Question 1

Under what situation might a budget be most effective?

Accepted Answer

A) as a tool to assess blame when costs are too high 
B) when used to evaluate a manager's performance 
C) Budgets are equally effective in all situations. 
D) when it is created by top management 
A) as a tool to assess blame when costs are too high 
B) when used to evaluate a manager's performance 
C) Budgets are equally effective in all situations. 
D) when it is created by top management

Question 2

Harrah Company provided the following information for the month of October: $\begin{array}{lr}
\text { Beginning cash balance } & \$ 35,000 \
\text { Cash receipts } & 460,000 \
\text { Cash disbursements } & 485,000
\end{array}$ Harrah's policy is to keep a minimum end-of-the-month cash balance of $30,000.How much will Harrah's need to borrow during August?

Accepted Answer

A) $20,000 
B) $25,000 
C) $10,000 
D) $0 
A) $20,000 
B) $25,000 
C) $10,000 
D) $0

Question 3

What is a disadvantage of the "bottoms-up" approach to budgeting?

Accepted Answer

A) Lower level management is not apt to know as much about their specific area as upper management who has a better view of the overall picture. 
B) When lower management is part of the budgeting process they are less likely to "buy into it". 
C) It is time consuming and therefore more costly. 
D) It is more apt to be widely seen as unrealistic than is the case with a "top-down" approach. 
A) Lower level management is not apt to know as much about their specific area as upper management who has a better view of the overall picture. 
B) When lower management is part of the budgeting process they are less likely to "buy into it". 
C) It is time consuming and therefore more costly. 
D) It is more apt to be widely seen as unrealistic than is the case with a "top-down" approach.

Question 4

Which of the following is correct regarding the manufacturing overhead budget?

Accepted Answer

A) The manufacturing overhead budget should include all costs of marketing and advertising. 
B) The budget should show only indirect materials and indirect labour. 
C) Manufacturing overhead costs should be broken down by cost behaviour. 
D) Total budgeted manufacturing overhead should be calculated using a predetermined overhead rate. 
A) The manufacturing overhead budget should include all costs of marketing and advertising. 
B) The budget should show only indirect materials and indirect labour. 
C) Manufacturing overhead costs should be broken down by cost behaviour. 
D) Total budgeted manufacturing overhead should be calculated using a predetermined overhead rate.

Question 5

How does a sales forecast differ from a sales budget?

Accepted Answer

A) A sales forecast includes the company, while a sales budget includes the industry. 
B) A sales forecast includes the company and the industry, while a sales budget includes only the industry. 
C) A sales forecast includes the company and the industry, while a sales budget includes only the company. 
D) They are both the same. 
A) A sales forecast includes the company, while a sales budget includes the industry. 
B) A sales forecast includes the company and the industry, while a sales budget includes only the industry. 
C) A sales forecast includes the company and the industry, while a sales budget includes only the company. 
D) They are both the same.

Question 6

What is "budgetary slack"?

Accepted Answer

A) It is the tolerance that is built into budgets to recognize that actual results will not match budgeted projections exactly. 
B) It is the process where managers intentionally underestimate budgeted revenues or overestimate budgeted expenses in order to make it easier to achieve budgetary goals. 
C) It is the amount that actual results vary from budgeted projections as reported at the end of the budget period. 
D) It is the process where upper management underestimates budgeted revenues or overestimates budgeted expenses in order to motivate lower management. 
A) It is the tolerance that is built into budgets to recognize that actual results will not match budgeted projections exactly. 
B) It is the process where managers intentionally underestimate budgeted revenues or overestimate budgeted expenses in order to make it easier to achieve budgetary goals. 
C) It is the amount that actual results vary from budgeted projections as reported at the end of the budget period. 
D) It is the process where upper management underestimates budgeted revenues or overestimates budgeted expenses in order to motivate lower management.

Question 7

Farley Company reported the following information for 2016: $$\begin{array} { l c c c c c } 
& \text { September } & \text { October } & \text { November } & \text { December } & \text { January } \
\text { Budgeted sales } & \$ 240,000 & \$ 310,000 & \$ 290,000 & \$ 360,000 & \$ 200,000 \
\text { Budgeted purchases } & \$ 90,000 & \$ 120,000 & \$ 128,000 & \$ 144,000 & \$ 88,000
\end{array}$$ Cost of goods sold is 35% of sales. 
-Farley purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month.
-Accounts payable is used only for inventory acquisitions.
How much is the budgeted balance for Accounts Payable at October 31, 2016?

