Question 1

Which of the following is not considered a benefit from budgeting?

Accepted Answer

A)  Limited managerial perspectives. 
B)  Advance warning of problems. 
C)  Better coordination among activities. 
D)  A measure of performance evaluation. 
A)  Limited managerial perspectives. 
B)  Advance warning of problems. 
C)  Better coordination among activities. 
D)  A measure of performance evaluation. A

Question 2

Of Hugh's budgeted debt service cost of $6,000 in March, the amount applied to the principal of the note totals:

Accepted Answer

A)  $500. 
B)  $4,000. 
C)  $4,500. 
D)  $5,000. 
A)  $500. 
B)  $4,000. 
C)  $4,500. 
D)  $5,000. A

Question 3

The cost-volume relationship used to prepare the flexible budget for this department includes:

Accepted Answer

A)  Manufacturing overhead cost of $1.00 per unit. 
B)  Fixed cost of $0.83 per unit. 
C)  Total cost of $2.98 per unit. 
D)  Variable costs of $2.15 per unit. 
A)  Manufacturing overhead cost of $1.00 per unit. 
B)  Fixed cost of $0.83 per unit. 
C)  Total cost of $2.98 per unit. 
D)  Variable costs of $2.15 per unit. D

Question 4

Flexible budgets can be prepared for sales budgets but not for productions budgets.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a major component of a master budget?

Accepted Answer

A)  A production throughput schedule. 
B)  A machinery maintenance schedule. 
C)  A manufacturing cost budget. 
D)  An employee training budget. 
A)  A production throughput schedule. 
B)  A machinery maintenance schedule. 
C)  A manufacturing cost budget. 
D)  An employee training budget.

Question 6

In a master budget, the sales forecast would be dependent upon the budgeted production figures.

Accepted Answer

A) True 
 B)False

Question 7

The Mentha company currently has the following statistics: Days in accounts receivable 68
Operating cycle 148
What is Mentha's days in inventory?

Accepted Answer

A)  80. 
B)  68. 
C)  148. 
D)  Cannot be determined from the information given. 
A)  80. 
B)  68. 
C)  148. 
D)  Cannot be determined from the information given.

Question 8

Assume that a revised performance report is prepared for the 11,000-unit level of production using a flexible budget approach. Compute the cost variances for each of the following. Indicate whether each variance is favorable (F) or unfavorable (U).
a. Direct materials variance from flexible budget: $_____________
b. Direct labor variance from flexible budget: $_____________
c. Total manufacturing overhead variance from flexible budget: $_____________

Accepted Answer

a. $4,000 Favorable

Question 9

Which of the following is not a benefit of a careful and thorough budgeting process?

Accepted Answer

A)  Budgeting increases management's awareness of the company's external economic environment. 
B)  Budgeted net income assures the company of operating profitably. 
C)  The budget may provide advance warning of pending problems. 
D)  Budgets provide a yardstick for evaluating future performance. 
A)  Budgeting increases management's awareness of the company's external economic environment. 
B)  Budgeted net income assures the company of operating profitably. 
C)  The budget may provide advance warning of pending problems. 
D)  Budgets provide a yardstick for evaluating future performance.

Question 10

A budget that can be adjusted easily to show budgeted revenues, costs, and cash flows at different levels of activity is known as:

Accepted Answer

A)  A flexible budget. 
B)  A master budget. 
C)  A production budget. 
D)  A multi-level budget. 
A)  A flexible budget. 
B)  A master budget. 
C)  A production budget. 
D)  A multi-level budget.

Question 11

Armstrong, Inc. uses a flexible budget. Armstrong produced 16,000 units in May incurring direct materials cost of $20,480. Its master budget for the year projected direct materials cost of $362,500, at a production volume of 290,000 units. A flexible budget for May should reflect direct materials cost of:

Accepted Answer

A)  $20,480. 
B)  $20,000. 
C)  $21,000. 
D)  $19,750. 
A)  $20,480. 
B)  $20,000. 
C)  $21,000. 
D)  $19,750.

