Question 1

The person responsible for managing the budget process

Accepted Answer

A)  is responsible for specifying the process by which budget data will be gathered. 
B)  collects information and prepares the annual financial budget. 
C)  communicates budget procedures and deadlines to employees throughout the organisation. 
D)  All of the given answers 
A)  is responsible for specifying the process by which budget data will be gathered. 
B)  collects information and prepares the annual financial budget. 
C)  communicates budget procedures and deadlines to employees throughout the organisation. 
D)  All of the given answers

Question 2

The difference between the revenue or cost projection that a person provides and a realistic estimate of the revenue or cost is called

Accepted Answer

A)  passing the buck. 
B)  budgetary slack. 
C)  participative budgeting. 
D)  resource allocation processing. 
A)  passing the buck. 
B)  budgetary slack. 
C)  participative budgeting. 
D)  resource allocation processing.

Question 3

Which of the following is not typically a responsibility centre for a manufacturing firm?

Accepted Answer

A)  Cost centre 
B)  Profit centre 
C)  Investment centre 
D)  Inventory centre 
A)  Cost centre 
B)  Profit centre 
C)  Investment centre 
D)  Inventory centre

Question 4

Vebco manufactures a product requiring 0.5 grams of platinum per unit. The cost of platinum is approximately $360 per gram. Vebco maintains an ending inventory of platinum equal to 10 per cent of the following month's production. The following data were taken from the most recent quarterly production budget.  
Determine the cost of platinum purchased in August.

Accepted Answer

A)  $195 840 
B)  $200 160 
C)  $391 680 
D)  $400 320 
A)  $195 840 
B)  $200 160 
C)  $391 680 
D)  $400 320

Question 5

When employees throughout an organisation are meaningfully involved in the budget-setting process, this is referred to as

Accepted Answer

A)  budgeting slack. 
B)  participative budgeting. 
C)  padding the budget. 
D)  employee-based budgeting. 
A)  budgeting slack. 
B)  participative budgeting. 
C)  padding the budget. 
D)  employee-based budgeting.

Question 6

As the starting point in the budgeting process, managers need to understand the strategy of the organisation, to enable them to formulate a budget that supports the organisation's

Accepted Answer

A)  mission statement. 
B)  strategic plan. 
C)  forecasts. 
D)  vision. 
A)  mission statement. 
B)  strategic plan. 
C)  forecasts. 
D)  vision.

Question 7

Insurance Plus provides their sales staff with a base salary and commissions. When the various departments' actual performance exceeds the budgeted sales figures an additional bonus is paid. This is an example of

Accepted Answer

A)  facilitating communication and coordination. 
B)  controlling profit and operations. 
C)  evaluating performance and providing incentives. 
D)  allocating resources. 
A)  facilitating communication and coordination. 
B)  controlling profit and operations. 
C)  evaluating performance and providing incentives. 
D)  allocating resources.

Question 8

People create budgetary slack because

Accepted Answer

A)  their performance will look better if they beat the budget. 
B)  it helps them cope with uncertainty. 
C)  they believe their budget requests will be cut. 
D)  All of the given answers 
A)  their performance will look better if they beat the budget. 
B)  it helps them cope with uncertainty. 
C)  they believe their budget requests will be cut. 
D)  All of the given answers

Question 9

Strawman Ltd runs tutoring classes for high school students. The maximum number of students a weekly tutorial class can take is 15. Each tutor, who is paid a per semester salary of $20 000 including on-costs, can manage up to 5 classes per week per semester. Assuming that this semester there are 350 students enrolled. What is the budgeted salary for tutors this semester?

Accepted Answer

A)  $100 000 
B)  $93 333 
C)  $20 000 
D)  $6428 
A)  $100 000 
B)  $93 333 
C)  $20 000 
D)  $6428

Question 10

The following is the forecast level of inventory (in units) for Aardvark Ltd.  
If the company plans to sell 320 000 units, how many will they need to produce during the period?

