Question 1

Calculate the production budget from the following data: sales 35,780 units; opening inventory 3,548 units; closing inventory 4,286 units.

Accepted Answer

A)  36,518 units 
B)  43,614 units 
C)  35,042 units 
D)  27,946 units 
A)  36,518 units 
B)  43,614 units 
C)  35,042 units 
D)  27,946 units A

Question 2

A firm has produced the following budget for an activity level of 5,000 units:
Materials : 45,000
Direct labour : 60,000
Salaries : 25,000
Depreciation : 12,000
What would be the total cost for a level of activity of 7,500 units?

Accepted Answer

A)  £164,500 
B)  £194,500 
C)  £213,000 
D)  £207,000 
A)  £164,500 
B)  £194,500 
C)  £213,000 
D)  £207,000 B

Question 3

What makes up a master budget?

Accepted Answer

A)  The cashflow forecast 
B)  Budgeted statement of profit or loss and budgeted statement of financial position 
C)  Production, sales and cost budgets for an organization 
D)  loss , budgeted statement of financial position and cashflow forecast 
A)  The cashflow forecast 
B)  Budgeted statement of profit or loss and budgeted statement of financial position 
C)  Production, sales and cost budgets for an organization 
D)  loss , budgeted statement of financial position and cashflow forecast D

Question 4

Which is not a valid purpose of budgets?

Accepted Answer

A)  Authorization of expenditure 
B)  Motivation of staff 
C)  Determining the value of a company 
D)  Assessing the performance of an organization 
A)  Authorization of expenditure 
B)  Motivation of staff 
C)  Determining the value of a company 
D)  Assessing the performance of an organization

Question 5

Which can be considered to be an advantage of a top-down budget?

Accepted Answer

A)  Uses the knowledge of all staff to build a fair budget 
B)  Devolves responsibility down the organization, through employee involvement 
C)  Motivates staff through participation 
D)  Cost effective to produce as it involves only a few people with less negotiations 
A)  Uses the knowledge of all staff to build a fair budget 
B)  Devolves responsibility down the organization, through employee involvement 
C)  Motivates staff through participation 
D)  Cost effective to produce as it involves only a few people with less negotiations

Question 6

A business plans to manufacture 400 watches a week, each taking 0.5 labour hours to produce. What is the total direct labour budget if the direct labour rate is £15 per hour and a pay rise of 12% is awarded three months into the year?

Accepted Answer

A)  £156,000 
B)  £174,720 
C)  £173,550 
D)  £170,040 
A)  £156,000 
B)  £174,720 
C)  £173,550 
D)  £170,040

Question 7

What would be the most likely cause of a favourable material price variance together with an unfavourable material quantity variance?

Accepted Answer

A)  The purchase and use of lower than standard quality of material 
B)  A labour efficiency problem 
C)  The purchase and use of higher than standard quality of material 
D)  Machine efficiency problem 
A)  The purchase and use of lower than standard quality of material 
B)  A labour efficiency problem 
C)  The purchase and use of higher than standard quality of material 
D)  Machine efficiency problem

Question 8

Which is not an example of a limiting factor?

Accepted Answer

A)  Machine capacity 
B)  Sales volume 
C)  Head office allocated costs 
D)  Raw material quantities 
A)  Machine capacity 
B)  Sales volume 
C)  Head office allocated costs 
D)  Raw material quantities

Question 9

What is meant by a zero-based budget?

Accepted Answer

A)  The level of budgeted overheads, if there were no sales 
B)  A budget prepared from first principles 
C)  The variable elements of a budget, excluding fixed costs 
D)  A budget which breaks even 
A)  The level of budgeted overheads, if there were no sales 
B)  A budget prepared from first principles 
C)  The variable elements of a budget, excluding fixed costs 
D)  A budget which breaks even

Question 10

Which is the usual logical sequence of constructing functional budgets?

Accepted Answer

A)  Calculate production level, set raw material usage, agree raw material purchases, agree level of sales volumes and prices. 
B)  Agree level of sales volumes and prices, calculate production levels, set raw material usage, agree raw material purchases. 
C)  Agree level of sales volumes and prices, calculate production levels, agree raw material purchases, set raw material usage. 
D)  Calculate production levels, agree level of sales volumes and prices, agree raw material purchases, set raw material usage. 
A)  Calculate production level, set raw material usage, agree raw material purchases, agree level of sales volumes and prices. 
B)  Agree level of sales volumes and prices, calculate production levels, set raw material usage, agree raw material purchases. 
C)  Agree level of sales volumes and prices, calculate production levels, agree raw material purchases, set raw material usage. 
D)  Calculate production levels, agree level of sales volumes and prices, agree raw material purchases, set raw material usage.

Calculate the production budget from the following data: sales 35,780 units; opening inventory 3,548 units; closing inventory 4,286 units.

A firm has produced the following budget for an activity level of 5,000 units: Materials : 45,000 Direct labour : 60,000 Salaries : 25,000 Depreciation : 12,000 What would be the total cost for a level of activity of 7,500 units?

What makes up a master budget?

Which is not a valid purpose of budgets?

Which can be considered to be an advantage of a top-down budget?

A business plans to manufacture 400 watches a week, each taking 0.5 labour hours to produce. What is the total direct labour budget if the direct labour rate is £15 per hour and a pay rise of 12% is awarded three months into the year?

What would be the most likely cause of a favourable material price variance together with an unfavourable material quantity variance?

Which is not an example of a limiting factor?

What is meant by a zero-based budget?

Which is the usual logical sequence of constructing functional budgets?

The Cash Budget

Introduction to the Statement of Profit or Loss

Balancing the Basics

Accounting for Depreciation and Bad Debts

Company Finance

Company Accounts

The Statement of Cash Flows

Interpreting Financial Statements

Capital Structure and Investment Ratios

Costs and Break-Even Analysis

Absorption and Activity-Based Costing

Pricing and Costs

Short-Term Decision Making

Investment Appraisal Techniques

Measuring and Reporting Performance

Double-Entry Bookkeeping I

Double-Entry Bookkeeping II

Filters

Exam 12: Budgeting

Calculate the production budget from the following data: sales 35,780 units; opening inventory 3,548 units; closing inventory 4,286 units.

A firm has produced the following budget for an activity level of 5,000 units: Materials : 45,000 Direct labour : 60,000 Salaries : 25,000 Depreciation : 12,000 What would be the total cost for a level of activity of 7,500 units?

What makes up a master budget?

Which is not a valid purpose of budgets?

Which can be considered to be an advantage of a top-down budget?

A business plans to manufacture 400 watches a week, each taking 0.5 labour hours to produce. What is the total direct labour budget if the direct labour rate is £15 per hour and a pay rise of 12% is awarded three months into the year?

What would be the most likely cause of a favourable material price variance together with an unfavourable material quantity variance?

Which is not an example of a limiting factor?

What is meant by a zero-based budget?

Which is the usual logical sequence of constructing functional budgets?

The Cash Budget

Introduction to the Statement of Profit or Loss

Balancing the Basics

Accounting for Depreciation and Bad Debts

Company Finance

Company Accounts

The Statement of Cash Flows

Interpreting Financial Statements

Capital Structure and Investment Ratios

Costs and Break-Even Analysis

Absorption and Activity-Based Costing

Pricing and Costs

Short-Term Decision Making

Investment Appraisal Techniques

Measuring and Reporting Performance

Double-Entry Bookkeeping I

Double-Entry Bookkeeping II

Filters