

Question 2

One of the limitation of the direct materials purchases budget is that it reflects only the quality of direct materials purchases.

Accepted Answer

A) True 
 B)False

Question 3

Participative budgeting results in setting unattainable standards.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true of budgets?

Accepted Answer

A) Every budget must contain both revenues and expenses. 
B) Budgets reduce the comparability concept of accounting. 
C) The data in budgets are presented in dollars only;nonfinancial data should be excluded. 
D) Budgets are synonymous with managing an organization. 
A) Every budget must contain both revenues and expenses. 
B) Budgets reduce the comparability concept of accounting. 
C) The data in budgets are presented in dollars only;nonfinancial data should be excluded. 
D) Budgets are synonymous with managing an organization.

Question 5

The last step in a master budget is to prepare a

Accepted Answer

A) cost of goods manufactured budget. 
B) budgeted balance sheet. 
C) cash budget. 
D) sales budget. 
A) cost of goods manufactured budget. 
B) budgeted balance sheet. 
C) cash budget. 
D) sales budget.

Question 6

Participative budgeting involves only personnel at top levels of the organization.

Accepted Answer

A) True 
 B)False

Question 7

Fantastic Futons manufactures futons.The estimated number of futon sales for the first three months of 2014 are as follows:   Finished goods inventory at the end of 2013 was 10,000 units.On average,25 percent of the futons to be sold in the next month are produced and kept as ending balance in finished goods inventory.The planned selling price is $150 per unit.
-Fantastic Futons buys direct materials for the futons in cloth rolls priced at $80 each.Each roll provides direct material for 40 futons.There was one roll in the direct materials inventory at the beginning of January,and the company expects to have four rolls in inventory at the end of the month.Assuming the production budget calls for 60,000 units to be produced in January,what would be the amount of the cloth rolls direct materials purchases budget for that month?

Accepted Answer

A) $119,760 
B) $114,000 
C) $120,000 
D) $120,240 
A) $119,760 
B) $114,000 
C) $120,000 
D) $120,240

Question 8

Successful budget implementation depends on two factors-clear communication and the support of top management.

Accepted Answer

A) True 
 B)False

Question 9

The projections of direct materials purchases that follow are for the Sombo Corporation.   The company pays for 60 percent of purchases on account in the month of purchase and 40 percent in the month following the purchase.
-What is the expected cash payment for direct materials for the month of January of Sombo?

Accepted Answer

A) $27,000 
B) $79,000 
C) $96,000 
D) $102,000 
A) $27,000 
B) $79,000 
C) $96,000 
D) $102,000

Question 10

Which of the following budgets would be prepared immediately after the preparation of the overhead budget?

Accepted Answer

A) Cash budget 
B) Production budget 
C) Cost of goods sold budget 
D) Cost of goods manufactured budget 
A) Cash budget 
B) Production budget 
C) Cost of goods sold budget 
D) Cost of goods manufactured budget

Question 11

Emerald Corporation's overhead budget for 2013 was as follows:   750,000 units were produced in 2013.
Direct labor cost is $42,000,000.
For both 2013 and 2014,each unit required 4 direct labor hours at $14 per hour.
In 2014,property taxes,insurance,and depreciation are expected to stay at 2013 levels.
Utilities costs vary proportionally with units produced.
Factory supervision increases by increments of $45,000 for every 300,000 increase in direct labor hours.
The 2014 expected production is 1,200,000 units.
-What will be the value for factory supervision of Emerald in the 2014 overhead budget?

Accepted Answer

A) $720,000 
B) $270,000 
C) $450,000 
D) $990,000 
A) $720,000 
B) $270,000 
C) $450,000 
D) $990,000

Question 12

J.J.Johnson has decided to supplement his income by selling beehives.He expects to sell 25,000 hives in 2014.He ended 2013 with 2,500 completed hives in inventory and would like to complete operations in 2014 with at least 2,800 completed hives in inventory.There is no ending work in process inventory.One beehive holds about 250 bees.The bees are purchased for $4.00 per 1,000 bees.The hives sell for $15.00 each. 
-What would be the total of the 2014 sales budget of Johnson?

Accepted Answer

A) $378,000 
B) $375,000 
C) $379,500 
D) $376,500 
A) $378,000 
B) $375,000 
C) $379,500 
D) $376,500

Question 13

Evaluating the value chain and capacity issues are not part of the budgeting process.

Accepted Answer

A) True 
 B)False

Question 14

Tough and Strong Inc.expects to sell 51,000 units of its product in the coming year.Each unit sells for $45.Sales brochures and supplies for the year are expected to cost $7,000.Three sales representatives cover the Northeast region.Each one's base salary is $25,000,and each earns a sales commission of 5 percent of the selling price of the units he or she sells.The sales representatives use their own transportation;they are reimbursed for travel at a rate of $0.40 per mile.The company estimates that the sales representatives will drive a total of 75,000 miles next year.From the information provided,calculate the company's budgeted selling expenses for the coming year.

