Exam 23: Operational Budgeting

The Company's actual manufacturing costs for the month of May totaled $144,000, while the budgeted manufacturing costs were $162,000. Comparison of the budgeted costs with actual amounts:

If the behavioral approach is employed to determine the levels at which budgeted amounts are set, then reasonable and achievable levels should be used.

Explain what is meant by "profit rich, yet cash poor".

Which of the following is not normally considered an element of a master budget?

For the year, budgeted cash payments to suppliers amounted to:

A flexible budget allows management to spend more or less for labor and materials without regard to the amount of production.

A debt service budget summarizes cash payments required for interest, and includes those required to pay down principal.

Hayden Corporation budgeted its cost of finished goods manufactured at $500,000 for May. Its May 31 finished goods inventory budgeted to be twice the level of its May 1 finished goods inventory. The cost of goods sold budget for May has been set at $450,000. Hayden's finished goods inventory at May 31 is budgeted at: $_____________

Which of the following is considered an operating budget estimate?

In preparing a master budget, budgeted levels for production, manufacturing costs, and operating expenses normally are determined after preparing the sales forecast.

The benefits of budgeting include all of the following except:

What is the budgeted balance of Ross's accounts receivable as of July 31?

Which of the following is not an accurate amount to be included in a flexible budget prepared for the 70,000-unit level of production?

Because a budget is merely a forecast of future events, its benefits are extremely narrow and limited.

What are Ross's budgeted collections for July?

For the year, budgeted purchases of direct materials amounted to:

Which budget typically serves as a starting point in developing a master budget?

Suffolk Corporation expects to incur $360,000 in expenses during June (excluding interest and taxes). Of this amount, depreciation is budgeted at $70,000, and expired prepayments are budgeted at $35,000. Suffolk's current payables total $60,000 at June 1 and are budgeted to increase to $70,000 by June 30. Payments on current payables budgeted for June total: $_____________

Which of the following is a characteristic of the behavioral approach to setting budget targets?

Weaver Corporation pays its debt service costs in full each month. April debt service costs are budgeted at $9,000. However, of this amount, only $1,000 represents a reduction of principal. The company expects to issue no new debt during the month. What cash disbursement amount will be shown on Weaver's debt service budget? $_____________