Accepted Answer

A) $48,000 
B) $72,000 
C) $102,000 
D) $51,200 
A) $48,000 
B) $72,000 
C) $102,000 
D) $51,200

Question 8

The last step in the budgeting process is developing a sales forecast.

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following is used by a merchandiser?

Accepted Answer

A) production budgets 
B) manufacturing budgets 
C) material purchases budgets 
D) merchandise purchases budget 
A) production budgets 
B) manufacturing budgets 
C) material purchases budgets 
D) merchandise purchases budget

Question 10

Which one of the following items would NEVER appear on a cash budget?

Accepted Answer

A) delivery expense 
B) depreciation expense 
C) cost of material purchases 
D) cash received from customers 
A) delivery expense 
B) depreciation expense 
C) cost of material purchases 
D) cash received from customers

Question 11

Which of the following individuals should accept the company's budgets in order for the budgets to be most effective?

Accepted Answer

A) division managers and customers 
B) department heads and division managers 
C) supervisors and clerks 
D) department heads and creditors 
A) division managers and customers 
B) department heads and division managers 
C) supervisors and clerks 
D) department heads and creditors

Question 12

In preparing the budgeted balance sheet, management should NOT be concerned if it does NOT balance since it does NOT reflect actual results.

Accepted Answer

A) True 
 B)False

Question 13

Bixley Company budgets variable manufacturing overhead at 50% of its direct labour costs.The company estimates that 20,000 direct labour hours will be used at an average rate of $11.50 per hour.Bixley's fixed manufacturing overhead costs are budgeted at $90,000 for the year.The company's budgeted manufacturing overhead for the year is

Accepted Answer

A) $320,000. 
B) $230,000. 
C) $205,000. 
D) $115,000. 
A) $320,000. 
B) $230,000. 
C) $205,000. 
D) $115,000.

Question 14

Sargent.Com plans to sell 2,000 purple lawn chairs during May, 1,900 in June, and 2,000 during July.The company keeps 15% of the next month's sales as ending inventory.How many units should Sargent.Com produce during June?

Accepted Answer

A) 1,915 
B) 2,200 
C) 1,885 
D) not enough information to determine 
A) 1,915 
B) 2,200 
C) 1,885 
D) not enough information to determine

Question 15

Items from Sap Company's budget for March in which 2,100 units were produced and sold appear below: $\begin{array}{lr}
\text { Direct materials } & \$ 12,000 \
\text { Indirect materials\_variable } & 2,000 \
\text { Supervisor salaries } & 10,000 \
\text { Depreciation on factory equipment } & 8,000 \
\text { Direct labour } & 7,000 \
\text { Property taxes on factory } & 3,000 \
\text { Total }&\$42,000
\end{array}$ At 2,200 units, how much are budgeted variable manufacturing costs?

Accepted Answer

A) $22,000 
B) $43,000 
C) $21,000 
D) $19,905 
A) $22,000 
B) $43,000 
C) $21,000 
D) $19,905

Question 16

Looker Hats is planning to sell 1,000 felt hats, and 800 will be produced during June.Each hat requires .75 metres of felt and 1/2 hour of direct labour.Felt costs $5.00 per metre and employees of the company are paid $15 per hour.How much is the total amount of budgeted direct labour for June?

Accepted Answer

A) $9,750 
B) $45,000 
C) $6,000 
D) $7,500 
A) $9,750 
B) $45,000 
C) $6,000 
D) $7,500

Question 17

What is a continuous budget?

Accepted Answer

A) It is a budget that is constantly being revised as new information is gained. 
B) It is a budget that covers every aspect of the production process from the purchase of raw materials to the collection of revenue from sales. 
C) It is a budget where the time period just completed is dropped and an equal future time period is added. 
D) It is a term used to describe a budget that is prepared by a budget committee that meets on a continuous basis. 
A) It is a budget that is constantly being revised as new information is gained. 
B) It is a budget that covers every aspect of the production process from the purchase of raw materials to the collection of revenue from sales. 
C) It is a budget where the time period just completed is dropped and an equal future time period is added. 
D) It is a term used to describe a budget that is prepared by a budget committee that meets on a continuous basis.

Question 18

What is the starting point in preparing a master budget?

Accepted Answer

A) the production budget 
B) the sales budget 
C) the direct labour budget 
D) the purchases budget 
A) the production budget 
B) the sales budget 
C) the direct labour budget 
D) the purchases budget

Question 19

Which one of the following is the last step in preparing the operating budget?