Accepted Answer

A) $226,750 
B) $176,750 
C) $151,750 
D) $114,750 
A) $226,750 
B) $176,750 
C) $151,750 
D) $114,750

Question 15

William Wills Inc.estimates the following for 2014:
   The ending cash balance for 2013 was $210,000.
Prepare a cash budget to determine the ending cash balance for 2014.

Accepted Answer

The answer of William Wills Inc.estimates the following for 2014:
...

Question 16

Each period's ending cash balance becomes the beginning cash balance for the next period.

Accepted Answer

A) True 
 B)False

Question 17

A company expects to begin the coming year with 6,000 ceramic pots in finished goods inventory.It expects to sell 85,000 ceramic pots and end the year with 8,000 pots in the finished goods inventory.Four pounds of clay go into each ceramic pot.The company expects to have 4,000 pounds of clay on hand at the beginning of the coming year and wishes to end the year with 6,000 pounds in inventory.
a.Prepare a production budget showing the number ceramic pots that the company must manufacture to carry out these plans.
b.Prepare a direct materials purchases budget showing the number of pounds of clay that the company must purchase during the year.

Accepted Answer

a.Production budget

Question 18

Great Lake Corporation wishes to prepare a cash budget for November 2014.Sales,purchases,and expenses for October (actual)and November and December (estimated)are as follows:   Sales: All sales are on credit,and the company's experience shows that,on an average,80 percent of sales are collected in the month of sale and the balance in the following month.A 2 percent discount is allowed on all collections in the month of sale.
Purchases: The company pays 60 percent of purchases in the month of purchase and the balance in the following month.The company is allowed an average discount of 1 percent on payments made in the month of purchase.
Expenses: The monthly expenses for November include charges for depreciation amounting to $1,000 and $100 of prepaid expenses,which will expire.All other expenses are paid as incurred.
Other: On September 1,2014,a new machine was purchased for $5,000.A down payment of $500 was made,and it was agreed that the balance would be paid in equal installments in the following three months.
-The cash payments in November for expenses of Great Lake are expected to be

Accepted Answer

A) $12,500. 
B) $9,900. 
C) $10,000. 
D) $11,000. 
A) $12,500. 
B) $9,900. 
C) $10,000. 
D) $11,000.

Question 19

Fantastic Futons manufactures futons.The estimated number of futon sales for the first three months of 2014 are as follows:   Finished goods inventory at the end of 2013 was 10,000 units.On average,25 percent of the futons to be sold in the next month are produced and kept as ending balance in finished goods inventory.The planned selling price is $150 per unit.
-What would be the sales budget for March of Fantastic Futons?

Accepted Answer

A) $7,200,000 
B) $8,000,000 
C) $6,750,000 
D) $9,000,000 
A) $7,200,000 
B) $8,000,000 
C) $6,750,000 
D) $9,000,000

Question 20

Which of the following budgets is prepared before the preparation of production budget?

Accepted Answer

A) Sales budget 
B) Cash budget 
C) Direct labor budget 
D) Capital expenditure budget 
A) Sales budget 
B) Cash budget 
C) Direct labor budget 
D) Capital expenditure budget

The process of developing a master budget differs among manufacturing,retail,and service organizations in terms of preparation of

One of the limitation of the direct materials purchases budget is that it reflects only the quality of direct materials purchases.

Participative budgeting results in setting unattainable standards.

Which of the following is true of budgets?

The last step in a master budget is to prepare a

Participative budgeting involves only personnel at top levels of the organization.

Successful budget implementation depends on two factors-clear communication and the support of top management.

Which of the following budgets would be prepared immediately after the preparation of the overhead budget?

Evaluating the value chain and capacity issues are not part of the budgeting process.

William Wills Inc.estimates the following for 2014: The ending cash balance for 2013 was $210,000. Prepare a cash budget to determine the ending cash balance for 2014.

Each period's ending cash balance becomes the beginning cash balance for the next period.

Which of the following budgets is prepared before the preparation of production budget?

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

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Exam 22: The Budgeting Process

The process of developing a master budget differs among manufacturing,retail,and service organizations in terms of preparation of

One of the limitation of the direct materials purchases budget is that it reflects only the quality of direct materials purchases.

Participative budgeting results in setting unattainable standards.

Which of the following is true of budgets?

The last step in a master budget is to prepare a

Participative budgeting involves only personnel at top levels of the organization.

Successful budget implementation depends on two factors-clear communication and the support of top management.

Which of the following budgets would be prepared immediately after the preparation of the overhead budget?

Evaluating the value chain and capacity issues are not part of the budgeting process.

William Wills Inc.estimates the following for 2014: The ending cash balance for 2013 was $210,000. Prepare a cash budget to determine the ending cash balance for 2014.

Each period's ending cash balance becomes the beginning cash balance for the next period.

Which of the following budgets is prepared before the preparation of production budget?

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

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