Question 1

Which of the following is considered a financial budget estimate?

Accepted Answer

A)  The manufacturing cost budget. 
B)  The cost of goods sold budget. 
C)  The operating expense budget. 
D)  The prepayments budget. 
A)  The manufacturing cost budget. 
B)  The cost of goods sold budget. 
C)  The operating expense budget. 
D)  The prepayments budget.

Question 2

Hugh's budgeted interest expense for March is:

Accepted Answer

A)  $500. 
B)  $2,444. 
C)  $5,500. 
D)  $6,000. 
A)  $500. 
B)  $2,444. 
C)  $5,500. 
D)  $6,000.

Question 3

Cash receipts budget
The director of budgeting for Bond Products is beginning the process of preparing a cash budget for each month of the coming year. The sales forecast for the month of January is as follows:
In the past, the accounts receivable originating from credit sales have been collected in the following pattern:
Credit sales in the last two months of the current year, some of which remain uncollected at year-end, were as follows:
Compute the amount of cash expected to be collected from customers in January of the coming year.
   $$\begin{array} { | l | l | } 
\hline \text { In the month of sale } & 15 \% \
\hline \text { In the first month following the sale } & 50 \% \
\hline \text { In the second month following the sale } & 25 \% \
\hline \text { Written off as uncollectible } & 10 \% \
\hline & \
\hline
\end{array}$$

Accepted Answer

The answer of Cash receipts budget
The director of budgeting for...

Question 4

Flexible budgeting may be viewed as combining the concepts of budgeting with cost-volume-profit analysis.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not considered an operating budget?

Accepted Answer

A)  Manufacturing cost budget. 
B)  Production schedule. 
C)  Capital expenditures budget. 
D)  Sales forecast. 
A)  Manufacturing cost budget. 
B)  Production schedule. 
C)  Capital expenditures budget. 
D)  Sales forecast.

Question 6

Flexible budgeting may be used for profit centers by applying cost-volume-profit relationships to the actual level of:

Accepted Answer

A)  Units produced. 
B)  Resources consumed. 
C)  Costs incurred. 
D)  Sales achieved. 
A)  Units produced. 
B)  Resources consumed. 
C)  Costs incurred. 
D)  Sales achieved.

Question 7

Which element of a master budget would normally be prepared last?

Accepted Answer

A)  A cash budget. 
B)  A budgeted balance sheet. 
C)  A budgeted income statement. 
D)  A production budget. 
A)  A cash budget. 
B)  A budgeted balance sheet. 
C)  A budgeted income statement. 
D)  A production budget.

Question 8

In a flexible budget for sales of 60,000 T-shirts, how much would Baskin budget for operating expenses?

Accepted Answer

A)  $238,800. 
B)  $338,800. 
C)  $218,400. 
D)  $418,400. 
A)  $238,800. 
B)  $338,800. 
C)  $218,400. 
D)  $418,400.

Question 9

The total quality management approach to budgeting sets budgeted amounts at levels that can be achieved through reasonably efficient operations.

Accepted Answer

A) True 
 B)False

Question 10

A cash budget is affected directly by each of the following except:

Accepted Answer

A)  A capital expenditures budget. 
B)  A sales forecast. 
C)  A manufacturing cost budget. 
D)  A budgeted income statement. 
A)  A capital expenditures budget. 
B)  A sales forecast. 
C)  A manufacturing cost budget. 
D)  A budgeted income statement.

Question 11

A flexible budget:

Accepted Answer

A)  Consists of advance estimates of costs and expenses for various possible levels of activity. 
B)  Is designed to be adjusted at frequent intervals for changes in the general price level. 
C)  Is better suited for use with a job cost system than a standard cost system. 
D)  Cannot be prepared when a standard cost system is in use. 
A)  Consists of advance estimates of costs and expenses for various possible levels of activity. 
B)  Is designed to be adjusted at frequent intervals for changes in the general price level. 
C)  Is better suited for use with a job cost system than a standard cost system. 
D)  Cannot be prepared when a standard cost system is in use.

Question 12

A performance report for Skelton's first quarter of operations using a flexible budget approach would show:

Accepted Answer

A)  Actual costs over budget by $1,300. 
B)  Actual costs over budget by $11,700. 
C)  Actual costs over budget by $15,150. 
D)  Total costs per the flexible budget of $194,400. 
A)  Actual costs over budget by $1,300. 
B)  Actual costs over budget by $11,700. 
C)  Actual costs over budget by $15,150. 
D)  Total costs per the flexible budget of $194,400.

Question 13

Capital expenditures budgets are typically prepared for a period of:

Accepted Answer

A)  3 months. 
B)  6 months. 
C)  The entire fiscal year. 
D)  Several years. 
A)  3 months. 
B)  6 months. 
C)  The entire fiscal year. 
D)  Several years.

Question 14

As the volume of output increases:

Accepted Answer

A)  Variable costs per unit will increase. 
B)  Variable costs per unit will decrease. 
C)  Variable costs per unit will not change. 
D)  Variable costs in total will decrease. 
A)  Variable costs per unit will increase. 
B)  Variable costs per unit will decrease. 
C)  Variable costs per unit will not change. 
D)  Variable costs in total will decrease.

Question 15

Budgeted material purchases and payments to suppliers
On January 1 of the current period, Gotham Corporation has direct materials on hand of $82,000. Of this amount, Gotham owes suppliers $51,000 on account. The company has prepared the following budget estimates for January:
(a) Purchases of direct materials budgeted in January amount to: $________________
(b) Cash payments to suppliers budgeted in January amount to: $________________ Computations

Accepted Answer

(a) $317,0

Question 16

A company that is profitable may not have sufficient cash on hand to meet their immediate needs.

Accepted Answer

A) True 
 B)False

Question 17

Which philosophy in setting budgeted amounts assumes both the complete elimination of inefficiencies and a level of absolute efficiency?

Accepted Answer

A)  The behavioral approach. 
B)  The total quality management approach. 
C)  Both philosophies. 
D)  Neither philosophy. 
A)  The behavioral approach. 
B)  The total quality management approach. 
C)  Both philosophies. 
D)  Neither philosophy.

Question 18

As the volume of output decreases:

Accepted Answer

A)  Fixed costs per unit will increase. 
B)  Fixed costs per unit will decrease. 
C)  Fixed costs per unit will not change. 
D)  Fixed costs in total will decrease. 
A)  Fixed costs per unit will increase. 
B)  Fixed costs per unit will decrease. 
C)  Fixed costs per unit will not change. 
D)  Fixed costs in total will decrease.

Question 19

Rodgers Mfg. Co. prepares a flexible budget. The original budget forecasted sales of 100,000 units @ $20, and operating expenses of $300,000 fixed, plus $2 per unit. Production also was budgeted at 100,000 units. Actual sales and production for the period totaled 110,000 units. When the budget is adjusted to reflect these new activity levels, which of the following budgeted amounts will increase, but by less than 10 percent?

Accepted Answer

A)  Sales revenue. 
B)  Variable manufacturing costs. 
C)  Fixed manufacturing costs. 
D)  Total operating expenses. 
A)  Sales revenue. 
B)  Variable manufacturing costs. 
C)  Fixed manufacturing costs. 
D)  Total operating expenses.

Question 20

The most widely used budgeting philosophy is the:

Accepted Answer

A)  Operational approach. 
B)  Behavioral approach. 
C)  Strategic approach. 
D)  Tactical approach. 
A)  Operational approach. 
B)  Behavioral approach. 
C)  Strategic approach. 
D)  Tactical approach.

Exam 23: Operational Budgeting

Which of the following is considered a financial budget estimate?

Hugh's budgeted interest expense for March is:

Flexible budgeting may be viewed as combining the concepts of budgeting with cost-volume-profit analysis.

Which of the following is not considered an operating budget?

Flexible budgeting may be used for profit centers by applying cost-volume-profit relationships to the actual level of:

Which element of a master budget would normally be prepared last?

In a flexible budget for sales of 60,000 T-shirts, how much would Baskin budget for operating expenses?

The total quality management approach to budgeting sets budgeted amounts at levels that can be achieved through reasonably efficient operations.

A cash budget is affected directly by each of the following except:

A flexible budget:

A performance report for Skelton's first quarter of operations using a flexible budget approach would show:

Capital expenditures budgets are typically prepared for a period of:

As the volume of output increases:

A company that is profitable may not have sufficient cash on hand to meet their immediate needs.

Which philosophy in setting budgeted amounts assumes both the complete elimination of inefficiencies and a level of absolute efficiency?

As the volume of output decreases:

The most widely used budgeting philosophy is the:

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

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