Question 1

The budget itself and the administration of the budget are the responsibility of the accounting department.

Accepted Answer

A) True 
 B)False

Question 2

Dart Inc. makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: $\begin{array}{lcc}
&\text {Variable Cost Per Unit Sold}&\text {Monthly Fixed Cost}\
\text { Sales commissions } & \$ 0.60 & \$ 6,000 \
\text { Shipping } & 1.20 & \
\text { Advertising } & 0.30 & \
\text { Executive salaries } & &40,000  \
\text { Depreciation on office equipment } & & 8,000\
\text { Other }&0.35 & 28,000
\end{array}$  Expenses are paid in the month incurred. If the company has budgeted to sell 8000 umbrellas in October how much is the total budgeted variable selling and administrative expenses for October?

Accepted Answer

A)  $16800 
B)  $18400 
C)  $101600 
D)  $19600

Question 3

Budgets can have a positive or negative effect on human behavior depending on the manner in which the budget is developed and administered.

Accepted Answer

A) True 
 B)False

Question 4

What is participative budgeting? What are its potential benefits? What are its potential shortcomings?

Accepted Answer

The answer of What is participative budgeting? What are its...

Question 5

Beginning cash balance plus total receipts

Accepted Answer

A)  equals ending cash balance. 
B)  must equal total disbursements. 
C)  equals total available cash. 
D)  is the excess of available cash over disbursements.

Question 6

Mapleview Inc. has the following budgeted sales: July $200000 August $300000 and September $250000. 40% of the sales are for cash and 60% are on credit. For the credit sales 50% are collected in the month of sale and 50% the next month. The total expected cash receipts during September are

Accepted Answer

A)  $280000. 
B)  $265000. 
C)  $262500. 
D)  $250000.

Question 7

Which one of the following sections would not appear on a cash budget?

Accepted Answer

A)  Cash receipts 
B)  Financing 
C)  Investing 
D)  Cash disbursements

Question 8

Comma Co. makes and sells widgets. The company is in the process of preparing its selling and administrative expense budget for the month. The following budget data are available: $\begin{array}{lcc}
&\text {Variable Cost Per Unit Sold}&\text {Monthly Fixed Cost}\
\text { Sales commissions } & \$1& \$10,000 \
\text { Shipping } & \$3 & \
\text { Advertising } &\$4& \
\text { Executive salaries } & &\$120,000  \
\text { Depreciation on office equipment } & & \$4,000\
\text { Other }&\$2& \$6,000
\end{array}$  Expenses are paid in the month incurred. If the company has budgeted to sell 80000 widgets in October how much is the total budgeted selling and administrative expenses for October?

Accepted Answer

A)  $940000 
B)  $140000 
C)  $930000 
D)  $800000

Question 9

If a company has adopted continuous budgeting the budget will show plans for

Accepted Answer

A)  every day. 
B)  a full year ahead. 
C)  the current year and the next year. 
D)  at least five years.

Question 10

Off-Line Co. has 9000 units in beginning finished goods. The sales budget shows expected sales to be 36000 units. If the production budget shows that 42000 units are required for production what was the desired ending finished goods?

Accepted Answer

A)  3000. 
B)  9000. 
C)  15000. 
D)  27000.

Question 11

The direct materials budget details
1) the quantity of direct materials to be purchased.
2) the cost of direct materials to be purchased.

Accepted Answer

A)  1 
B)  2 
C)  both 1 and 2 
D)  neither 1 nor 2

Question 12

A benefit of budgeting is that it provides definite objectives for evaluating performance.

Accepted Answer

A) True 
 B)False

Question 13

The following credit sales are budgeted by Terra Co.: $$\begin{array} { l r } 
\text { January } & \$ 204,000 \
\text { February } & 300,000 \
\text { March } & 420,000 \
\text { April } & 360,000
\end{array}$$ The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale 20% in the month following the sale and 8% in the second month following the sale. The anticipated cash inflow for the month of April is

Accepted Answer

A)  $370320. 
B)  $336000. 
C)  $360000. 
D)  $352800.

Question 14

Leaf Industries is preparing its master budget for 2016. Relevant data pertaining to its sales budget are as follows:
Sales for the year are expected to total 8000000 units. Quarterly sales are 25% 30% 15% and 30% respectively. The sales price is expected to be $2.00 per unit for the first quarter and then be increased to $2.20 per unit in the second quarter.
Instructions
Prepare a sales budget for 2016 for Leaf Industries.

Accepted Answer

The answer of Leaf Industries is preparing its master budget...

Question 15

A budget can be a means of communicating a company's objectives to external parties.

Accepted Answer

A) True 
 B)False

Question 16

Lion Industries required production for June is 132000 units. To make one unit of finished product three pounds of direct material Z are required. Actual beginning and desired ending inventories of direct material Z are 300000 and 330000 pounds respectively. How many pounds of direct material Z must be purchased?

Accepted Answer

A)  378000. 
B)  396000. 
C)  408000. 
D)  426000.

Question 17

The manufacturing overhead budget generally has separate sections for variable mixed and fixed costs.

Accepted Answer

A) True 
 B)False

Question 18

A critical factor in budgeting for a service firm is to determine the amount of products to purchase.

Accepted Answer

A) True 
 B)False

Question 19

Young Co. has budgeted its activity for December according to the following information:
1) Sales at $600000 all for cash.
2) Budgeted depreciation for December is $15000.
4) The cash balance at December 1 was $15000.
5) Selling and administrative expenses are budgeted at $60000 for December and are paid for in cash.
6) The planned merchandise inventory on December 31 and December 1 is $18000.
7) The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid in cash.
How much are the budgeted cash disbursements for December?

Accepted Answer

A)  $345000 
B)  $510000 
C)  $525000 
D)  $492000

Question 20

Lorie Nursery plans to sell 320 potted plants during April and 240 units in May. Lorie Nursery keeps 15% of the next month's sales as ending inventory. How many units should Lorie Nursery produce during April?

Accepted Answer

A)  308 
B)  332 
C)  320 
D)  356

Exam 23: Budgetary Planning

The budget itself and the administration of the budget are the responsibility of the accounting department.

Budgets can have a positive or negative effect on human behavior depending on the manner in which the budget is developed and administered.

What is participative budgeting? What are its potential benefits? What are its potential shortcomings?

Beginning cash balance plus total receipts

Mapleview Inc. has the following budgeted sales: July $200000 August $300000 and September $250000. 40% of the sales are for cash and 60% are on credit. For the credit sales 50% are collected in the month of sale and 50% the next month. The total expected cash receipts during September are

Which one of the following sections would not appear on a cash budget?

If a company has adopted continuous budgeting the budget will show plans for

Off-Line Co. has 9000 units in beginning finished goods. The sales budget shows expected sales to be 36000 units. If the production budget shows that 42000 units are required for production what was the desired ending finished goods?

The direct materials budget details 1) the quantity of direct materials to be purchased. 2) the cost of direct materials to be purchased.

A benefit of budgeting is that it provides definite objectives for evaluating performance.

A budget can be a means of communicating a company's objectives to external parties.

The manufacturing overhead budget generally has separate sections for variable mixed and fixed costs.

A critical factor in budgeting for a service firm is to determine the amount of products to purchase.

Lorie Nursery plans to sell 320 potted plants during April and 240 units in May. Lorie Nursery keeps 15% of the next month's sales as ending inventory. How many units should Lorie Nursery produce during April?