Accepted Answer

A)  330 000 
B)  315 000 
C)  305 000 
D)  320 000 
A)  330 000 
B)  315 000 
C)  305 000 
D)  320 000

Question 11

Budgeted sales for ABC Company are as follows:  
All stock is marked up to sell at its invoice cost plus 25 per cent. On average 60 per cent of credit sales are collected in the month of sale, 35 per cent in the month following sale and the remainder is uncollectable. The budgeted cost of goods sold for the month of October is:

Accepted Answer

A)  $1 360 000 
B)  $1 425 000 
C)  $1 520 000 
D)  None of the given answers 
A)  $1 360 000 
B)  $1 425 000 
C)  $1 520 000 
D)  None of the given answers

Question 12

Suppose that the departmental manager deliberately underestimates the level of sales activity by 10 000 units. What is this practice called?

Accepted Answer

A)  Budgetary participation 
B)  Appropriate caution 
C)  Budgetary slack 
D)  Allowance for uncertainty 
A)  Budgetary participation 
B)  Appropriate caution 
C)  Budgetary slack 
D)  Allowance for uncertainty

Question 13

Christina Wadat is a sales manager at Walter Booksellers. She believes that the sales revenue will most likely to be $500 000 this coming year. However, she decides to build in budget slack of 10 per cent. The amount of sales revenue she inputs into the company's sales budget is

Accepted Answer

A)  $450 000. 
B)  $500 000. 
C)  $550 000. 
D)  600 000. 
A)  $450 000. 
B)  $500 000. 
C)  $550 000. 
D)  600 000.

Question 14

On January 1, Bandy Manufacturing plans to introduce a product called Handy Dandy. The company plans to sell each unit of Handy Dandy for $25.00. Management has forecast the following in sales units for the first three months.  
Each unit of Handy Dandy requires 2 kg of Dingaling and 1 hour of direct labour. Management wants to end each month with a Handy Dandy inventory level equal to 10 per cent of the following month's sales, and a Dingaling inventory equal to 5 per cent of the following month's production. Dingaling can be purchased for $3 per kg and direct labour costs are estimated to be $5.00 per hour. How many kilograms of Dingaling should be purchased in January? Bandy plans to have no inventory of Dingaling on January 1:

Accepted Answer

A)  78 520 
B)  72 800 
C)  72 680 
D)  78 400 
A)  78 520 
B)  72 800 
C)  72 680 
D)  78 400

Question 15

Budgets can be broken into three main categories, capital expenditure budgets, operating budgets and continuous budgets.

Accepted Answer

A) True 
 B)False

Question 16

Telcer & Company had 3000 units in finished goods inventory on December 31. Following is a partial production budget for January to March.  
How many units does the company expect to sell in January?

Accepted Answer

A)  6900 
B)  8900 
C)  9400 
D)  9900 
A)  6900 
B)  8900 
C)  9400 
D)  9900

Question 17

BeActive Sporting Goods sells tandem bicycles. The following data was taken from the most recent quarterly sales forecast.  
BeActive's cost for one bicycle is $125. What dollar amount should the company budget for June purchases?

Accepted Answer

A)  $153 125 
B)  $154 750 
C)  $204 625 
D)  $207 875 
A)  $153 125 
B)  $154 750 
C)  $204 625 
D)  $207 875

Question 18

Based on the production budget, the manufacturer develops budgets for

Accepted Answer

A)  direct labour. 
B)  direct materials. 
C)  manufacturing overhead. 
D)  All of the given options 
A)  direct labour. 
B)  direct materials. 
C)  manufacturing overhead. 
D)  All of the given options

Question 19

The Z Company has prepared a sales budget for 40 000 units for a three-month period. The company desires a closing finished goods inventory of 12 000 units, and closing direct material inventory of 14 000 units at the end of the quarter. There is no beginning finished goods inventory, but beginning inventory of direct materials is 2000 units. It takes two units of direct material to make one unit of finished product. The number of units of direct material to be purchased during the quarter is

Accepted Answer

A)  52 000. 
B)  104 000. 
C)  118 000. 
D)  116 000. 
A)  52 000. 
B)  104 000. 
C)  118 000. 
D)  116 000.

