Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

The budgeting process does not involve which of the following activities:

Accepted Answer

A)  Specific goals are established 
B)  Periodic comparison of actual results to goals 
C)  Execution of plans to achieve goals 
D)  Increase in sales by increasing marketing efforts. 
A)  Specific goals are established 
B)  Periodic comparison of actual results to goals 
C)  Execution of plans to achieve goals 
D)  Increase in sales by increasing marketing efforts. D

Question 3

Production and sales estimates for May for the Robin Co. are as follows:   The number of units expected to be sold in May is:

Accepted Answer

A)  22,000 
B)  2,700 
C)  21,800 
D)  19,300 
A)  22,000 
B)  2,700 
C)  21,800 
D)  19,300 A

Question 4

Manicotti Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 108,000 units, and desired ending inventory is 90,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A .50 lb. per unit @ $ .60 per pound
Material B 1.00 lb. per unit @ $1.70 per pound
Material C 1.20 lb. per unit @ $1.00 per pound
The dollar amount of direct material A used in production during the year is:

Accepted Answer

A)  $186,600 
B)  $181,200 
C)  $240,000 
D)  $210,600 
A)  $186,600 
B)  $181,200 
C)  $240,000 
D)  $210,600

Question 5

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called zero-based budgeting.

Accepted Answer

A) True 
 B)False

Question 6

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. What would be the budgeted production for March?

Accepted Answer

A)  256,000 
B)  206,000 
C)  214,000 
D)  298,000 
A)  256,000 
B)  206,000 
C)  214,000 
D)  298,000

Question 7

Woodpecker Co. has $296,000 in accounts receivable on January 1. Budgeted sales for January are $860,000. Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month. The January cash collections from sales are:

Accepted Answer

A)  $812,000 
B)  $688,000 
C)  $468,000 
D)  $984,000 
A)  $812,000 
B)  $688,000 
C)  $468,000 
D)  $984,000

Question 8

The budgeted finished goods inventory and cost of goods sold for a manufacturing company for the year 2012 are as follows: January 1 finished goods, $765,000; December 31 finished goods, $640,000; cost of goods sold for the year, $2,560,000. The budgeted costs of goods manufactured for the year is?

Accepted Answer

A)  $1,405,000 
B)  $2,560,000 
C)  $2,435,000 
D)  $3,965,000 
A)  $1,405,000 
B)  $2,560,000 
C)  $2,435,000 
D)  $3,965,000

Question 9

The budgeting process is used to effectively communicate planned expectations regarding profits and expenses to the entire organization.

Accepted Answer

A) True 
 B)False

Question 10

The primary difference between a static budget and a flexible budget is that a static budget

Accepted Answer

A)  is suitable in volatile demand situation while flexible budget is suitable in a stable demand situation. 
B)  is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales. 
C)  includes only fixed costs, whereas a flexible budget includes only variable costs. 
D)  is a plan for a single level of production, whereas a flexible budget can be converted to any level of production. 
A)  is suitable in volatile demand situation while flexible budget is suitable in a stable demand situation. 
B)  is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales. 
C)  includes only fixed costs, whereas a flexible budget includes only variable costs. 
D)  is a plan for a single level of production, whereas a flexible budget can be converted to any level of production.

Question 11

Cameron 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 $20,000. At 8,000 units of production, a flexible budget would show:

Accepted Answer

A)  variable costs of $64,000 and $25,000 of fixed costs 
B)  variable costs of $64,000 and $20,000 of fixed costs 
C)  variable costs of $72,000 and $20,000 of fixed costs 
D)  variable and fixed costs totaling $104,000 
A)  variable costs of $64,000 and $25,000 of fixed costs 
B)  variable costs of $64,000 and $20,000 of fixed costs 
C)  variable costs of $72,000 and $20,000 of fixed costs 
D)  variable and fixed costs totaling $104,000

Question 12

A company is preparing its their Cash Budget. The following data has been provided for cash receipts and payments.   The company's cash balance at January 1st is $290,000. This company desires a minimum cash balance of $340,000.
What is the amount of excess cash or deficiency of cash (after considering the minimum cash balance required) for February?

Accepted Answer

A)  $109,100 deficiency 
B)  $10,900 excess 
C)  $900 deficiency 
D)  $109,100 excess 
A)  $109,100 deficiency 
B)  $10,900 excess 
C)  $900 deficiency 
D)  $109,100 excess

Question 13

Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A .50 lb. per unit @ $ .60 per pound
Material B 1.00 lb. per unit @ $1.70 per pound
Material C 1.20 lb. per unit @ $1.00 per pound
The dollar amount of direct 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 14

Sweet Dreams, Inc. manufactures bedding sets. The budgeted production is for 52,000 comforters in 2012. Each comforter requires 1.5 hours to cut and sew the material. If cutting and sewing labor costs $11.00 per hour, determine the direct labor budget for 2012.

Accepted Answer

The answer of Sweet Dreams, Inc. manufactures bedding sets. The...

Question 15

Goal conflict can be avoided if budget goals are carefully designed for consistency across all areas of the organization.

Accepted Answer

A) True 
 B)False

Question 16

The financial budgets of a business include the cash budget, the budgeted income statement, and the budgeted balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. What would be the budgeted production for February?

Accepted Answer

A)  186,000 
B)  181,000 
C)  222,000 
D)  174,000 
A)  186,000 
B)  181,000 
C)  222,000 
D)  174,000

Question 18

A process whereby the effect of fluctuations in the level of activity is built into the budgeting system is referred to as flexible budgeting.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Prepare a monthly flexible selling expense budget for PineTree Company for sales volumes of $300,000, $350,000, and $400,000, based on the following data:

Accepted Answer

The answer of Prepare a monthly flexible selling expense budget...

Exam 21: Budgeting

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

The budgeting process does not involve which of the following activities:

Production and sales estimates for May for the Robin Co. are as follows: The number of units expected to be sold in May is:

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called zero-based budgeting.

The budgeted finished goods inventory and cost of goods sold for a manufacturing company for the year 2012 are as follows: January 1 finished goods, $765,000; December 31 finished goods, $640,000; cost of goods sold for the year, $2,560,000. The budgeted costs of goods manufactured for the year is?

The budgeting process is used to effectively communicate planned expectations regarding profits and expenses to the entire organization.

The primary difference between a static budget and a flexible budget is that a static budget

Cameron 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 $20,000. At 8,000 units of production, a flexible budget would show:

Sweet Dreams, Inc. manufactures bedding sets. The budgeted production is for 52,000 comforters in 2012. Each comforter requires 1.5 hours to cut and sew the material. If cutting and sewing labor costs $11.00 per hour, determine the direct labor budget for 2012.

Goal conflict can be avoided if budget goals are carefully designed for consistency across all areas of the organization.

The financial budgets of a business include the cash budget, the budgeted income statement, and the budgeted balance sheet.

A process whereby the effect of fluctuations in the level of activity is built into the budgeting system is referred to as flexible budgeting.

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

Prepare a monthly flexible selling expense budget for PineTree Company for sales volumes of $300,000, $350,000, and $400,000, based on the following data:

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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