Question 1

A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

Accepted Answer

A) Traditional budgeting. 
B) Management budgeting. 
C) Master budgeting. 
D) Activity-based budgeting. 
E) Cash budgeting. 
A) Traditional budgeting. 
B) Management budgeting. 
C) Master budgeting. 
D) Activity-based budgeting. 
E) Cash budgeting.

Question 2

Pantheon Company has prepared the following forecasts of monthly sales:
 $\begin{array}{lcccc}
&\underline{ \text { July } } &\underline{ \text { August } }&\underline{ \text { September } }&\underline{ \text { October } }\
\text { Sales (in units) } &4,500 &5,300 &4,000 & 3,700\
\end{array}$
 Pantheon has decided that the number of units in its inventory at the end of each month should equal 25% of the next month's sales.The budgeted cost per unit is $30.
(1)How many units should be in July's beginning inventory?
(2)What amount should be budgeted for the cost of merchandise purchases in July?
(3)How many units should be purchased in September?

Accepted Answer

(1)July's beginning inventory = 25% x 4,

Question 3

Why is the sales budget usually prepared first?

Accepted Answer

The sales budget is normally prepared fi

Question 4

Which of the following is not a benefit derived from budgeting?

Accepted Answer

A) Budgeting focuses management's attention on the future. 
B) Budgeting provides coordination of departments. 
C) Budgeting provides a basis for evaluating performance. 
D) Budgeting provides motivation for managers and employees. 
E) Budgeting ensures the achievement of all goals. 
A) Budgeting focuses management's attention on the future. 
B) Budgeting provides coordination of departments. 
C) Budgeting provides a basis for evaluating performance. 
D) Budgeting provides motivation for managers and employees. 
E) Budgeting ensures the achievement of all goals.

Question 5

The merchandise purchases budget is the starting point for preparing the master budget.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following factors is least likely to be considered in preparing a sales budget?

Accepted Answer

A) Plant capacity. 
B) General economic and industry conditions. 
C) Past sales volume. 
D) The capital expenditures budget. 
E) Proposed selling expenses, such as advertising. 
A) Plant capacity. 
B) General economic and industry conditions. 
C) Past sales volume. 
D) The capital expenditures budget. 
E) Proposed selling expenses, such as advertising.

Question 7

Kabuki Company's policy is to have 16% of the next month's sales as desired ending inventory.Estimated sales are shown in the following table.Given this data, what are Kabuki's estimated purchases for March? $\begin{array}{llll} 
& \text { March } & \text { April } & \text { May } \
\text { Expected sales units } & 9,400 & 8,900 & 7,300
\end{array}$

Accepted Answer

A) 9,400 
B) 9,320 
C) 8,900 
D) 8,644 
E) 8,820 
A) 9,400 
B) 9,320 
C) 8,900 
D) 8,644 
E) 8,820

Question 8

The budget process is a continuous activity of planning, revising, and evaluating business activities.

Accepted Answer

A) True 
 B)False

Question 9

The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.

Accepted Answer

A) True 
 B)False

Question 10

Which budget must be completed after a cash budget is prepared?

Accepted Answer

A) Capital expenditures budget. 
B) Sales budget. 
C) Merchandise purchases budget. 
D) General and administrative expense budget. 
E) Budgeted income statement 
A) Capital expenditures budget. 
B) Sales budget. 
C) Merchandise purchases budget. 
D) General and administrative expense budget. 
E) Budgeted income statement

Question 11

Use the following data to determine the company's cash disbursements for the month of August and September:
 $\begin{array}{lrlr}
&\text { July } & \text { August } & \text { September } \
\text {Sales  } &\$ 24,000 & \$ 32,000 & \$ 36,000 \
\text { Purchases } &14,400 & \$ 19,200 & \$ 21,600
\end{array}$

$ \begin{array}{ll}
 \text {Payments for purchases } &  \text { One month after purchase}\
  \text {Selling expenses } &  \text {15 \% of sales, paid in the month of}\
 & \text { sale } \ 
  \text {Administrative expenses } &  \text { 10 \% of sales, paid in the month of}\
 & \text { sale } \ 
\text { Rent expense } & \$ 2,400 \text { per month }\
  \text {Equipment depreciation } &  \text { \$ 1,300 per month}
\end{array} $

Accepted Answer

None

Question 12

___________________________ is a budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities.

Accepted Answer

Activity-b

Question 13

A company's history indicates that 20% of its sales are for cash and the rest are on credit.Collections on credit sales are 20% in the month of the sale, 50% in the next month, and 30% the following month.Projected sales for January, February, and March are $75,000, $92,000, and $60,000, respectively.The March expected cash receipts from all current and prior credit sales are $80,500.

