Question 1

Each speaker system requires 3 boxes and 15 yards of wire. Boxes cost $4 each and wire is $0.60 per yard. Connor wants to have 20% of the following month's production needs in ending raw materials inventory. On January 1, Connor had 24,000 boxes and 100,000 yards of wire in inventory.
-Refer to Figure 9-11. What is Pallen's budgeted operating income?

Accepted Answer

A)  $281,000 
B)  $39,000 
C)  $198,000 
D)  $83,000 
E)  $440,000

Question 2

$\begin{array}{lr}
\text { Production in units } & 3,000 \
\text { Direct materials cost } & \$ 7,000 \
\text { Direct labor cost } & \$ 10,000 \
\text { Overhead cost } & \$ 9,600 \
\text { Sales commission per unit sold } & \$ 4 \
\text { Price per unit sold } & \$ 29 \
\text { Fixed selling and administrative expense } & \$ 7,000
\end{array}$ There were no beginning and ending inventories.
-Refer to Figure 9-5. What is operating income for Sully Company for last month?

Accepted Answer

A)  $24,000 
B)  $34,600 
C)  $49,400 
D)  $27,400 
E)  $41,400

Question 3

A company has had stable sales and production for several years. Next year, sales are expected to increase by at least 50%. Assuming that the company maintains its policy for desired ending inventories of finished product and direct materials purchases, what will be the likely effect on the desired ending inventory of finished product?

Accepted Answer

A)  It will increase 
B)  It will decrease 
C)  It will stay the same 
D)  It will be twice the size of the desired ending inventory of raw materials 
E)  None of these

Question 4

The planned ending cash balance for the year appears on which of the following statements?

Accepted Answer

A)  Budgeted income statement 
B)  Budgeted balance sheet 
C)  Production budget 
D)  Budgeted cash receipts 
E)  Budgeted cash disbursements

Question 5

Communication and coordination are served by budgets.

Accepted Answer

A) True 
 B)False

Question 6

$$\begin{array} { l l } 
\text { August } & 26,000 \
\text { September } & 48,000 \
\text { Octaber } & 31,000
\end{array}$$ Each sneaker requires 1.5 hours of direct labor time. Direct labor wages average $13 per hour. Monthly overhead averages $8 per direct labor hour plus fixed overhead of $4,300.
-Refer to Figure 9-3. What is the direct labor cost budgeted for September?

Accepted Answer

A)  $820,000 
B)  $750,000 
C)  $140,000 
D)  $936,000 
E)  $625,000

Question 7

The controller of the company usually serves as the __________________.

Accepted Answer

The answer of The controller of the company usually serves...

Question 8

The budget director is the person responsible for directing and coordinating the organization's overall budgeting process.

Accepted Answer

A) True 
 B)False

Question 9

Rivers Company purchases merchandise on account. In general, Rivers pays 50% in the month of purchase and 50% in the following month. All payments in the month of purchase qualify for a 2% cash discount. First quarter budgeted purchases are:

Accepted Answer

The answer of Rivers Company purchases merchandise on account. In...

Question 10

Comparing actual results with budgeted results on a periodic basis provides control in a budgetary system.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true of the master budget?

Accepted Answer

A)  Monthly budgets are derived by dividing the master budget by 12. 
B)  Fixed costs cannot change from one month to another. 
C)  Variable costs cannot change from one month to another. 
D)  The master budget can reflect seasonal effects. 
E)  None of these.

Question 12

Examples of ________________ include job enrichment, increased responsibility and autonomy, and recognition programs.

Accepted Answer

The answer of Examples of ________________ include job enrichment, increased...

Question 13

Shorter Company developed the following data for the month of June.

Accepted Answer

The answer of Shorter Company developed the following data for...

Question 14

It is May 28 and you have just gotten a summer job that will pay you (net of taxes) $800 per month. You start June 1 and will work until school starts -0 halfway through August. Your scholarship pays for tuition, room and board. But you must buy books, pay for transportation to and from school, and pay for clothing, any extra meals, entertainment, and so on. You have gathered the following data:
  
Right now, you have $200 in your checking account.

Accepted Answer

The answer of It is May 28 and you have...

Question 15

The basic structure of a ______________ includes cash receipts, cash disbursements, any excess or deficiency of cash, and financing.

Accepted Answer

The answer of The basic structure of a ______________ includes...

Question 16

A company plans on selling 400 units. The selling price per unit is $5. There are 40 units in beginning inventory, and the company would like to have 75 units in ending inventory. How many units should be produced for the coming period?

Accepted Answer

A)  435 
B)  400 
C)  365 
D)  2,000 
E)  2,035

Question 17

The ________________ plots a direction for an organization's future activities and operations; it generally covers at least five years.

Accepted Answer

The answer of The ________________ plots a direction for an...

Question 18

Which of the following is an example of myopic behavior?

Accepted Answer

A)  Promotion of deserving employees. 
B)  Reducing expenditures on preventive maintenance. 
C)  Increased spending on research and development. 
D)  Productivity training for new employees. 
E)  Buying cheaper materials of the same quality to decrease the amount spent on raw materials.

Question 19

Describe some problems with participative budgeting.

Accepted Answer

The answer of Describe some problems with participative budgeting....

Question 20

A company's planned borrowings and repayments appear on the

Accepted Answer

A)  production budget. 
B)  selling and administrative expenses budget. 
C)  interest income budget. 
D)  cash budget. 
E)  operating budget.

Exam 9: Profit Planning

The planned ending cash balance for the year appears on which of the following statements?

Communication and coordination are served by budgets.

The controller of the company usually serves as the __________________.

The budget director is the person responsible for directing and coordinating the organization's overall budgeting process.

Rivers Company purchases merchandise on account. In general, Rivers pays 50% in the month of purchase and 50% in the following month. All payments in the month of purchase qualify for a 2% cash discount. First quarter budgeted purchases are:

Comparing actual results with budgeted results on a periodic basis provides control in a budgetary system.

Which of the following is true of the master budget?

Examples of ________________ include job enrichment, increased responsibility and autonomy, and recognition programs.

Shorter Company developed the following data for the month of June.

The basic structure of a ______________ includes cash receipts, cash disbursements, any excess or deficiency of cash, and financing.

A company plans on selling 400 units. The selling price per unit is $5. There are 40 units in beginning inventory, and the company would like to have 75 units in ending inventory. How many units should be produced for the coming period?

The ________________ plots a direction for an organization's future activities and operations; it generally covers at least five years.

Which of the following is an example of myopic behavior?

Describe some problems with participative budgeting.

A company's planned borrowings and repayments appear on the