Exam 9: Budgeting Systems

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

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?

A budget that includes indirect materials,indirect labour and other indirect manufacturing costs is:

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.What are Bandy Manufacturing's budgeted prime costs in January?

Before any steps are taken in the budgeting process,it is essential that all involved in the process familiarise themselves with the strategic plans of the organisation so they can formulate the budget in light of these plans.

Which of the following involves decisions about the types of businesses and markets that an organisation operates in,and about how those businesses and activities will be financed?

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

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?

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

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 are the estimated cash collections in May?

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

Which of the following shows the schedule of cash payments for the materials and services the firm purchased on account,and all cash payments for services that are paid in advance or paid at the time of purchase?

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?

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

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

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.

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:

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

Budgets can be used as a benchmark against which to evaluate performance and control costs.

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?