Question 1

Which of the following is NOT a benefit of budgeting?

Accepted Answer

A)  It uncovers potential bottlenecks before they occur. 
B)  It coordinates the activities of the entire organization by integrating the plans and objectives of the various parts. 
C)  It ensures that accounting records comply with generally accepted accounting principles. 
D)  It provides benchmarks for evaluating subsequent performance.

Question 2

A sales budget is given below for one of the products manufactured by the OMI Co.:  
The inventory of finished goods at the end of each month must equal 20% of the next month's sales.However,on December 31,the finished goods inventory totalled only 4,000 units.
Each unit of product requires three kilograms of specialized material.Since the production of this specialized material by OMI's suppliers is sometimes irregular,the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs.This requirement had been met on January 1 of the current year.
Required:
Prepare a budget showing the quantity of material to be purchased each month for January,February,and March,and in total for the quarter.

Accepted Answer

The answer of A sales budget is given below for...

Question 3

Which of the following best describes the direct materials purchase budget?

Accepted Answer

A)  It is the beginning point in the budget process. 
B)  It must provide for the desired ending inventory as well as for production. 
C)  It is accompanied by a schedule of cash collections. 
D)  It is completed after the cash budget.

Question 4

What should be the total variable overhead cost at an activity level of 9,300 patient-visits per month?

Accepted Answer

A)  $114,390. 
B)  $149,730. 
C)  $102,090. 
D)  $133,630.

Question 5

In a budget of cash disbursements for March,what would be the total cash disbursements?

Accepted Answer

A)  $11,200. 
B)  $13,900. 
C)  $16,900. 
D)  $22,300.

Question 6

If Pardise Company plans to sell 480,000 units during July,what would be the number of units it would have to manufacture during July?

Accepted Answer

A)  440,000 units. 
B)  450,000 units. 
C)  480,000 units. 
D)  510,000 units.

Question 7

TabComp Inc.is a retail distributor for MZB-33 computer hardware and related software.TabComp prepares annual sales forecasts,of which the first six months of the coming year are presented below:  
Cash sales account for 25% of TabComp's total sales,30% of the total sales are paid by bank credit card,and the remaining 45% are on open account (TabComp's own charge accounts).The cash and bank credit card sale payments are received in the month of the sale.Bank credit card sales are subject to a 4% discount,which is deducted immediately.The cash receipts for sales on open account are 70% in the month following the sale and 28% in the second month following the sale;the remaining are uncollectible.
TabComp's month-end inventory requirements for computer hardware units are 30% of the next month's sales.The units must be ordered two months in advance due to long lead times quoted by the manufacturer.
Required:
a)Calculate the cash that TabComp can expect to collect during April.Show all of your calculations.
b)Determine the number of computer hardware units that should be ordered in January.Show all of your calculations.

Accepted Answer

The answer of TabComp Inc.is a retail distributor for MZB-33...

Question 8

What are the budgeted cash disbursements for December?

Accepted Answer

A)  $382,500. 
B)  $442,500. 
C)  $472,500. 
D)  $477,500.

Question 9

Marple Company's budgeted production in units and budgeted raw materials purchases over the next three months are given below: 
Two kilograms of raw materials are required to produce one unit of product.The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs.The company is expected to have 36,000 kilograms of raw materials on hand on January 1.What should be the budgeted production for February?

Accepted Answer

A)  75,000 units. 
B)  82,500 units. 
C)  105,000 units. 
D)  150,000 units.

Question 10

Suppose the company produces and sells 25,000 units instead of the original 22,000 units at an average selling price of $55.What is the company's flexible budget operating income (loss)for April,given the actual sales volume of 25,000 units?

Accepted Answer

A)  $388,000. 
B)  $463,000. 
C)  $550,000. 
D)  $625,000.

Question 11

What is the total number of units to be produced in February?

Accepted Answer

A)  5,220 units. 
B)  5,400 units. 
C)  5,580 units. 
D)  6,120 units.

Question 12

Superior Industries' sales budget shows quarterly sales for the next year as follows: 
Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales.What should be the budgeted production for the second quarter?

Accepted Answer

A)  7,200 units. 
B)  8,000 units. 
C)  8,400 units. 
D)  8,800 units.

Question 13

The beginning cash balance is not included on the cash budget since the cash budget deals exclusively with cash flows rather than with balance sheet amounts.

Accepted Answer

A) True 
 B)False

Question 14

What are the collections from customers during the first quarter (item a),in thousands of dollars?

Accepted Answer

A)  $43. 
B)  $67. 
C)  $60. 
D)  $73.

Question 15

What is the desired ending inventory for March?

Accepted Answer

A)  380 units. 
B)  460 units. 
C)  540 units. 
D)  720 units.

Question 16

The following overhead data are for a department in a large company.  
  
Required:
Prepare a report that would be useful in assessing how well costs were controlled in this department.

Accepted Answer

The answer of The following overhead data are for a...

Question 17

If all cash expenses are paid for in the month incurred what is the budgeted cash disbursements for manufacturing overhead if 5,500 units are produced?

Accepted Answer

A)  $16,500. 
B)  $75,500. 
C)  $91,500. 
D)  $99,000.

Question 18

Friden Company has budgeted sales and production over the next quarter as follows: 
On April 1,the company has 20,000 units of product on hand.A minimum of 20% of the next month's sales needs (in units)must be on hand at the end of each month.July sales are expected to be 140,000 units.What would be the budgeted sales for June (in units)?

Accepted Answer

A)  128,000 units. 
B)  160,000 units. 
C)  184,000 units. 
D)  188,000 units.

Question 19

What is the budgeted accounts receivable balance on June 1 of the current year?

Accepted Answer

A)  $56,000. 
B)  $64,000. 
C)  $76,000. 
D)  $132,000.

Question 20

What is the variance for laundry costs in the flexible budget performance report for the month?

Accepted Answer

A)  $5,080 F 
B)  $5,080 U 
C)  $5,800 U 
D)  $5,800 F

Exam 9: Budgeting