Exam 9: Budgeting Systems

The annual financial budget is also called a

XYZ has budgeted to sell 100 000 units of P for February 2008. It has an opening inventory of 20 000 units of P and would like a closing inventory of 30 000 units. Each unit of P requires 2 kg of raw material Y. Inventory of Y at the beginning of the month is 5000 kg. Assuming the sales budget is met and the desired closing inventory of P is achieved, how many kilograms of Y need to be purchased during February, in order to have a closing balance of 8000 kg?

Which of the following does budget preparation require to achieve optimum outcomes? i. Top-down budgeting ii. Bottom-up budgeting iii. Participative budgeting

Carter Manufacturers have budgeted sales for the coming months as follows. The firm has decided that to avoid losing customers because of production hold-ups it will in future maintain a finished goods inventory on hand equal to one-fifth of the following month's budgeted sales. At 31 December, the company had in finished goods stock 10 000 units. What is budgeted production for the quarter January-March?

The budget is:

Which of the following are unlikely to influence the sales forecast?

A company's plan for the acquisition of long-term assets, such as buildings and equipment, is called a

A production budget

Lee's Appliances forecasts the following sales figures for the next four months. Cash sales average 10 per cent of total sales and credit sales are collected 50 per cent in the month of sale and 50 per cent in the month following sale. What is Lee's estimated accounts receivable balance on July 31?

In preparing and using any budget, it is important that managers keep in mind the

Assume for a firm that budgeted production for July and August is 180 000 and 200 000 units respectively. It takes half a kilogram of direct material to make one unit of finished product. Materials inventory is maintained at 10 per cent of the next month's budgeted production needs. If the 30 June inventory of materials was 5000 kg, how many kilograms of direct material should be purchased during July?

If an organisation were more focused on outputs rather than inputs, they would be advised to use program budgeting as opposed to other alternatives.

Which of the following is an example of padding the budget?

A slightly inaccurate sales forecast, since it comes at the beginning of the budgeting process

Zero-based budgeting is too introspective. Discuss this statement.

Zero-based budgeting refers to

Which of the following statements is false?

To communicate budget procedures and deadlines to employees throughout the organisation, the manager responsible for managing the budget often develops and disseminates a

As all budgets 'hang' off the sales budget, if the sales forecasts are incorrect, chances are all operating budgets will also be inaccurate.

The typical starting point in the sales forecasting process is