Exam 19: Introduction to Managerial Accounting and the Master Budget

Management must get employees to accept the budget's goals in order to effectively use the budget as a benchmark for evaluating performance.

A goal of the budgeting process is to assist managers with coordinating and implementing the business plan.

At a company with different business units, individual managers can modify various assumptions of their budget in order to determine how the modifications would affect the operational and financial results. This is an example of:

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for Accounts payable, which document should be used?

Repair and maintenance costs for factory equipment are included in manufacturing overhead.

Liu Electronics budgeted sales of $400 000 for the month of November; cost of sales is equal to 65% of sales. Beginning inventory for November was $80 000 and ending inventory for November should be $72 000. How much are the budgeted purchases for November?

Caskill Company forecasts $40 000 of sales in January, $38 000 in February, $30 000 in March, and $32 000 in April. Cost of sales is budgeted at 75% of sales. Caskill should have inventory on hand at the end of each month equal to $5 000 plus 20% of the following month's cost of sales. How much are budgeted purchases for January?

Advertising and marketing costs are inventoriable product costs.

Which of the following describes the operating expenses budget?

A goal of the budgeting process is to promote coordination and communication throughout.

Bartholomew Manufacturing Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Cost of sales is budgeted at 40% of Sales. Variable and fixed expenses are as follows: Variable: Miscellaneous expenses : 20% of Sales Fixed: Salary expense: $11 000 per month Rent expense: $5 000 per month Depreciation expense: $1 200 per month Miscellaneous expenses/fixed portion: $3 300 per month How much is the operating net profit/(loss)for January?

Inventoriable product costs, such as direct materials, are expensed during the period that they were incurred.

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for Accounts receivable, which document should be used?

Accounting, legal and administrative costs are included in manufacturing overhead.

Which of the following applies to the raw materials used by a manufacturing company?

For a manufacturing business, which of the following would be included in manufacturing overhead?

The capital expenditures budget stands alone and is not part of either the operating budget or the financial budget.

Which of the following is an example of the planning function of a budget?

Argyle Company forecasts sales of $50 000 in January, $60 000 in February, $70 000 in March, and $75 000 in April. The inventory balance at 1 January is $12 000. Cost of sales is budgeted at 40% of sales revenue. Argyle wishes to have inventory levels at the end of each month equal to 60% of the cost of sales for the following month, plus a "safety cushion" of $1 000. How much should be budgeted for inventory purchases in January?

Bartholomew Manufacturing Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Cost of sales is budgeted at 40% of Sales. Variable and fixed expenses are as follows: Variable: Miscellaneous expenses : 20% of Sales Fixed: Salary expense: $11 000 per month Rent expense: $5 000 per month Depreciation expense: $1 200 per month Miscellaneous expenses/fixed portion: $3 300 per month How much is the operating net profit/(loss)for February?