Question 12

Compute the amounts that should be included for each of the following in a flexible budget prepared at an 11,000-unit level of production:
a. Direct materials: $_____________
b. Direct labor: $_____________
c. Fixed manufacturing overhead: $_____________

Accepted Answer

a. $264,00

Question 13

Preparation of a budgeted income statement does not require:

Accepted Answer

A)  Estimates of cost of goods sold. 
B)  Estimates of the timing of cash receipts and payments. 
C)  Preparation of a sales forecast. 
D)  Anticipation of operating expenses. 
A)  Estimates of cost of goods sold. 
B)  Estimates of the timing of cash receipts and payments. 
C)  Preparation of a sales forecast. 
D)  Anticipation of operating expenses.

Question 14

Lamberton Manufacturing Company has just completed its master budget. The budget indicates that the company's operating cycle needs to be shortened. Thus, the company will likely attempt:

Accepted Answer

A)  Stocking larger inventories. 
B)  Reducing cash discounts for prompt payment. 
C)  Tighten credit policies. 
D)  None of the above selections is correct. 
A)  Stocking larger inventories. 
B)  Reducing cash discounts for prompt payment. 
C)  Tighten credit policies. 
D)  None of the above selections is correct.

Question 15

The preparation of a budgeted balance sheet requires consideration of the budgeted capital expenditures and budgeted net income.

Accepted Answer

A) True 
 B)False

Question 16

The Mentha company currently has the following statistics: Days in inventory 80
Days in accounts receivable 68
What is Mentha's operating cycle?

Accepted Answer

A)  80. 
B)  68. 
C)  148. 
D)  Cannot be determined from the information given. 
A)  80. 
B)  68. 
C)  148. 
D)  Cannot be determined from the information given.

Question 17

Discuss the benefits that a company may derive from a formal budgeting process.

Accepted Answer

The benefits of budgeting are the benefi

Question 18

A flexible budget is used to evaluate:

Accepted Answer

A)  Costs that should have been incurred for a level of output achieved. 
B)  Costs that should have been incurred for a level of output considered to be normal. 
C)  How variable unit costs change as output changes. 
D)  How flexible management was at adapting to changes in business conditions. 
A)  Costs that should have been incurred for a level of output achieved. 
B)  Costs that should have been incurred for a level of output considered to be normal. 
C)  How variable unit costs change as output changes. 
D)  How flexible management was at adapting to changes in business conditions.

Question 19

The typical starting point of a master budget would be to prepare a budgeted balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

Flexible budgeting
What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance?

Accepted Answer

A flexible budget is one which may be ge

Exam 23: Operational Budgeting

Which of the following is not considered a benefit from budgeting?

Of Hugh's budgeted debt service cost of $6,000 in March, the amount applied to the principal of the note totals:

The cost-volume relationship used to prepare the flexible budget for this department includes:

Flexible budgets can be prepared for sales budgets but not for productions budgets.

Which of the following is a major component of a master budget?

In a master budget, the sales forecast would be dependent upon the budgeted production figures.

The Mentha company currently has the following statistics: Days in accounts receivable 68 Operating cycle 148 What is Mentha's days in inventory?

Which of the following is not a benefit of a careful and thorough budgeting process?

A budget that can be adjusted easily to show budgeted revenues, costs, and cash flows at different levels of activity is known as:

Compute the amounts that should be included for each of the following in a flexible budget prepared at an 11,000-unit level of production: a. Direct materials: $_____________ b. Direct labor: $_____________ c. Fixed manufacturing overhead: $_____________

Preparation of a budgeted income statement does not require:

Lamberton Manufacturing Company has just completed its master budget. The budget indicates that the company's operating cycle needs to be shortened. Thus, the company will likely attempt:

The preparation of a budgeted balance sheet requires consideration of the budgeted capital expenditures and budgeted net income.

The Mentha company currently has the following statistics: Days in inventory 80 Days in accounts receivable 68 What is Mentha's operating cycle?

Discuss the benefits that a company may derive from a formal budgeting process.

A flexible budget is used to evaluate:

The typical starting point of a master budget would be to prepare a budgeted balance sheet.

Flexible budgeting What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

Filters

Compute the amounts that should be included for each of the following in a flexible budget prepared at an 11,000-unit level of production: a. Direct materials: $_______ b. Direct labor: $_ c. Fixed manufacturing overhead: $_______