Accepted Answer

A) budgeted income statement 
B) production budget 
C) cash budget 
D) budgeted balance sheet 
A) budgeted income statement 
B) production budget 
C) cash budget 
D) budgeted balance sheet

Question 20

The direct materials budget shows: $\begin{array}{ll}
\text { Desired ending direct materials } & 2,000 \text { kilograms } \
\text { Materials purchased } & 51,400 \text { kilograms } \
\text { Beginning inventory on hand } & 1,200 \text { kilograms }
\end{array}$ How much are the total direct materials needed for production?

Accepted Answer

A) 50,600 kilograms 
B) 52,600 kilograms 
C) 52,200 kilograms 
D) 51,400 kilograms 
A) 50,600 kilograms 
B) 52,600 kilograms 
C) 52,200 kilograms 
D) 51,400 kilograms

Under what situation might a budget be most effective?

Harrah Company provided the following information for the month of October: Beginning cash balance \ 35,000 Cash receipts 460,000 Cash disbursements 485,000 Harrah's policy is to keep a minimum end-of-the-month cash balance of $30,000.How much will Harrah's need to borrow during August?

What is a disadvantage of the "bottoms-up" approach to budgeting?

Which of the following is correct regarding the manufacturing overhead budget?

How does a sales forecast differ from a sales budget?

What is "budgetary slack"?

The last step in the budgeting process is developing a sales forecast.

Which one of the following is used by a merchandiser?

Which one of the following items would NEVER appear on a cash budget?

Which of the following individuals should accept the company's budgets in order for the budgets to be most effective?

In preparing the budgeted balance sheet, management should NOT be concerned if it does NOT balance since it does NOT reflect actual results.

Sargent.Com plans to sell 2,000 purple lawn chairs during May, 1,900 in June, and 2,000 during July.The company keeps 15% of the next month's sales as ending inventory.How many units should Sargent.Com produce during June?

Looker Hats is planning to sell 1,000 felt hats, and 800 will be produced during June.Each hat requires .75 metres of felt and 1/2 hour of direct labour.Felt costs $5.00 per metre and employees of the company are paid $15 per hour.How much is the total amount of budgeted direct labour for June?

What is a continuous budget?

What is the starting point in preparing a master budget?

Which one of the following is the last step in preparing the operating budget?

The direct materials budget shows: Desired ending direct materials 2,000 kilograms Materials purchased 51,400 kilograms Beginning inventory on hand 1,200 kilograms How much are the total direct materials needed for production?

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job-Order Cost Accounting

Process Cost Accounting

Activity-Based Costing

Decision-Making: Costvolumeprofit

Incremental Analysis

Alternative Inventory Costing Methods: a Decision-Making Perspective

Pricing

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 10: Budgetary Planning

Under what situation might a budget be most effective?

Harrah Company provided the following information for the month of October: Beginning cash balance \ 35,000 Cash receipts 460,000 Cash disbursements 485,000 Harrah's policy is to keep a minimum end-of-the-month cash balance of $30,000.How much will Harrah's need to borrow during August?

What is a disadvantage of the "bottoms-up" approach to budgeting?

Which of the following is correct regarding the manufacturing overhead budget?

How does a sales forecast differ from a sales budget?

What is "budgetary slack"?

The last step in the budgeting process is developing a sales forecast.

Which one of the following is used by a merchandiser?

Which one of the following items would NEVER appear on a cash budget?

Which of the following individuals should accept the company's budgets in order for the budgets to be most effective?

In preparing the budgeted balance sheet, management should NOT be concerned if it does NOT balance since it does NOT reflect actual results.

Sargent.Com plans to sell 2,000 purple lawn chairs during May, 1,900 in June, and 2,000 during July.The company keeps 15% of the next month's sales as ending inventory.How many units should Sargent.Com produce during June?

Looker Hats is planning to sell 1,000 felt hats, and 800 will be produced during June.Each hat requires .75 metres of felt and 1/2 hour of direct labour.Felt costs $5.00 per metre and employees of the company are paid $15 per hour.How much is the total amount of budgeted direct labour for June?

What is a continuous budget?

What is the starting point in preparing a master budget?

Which one of the following is the last step in preparing the operating budget?

The direct materials budget shows: Desired ending direct materials 2,000 kilograms Materials purchased 51,400 kilograms Beginning inventory on hand 1,200 kilograms How much are the total direct materials needed for production?

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job-Order Cost Accounting

Process Cost Accounting

Activity-Based Costing

Decision-Making: Costvolumeprofit

Incremental Analysis

Alternative Inventory Costing Methods: a Decision-Making Perspective

Pricing

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters