Question 1

Which of the following is NOT a key feature of an ideal budgetary system?

Accepted Answer

A)  participation 
B)  incentives 
C)  accountability for noncontrollable costs 
D)  feedback on performance

Question 2

Rydingsward, Inc., has done a cost analysis for its production of reflectors.The following activities and cost drivers have been developed:  
-What is the budgeted maintenance cost if there was production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?

Accepted Answer

A)  $15,000 
B)  $32,000 
C)  $47,000 
D)  $79,000

Question 3

Figure 8-8 Armati, Inc., is looking for feedback on company performance.The company compares the budget for the year with the actual costs.Data have been collected below:
Armati, Inc., had the following budgeted data:
 The following actually occurred:

- Refer to Figure 8-8.The static budget variance for direct materials is

Accepted Answer

A) $100 F. 
B) $100 U. 
C) $400 F. 
D) $400 U.

Question 4

Figure 8-6 The following forecasted sales pertain to Tigers, Inc.
 Collection pattern:
60 percent in month of sale
40 percent in month following the sale
 The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month's sales.
-
Refer to Figure 8-6.How much is Accounts Receivable as of October 31?

Accepted Answer

A)  $420,000 
B)  $460,000 
C)  $240,000 
D)  none of the above

Question 5

Figure 8-3 Bug Company manufactures buggies.Manufacturing a buggy takes 20 units of wood and 1 unit of steel.Scheduled production of buggies for the next two months is 500 and 600 units, respectively.Beginning inventory is 4,000 units of wood and 30 units of steel.The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months.
-Refer to Figure 8-3.How many units of steel are expected in the material inventory at the end of the second month?

Accepted Answer

A)  30 units 
B)  45 units 
C)  40 units 
D)  35 units

Question 6

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months of 2011 are as follows:  Finished goods inventory at the end of December was 900 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.General Corporation expects to sell the boxes for $5 each.April 2011 sales is projected at 4,500 boxes.
-
How many boxes should be produced in January?

Accepted Answer

A)  3,060 boxes 
B)  2,940 boxes 
C)  3,000 boxes 
D)  3,840 boxes

Question 7

Figure 8-2 Oriental Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 are as follows:
 Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January 2011 sales is projected at 16,000 lamps.
-
Refer to Figure 8-2.In going from the sales budget to the production budget, adjustments to the sales budget need to be made for

Accepted Answer

A)  finished goods inventories. 
B)  cash receipts. 
C)  factory overhead costs. 
D)  selling expenses.

Question 8

Which of the following is NOT a potential disadvantage of participative budgeting?

Accepted Answer

A)  pseudoparticipation 
B)  performance feedback 
C)  unrealistic standards 
D)  budgetary slack

Question 9

Which of the following is NOT a component of the master budget?

Accepted Answer

A)  Sales Budget 
B)  Capital Budget 
C)  Cost of Goods Sold Budget 
D)  Budget to Actual Variance Analysis

Question 10

Figure 8-8 Armati, Inc., is looking for feedback on company performance.The company compares the budget for the year with the actual costs.Data have been collected below:
Armati, Inc., had the following budgeted data:
 The following actually occurred:

- Refer to Figure 8-8.The total budgeted costs for 2011 were

Accepted Answer

A)  $11,440. 
B)  $13,510. 
C)  $14,340. 
D)  $13,460.

Question 11

If production was budgeted at 400 units and the actual production was 420 units, what would be the static budget variance for materials if the actual cost of materials was $4,150 and the budgeted cost per unit is $10?

Accepted Answer

A)  $50 F 
B)  $200 U 
C)  $100 F 
D)  $150 U

Question 12

The budget most appropriate for control purposes is the

Accepted Answer

A)  static budget. 
B)  flexible budget. 
C)  continuous budget. 
D)  incremental budget.

Question 13

Which of the following is NOT an advantage of participative budgeting?

Accepted Answer

A)  encourages incrementalism 
B)  encourages communication 
C)  encourages responsibility 
D)  encourages creativity

Question 14

With an activity flexible budget, a budget variance is calculated

Accepted Answer

A)  based on a flexible budget based on cost for actual units produced. 
B)  based on a flexible budget based on various activity drivers for actual units produced. 
C)  based on a flexible budget based on flexible manufacturing. 
D)  based on a flexible budget based on committed resources for actual units produced.

Question 15

Denver Corporation has the following sales forecast for the next quarter: July, 4,000 units; August, 4,800 units; September, 5,600 units
Sales totaled 3,200 units in June.The June ending finished goods inventory was 800 units.End-of-month finished goods inventory levels are planned to be equal to 30 percent of the next month's planned sales.Records showed that each unit is budgeted at 2 pounds of materials costing $3 per pound.Direct labor was budgeted at .5 direct labor hours per unit at a wage of $20 per hour.Budgeted variable overhead is $1.50 per direct labor hour.Fixed overhead is budgeted at $250,000 for the year, and 50,000 units are expected to be produced.
-
The beginning finished inventory is valued at $31,320.
After preparing a finished goods inventory budget for August, what is the cost of goods sold for August?

Accepted Answer

A)  $104,400 
B)  $109,620 
C)  $67,860 
D)  $140,940

Question 16

Glenn, Inc., has done a cost analysis for its production of T-shirts.The following activities and cost drivers have been developed:  Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders

- What is the budget variance for purchasing in an activity-based performance report?

Accepted Answer

A)  $1,000 U 
B)  $2,000 U 
C)  $3,000 U 
D)  none of these

Question 17

Amy Company produces and sells bikes.It expects to sell 15,000 bikes in March 2011 and had 1,200 bikes in finished goods inventory at the end of February 2011.Amy Company would like to complete operations in March with at least 1,500 completed bikes in inventory.The bikes sell for $100 each. 
- How many bikes would be produced in March 2011?

Accepted Answer

A)  15,300 bikes 
B)  15,000 bikes 
C)  14,700 bikes 
D)  13,800 bikes

Question 18

Figure 8-8 Armati, Inc., is looking for feedback on company performance.The company compares the budget for the year with the actual costs.Data have been collected below:
Armati, Inc., had the following budgeted data:
 The following actually occurred:
 
-Refer to Figure 8-8.The static budget for total variable costs is

Accepted Answer

A) $90 U. 
B) $180 U. 
C) $790 F. 
D) $880 F.

Question 19

Which of the following is NOT a key feature of an ideal budgetary system?

Accepted Answer

A)  controllable costs 
B)  single measure for performance 
C)  incentives 
D)  frequent feedback

Question 20

Figure 8-4 CD Productions needs to know its anticipated cash inflows for the next quarter by month.Cash sales are 10 percent of total sales each month.Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale.Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000.Accounts receivable on March 31 were $60,000.
-
Refer to Figure 8-4.The expected cash collections of CD Productions for June are

Accepted Answer

A)  $48,000. 
B)  $98,000. 
C)  $68,000. 
D)  $89,000.

Exam 8: Budgeting for Planning and Control

Which of the following is NOT a key feature of an ideal budgetary system?

Which of the following is NOT a potential disadvantage of participative budgeting?

Which of the following is NOT a component of the master budget?

If production was budgeted at 400 units and the actual production was 420 units, what would be the static budget variance for materials if the actual cost of materials was $4,150 and the budgeted cost per unit is $10?

The budget most appropriate for control purposes is the

Which of the following is NOT an advantage of participative budgeting?

With an activity flexible budget, a budget variance is calculated

Which of the following is NOT a key feature of an ideal budgetary system?