Question 20

The purposes of a budget include:

Accepted Answer

A)  planning. 
B)  facilitating communication and coordination. 
C)  controlling profit and operations, and evaluating performance and providing incentives. 
D)  All of the given answers 
A)  planning. 
B)  facilitating communication and coordination. 
C)  controlling profit and operations, and evaluating performance and providing incentives. 
D)  All of the given answers

The person responsible for managing the budget process

The difference between the revenue or cost projection that a person provides and a realistic estimate of the revenue or cost is called

Which of the following is not typically a responsibility centre for a manufacturing firm?

When employees throughout an organisation are meaningfully involved in the budget-setting process, this is referred to as

As the starting point in the budgeting process, managers need to understand the strategy of the organisation, to enable them to formulate a budget that supports the organisation's

Insurance Plus provides their sales staff with a base salary and commissions. When the various departments' actual performance exceeds the budgeted sales figures an additional bonus is paid. This is an example of

People create budgetary slack because

The following is the forecast level of inventory (in units) for Aardvark Ltd. If the company plans to sell 320 000 units, how many will they need to produce during the period?

Suppose that the departmental manager deliberately underestimates the level of sales activity by 10 000 units. What is this practice called?

Christina Wadat is a sales manager at Walter Booksellers. She believes that the sales revenue will most likely to be $500 000 this coming year. However, she decides to build in budget slack of 10 per cent. The amount of sales revenue she inputs into the company's sales budget is

Budgets can be broken into three main categories, capital expenditure budgets, operating budgets and continuous budgets.

Telcer & Company had 3000 units in finished goods inventory on December 31. Following is a partial production budget for January to March. How many units does the company expect to sell in January?

BeActive Sporting Goods sells tandem bicycles. The following data was taken from the most recent quarterly sales forecast. BeActive's cost for one bicycle is $125. What dollar amount should the company budget for June purchases?

Based on the production budget, the manufacturer develops budgets for

The purposes of a budget include:

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

Exam 9: Budgeting Systems

The person responsible for managing the budget process

The difference between the revenue or cost projection that a person provides and a realistic estimate of the revenue or cost is called

Which of the following is not typically a responsibility centre for a manufacturing firm?

When employees throughout an organisation are meaningfully involved in the budget-setting process, this is referred to as

As the starting point in the budgeting process, managers need to understand the strategy of the organisation, to enable them to formulate a budget that supports the organisation's

Insurance Plus provides their sales staff with a base salary and commissions. When the various departments' actual performance exceeds the budgeted sales figures an additional bonus is paid. This is an example of

People create budgetary slack because

The following is the forecast level of inventory (in units) for Aardvark Ltd. If the company plans to sell 320 000 units, how many will they need to produce during the period?

Suppose that the departmental manager deliberately underestimates the level of sales activity by 10 000 units. What is this practice called?

Christina Wadat is a sales manager at Walter Booksellers. She believes that the sales revenue will most likely to be $500 000 this coming year. However, she decides to build in budget slack of 10 per cent. The amount of sales revenue she inputs into the company's sales budget is

Budgets can be broken into three main categories, capital expenditure budgets, operating budgets and continuous budgets.

Telcer & Company had 3000 units in finished goods inventory on December 31. Following is a partial production budget for January to March. How many units does the company expect to sell in January?

BeActive Sporting Goods sells tandem bicycles. The following data was taken from the most recent quarterly sales forecast. BeActive's cost for one bicycle is $125. What dollar amount should the company budget for June purchases?

Based on the production budget, the manufacturer develops budgets for

The purposes of a budget include:

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters