Question 1

When budgeted amounts are set at reasonable and achievable levels:

Accepted Answer

A)  They reflect a "total quality management" philosophy of management. 
B)  A highly efficient department should fall slightly short of budget standards. 
C)  Meeting the budgeted amounts ensures a maximum level of profitability. 
D)  Failure to stay within the budget is viewed as an unacceptable level of performance. 
A)  They reflect a "total quality management" philosophy of management. 
B)  A highly efficient department should fall slightly short of budget standards. 
C)  Meeting the budgeted amounts ensures a maximum level of profitability. 
D)  Failure to stay within the budget is viewed as an unacceptable level of performance.

Question 2

Assume Baskin actually achieves the 60,000 unit sales level, and that net income actually earned at this level was $70,000. A performance report would indicate that net income was:

Accepted Answer

A)  $2,660 over budget. 
B)  $43,120 under budget. 
C)  $90,000 under budget. 
D)  At the budgeted level. 
A)  $2,660 over budget. 
B)  $43,120 under budget. 
C)  $90,000 under budget. 
D)  At the budgeted level.

Question 3

Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level?

Accepted Answer

A)  Direct materials used, $43,200. 
B)  Direct labor, $54,000. 
C)  Variable overhead, $27,000. 
D)  Fixed manufacturing overhead, $70,200. 
A)  Direct materials used, $43,200. 
B)  Direct labor, $54,000. 
C)  Variable overhead, $27,000. 
D)  Fixed manufacturing overhead, $70,200.

Question 4

A segment of a master budget relating to that portion of a business under the control of a particular manager is termed a:

Accepted Answer

A)  Performance report. 
B)  Production report. 
C)  Responsibility budget. 
D)  Cash budget. 
A)  Performance report. 
B)  Production report. 
C)  Responsibility budget. 
D)  Cash budget.

Question 5

During the first quarter of its operations, Morris Mfg. Co. expects to sell 50,000 units and create an ending inventory of 20,000 units. Variable manufacturing costs are budgeted at $10 per unit, and fixed manufacturing costs at $100,000 per quarter. The company's treasurer expects that 80 percent of the variable manufacturing costs will require cash payment during the quarter and that 20 percent will be financed through accounts payable and accrued liabilities. Only 50 percent of the fixed manufacturing costs are expected to require cash payments during the quarter. In the cash budget, payments for manufacturing costs during the quarter will total:

Accepted Answer

A)  $800,000. 
B)  $610,000. 
C)  $600,000. 
D)  $450,000. 
A)  $800,000. 
B)  $610,000. 
C)  $600,000. 
D)  $450,000.

Question 6

In a flexible budget, both variable and fixed costs will vary with the level of activity.

Accepted Answer

A) True 
 B)False

Question 7

What unit cost did Baskin use in budgeting the cost of goods sold for the year?

Accepted Answer

A)  $6. 
B)  $10.25. 
C)  $17.50. 
D)  Some other amount. 
A)  $6. 
B)  $10.25. 
C)  $17.50. 
D)  Some other amount.

Question 8

Budgeted collections from customers in October total:

Accepted Answer

A)  $39,000. 
B)  $27,000. 
C)  $31,000. 
D)  $110,000. 
A)  $39,000. 
B)  $27,000. 
C)  $31,000. 
D)  $110,000.

Question 9

Which of the following is not an element of the master budget?

Accepted Answer

A)  The capital expenditures budget. 
B)  The production schedule. 
C)  The operating expense budget. 
D)  All of the above are elements of the master budget. 
A)  The capital expenditures budget. 
B)  The production schedule. 
C)  The operating expense budget. 
D)  All of the above are elements of the master budget.

Question 10

Elements of the master budget
Describe briefly the purpose of a master budget and discuss its elements.

Accepted Answer

A master budget is a group of related bu

Question 11

The production schedule in units:

Accepted Answer

A)  Cannot be prepared until the budgeted income statement is completed. 
B)  Is dependent upon the sales forecast for the period. 
C)  Is based upon the manufacturing cost budget, that is, upon the level of funds available for manufacturing costs. 
D)  Is the starting point in the preparation of the master budget. 
A)  Cannot be prepared until the budgeted income statement is completed. 
B)  Is dependent upon the sales forecast for the period. 
C)  Is based upon the manufacturing cost budget, that is, upon the level of funds available for manufacturing costs. 
D)  Is the starting point in the preparation of the master budget.

Question 12

Which of the following is not a characteristic of the total quality approach to setting budgetary targets?

Accepted Answer

A)  Absolute efficiency. 
B)  A perception that the budget is fair. 
C)  Budgetary targets that are unattainable. 
D)  Budgeted performance expectations that cannot be exceeded. 
A)  Absolute efficiency. 
B)  A perception that the budget is fair. 
C)  Budgetary targets that are unattainable. 
D)  Budgeted performance expectations that cannot be exceeded.

Question 13

Flexible budgeting may be viewed as combining the concepts of budgeting and:

Accepted Answer

A)  Incremental analysis. 
B)  Product costing. 
C)  Cost-volume-profit analysis. 
D)  Financial statement analysis. 
A)  Incremental analysis. 
B)  Product costing. 
C)  Cost-volume-profit analysis. 
D)  Financial statement analysis.

Question 14

Budgeted debt service costs
On April 1, Fisher Corporation borrowed $400,000 from its bank by signing a 9%, 5-year note payable. The note calls for 60 monthly payments of $6,150, which includes both interest and principal components.
(a) Interest expense budgeted for April amounts to: $________________
(b) The carrying value of the note to be reported in the company's budgeted balance sheet as of April 30 is: $________________
(c) Interest expense budgeted for May amounts to (round to nearest whole dollar): $________________
(d) The carrying value of the note to be reported in the company's budgeted balance sheet as of May 31 is (round to nearest whole dollar): $________________

Accepted Answer

(a) $3,000
(b) $396,

Question 15

A cash budget determines the maximum amount of money that can be spent during the period.

Accepted Answer

A) True 
 B)False

Exam 23: Operational Budgeting

When budgeted amounts are set at reasonable and achievable levels:

Assume Baskin actually achieves the 60,000 unit sales level, and that net income actually earned at this level was $70,000. A performance report would indicate that net income was:

Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level?

A segment of a master budget relating to that portion of a business under the control of a particular manager is termed a:

In a flexible budget, both variable and fixed costs will vary with the level of activity.

What unit cost did Baskin use in budgeting the cost of goods sold for the year?

Budgeted collections from customers in October total:

Which of the following is not an element of the master budget?

Elements of the master budget Describe briefly the purpose of a master budget and discuss its elements.

The production schedule in units:

Which of the following is not a characteristic of the total quality approach to setting budgetary targets?

Flexible budgeting may be viewed as combining the concepts of budgeting and:

A cash budget determines the maximum amount of money that can be spent during the period.

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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