Accepted Answer

A) True 
 B)False

Question 14

Sweeny Co.is preparing a cash budget for the second quarter of the coming year.The following data have been forecasted:
 $\begin{array}{lrr}
& \underline {\text { April  }  }& \underline {\text { May } }\
 \text { Sales } & \$ 150,000 & \$ 157,500 \
\text { Merchandise purchases } & 107,000 & 112,400 \
\text { Operating expenses: } & & \
\text { Payroll } & 13,600 & 14,280 \
\text { Advertising } & 5,400 & 5,700 \
\text { Rent } & 1,500 & 1,500 \
\text { Depreciation } & 7,500 & 7,500\
\text { End of April balances: }\
\text { Cash } & 40,000 \
\text { Bank loan payable } & 16,000
\end{array}$ Additional data:
(1)Sales are 40% cash and 60% credit.The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter.Total sales in March were $125,000.
(2)Purchases are all on credit, with 40% paid in the month of purchase and the balance paid in the following month.
(3)Operating expenses are paid in the month they are incurred.
(4)A minimum cash balance of $40,000 is required at the end of each month.
(5)Loans are used to maintain the minimum cash balance.At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month.Repayments are made whenever excess cash is available.
Required: Calculate the following items for May
a.Cash collections from customers.
b.Cash payments made for merchandise purchases.
c.Cash paid for other operating expenses, including interest.
d.What is the preliminary cash balance for May 31?
e.What loan activity will take place at the end of May?
f.What is the ending cash balance?

Accepted Answer

@#IMG-DLM&_TB6311_00

Question 15

Merchandising companies prepare the production budget after preparing the sales budget.

Accepted Answer

A) True 
 B)False

Question 16

A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a(n):

Accepted Answer

A) Capital expenditures budget. 
B) Operating budget. 
C) Rolling budget. 
D) Cash budget. 
E) Income statement. 
A) Capital expenditures budget. 
B) Operating budget. 
C) Rolling budget. 
D) Cash budget. 
E) Income statement.

Question 17

The financial budgets include the cash budget and the capital expenditures budget.

Accepted Answer

A) True 
 B)False

Question 18

A capital expenditures budget is prepared before the operating budgets.

Accepted Answer

A) True 
 B)False

Question 19

Kyoto, Inc. predicts the following sales in units for the coming four months:
$\begin{array}{l}

&\underline{ \text { April } }  &\underline{ \text { May } }  &\underline{ \text { June } }  & \underline{ \text { July } } \
\text { Sales in units }&{ 240 }&{ 280 }&{ 300 }&{ 240 }\
\end{array}$
Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material B. The March 31 raw materials inventory has 200 pounds of B. Each month's ending inventory of raw materials should be 30% of the following month's production needs. 
-If each unit of Kyoto's product takes two hours to produce and the labor rate is expected to be $10 per hour, what is the budgeted labor cost for the second quarter?

Accepted Answer

A) $16,400 
B) $17,280 
C) $9,840 
D) $8,960 
E) $17,560 
A) $16,400 
B) $17,280 
C) $9,840 
D) $8,960 
E) $17,560

Question 20

Assume that total sales for January are budgeted to be $50,000.What are the expected cash receipts for January from the current and past sales? Round all calculations to full dollar amounts.

Accepted Answer

A) $18,500 
B) $51,500 
C) $51,900 
D) $55,500 
E) $60,500 
A) $18,500 
B) $51,500 
C) $51,900 
D) $55,500 
E) $60,500

A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

Why is the sales budget usually prepared first?

Which of the following is not a benefit derived from budgeting?

The merchandise purchases budget is the starting point for preparing the master budget.

Which of the following factors is least likely to be considered in preparing a sales budget?

Kabuki Company's policy is to have 16% of the next month's sales as desired ending inventory.Estimated sales are shown in the following table.Given this data, what are Kabuki's estimated purchases for March? March April May Expected sales units 9,400 8,900 7,300

The budget process is a continuous activity of planning, revising, and evaluating business activities.

The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.

Which budget must be completed after a cash budget is prepared?

___________________________ is a budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities.

Merchandising companies prepare the production budget after preparing the sales budget.

A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a(n):

The financial budgets include the cash budget and the capital expenditures budget.

A capital expenditures budget is prepared before the operating budgets.

Assume that total sales for January are budgeted to be $50,000.What are the expected cash receipts for January from the current and past sales? Round all calculations to full dollar amounts.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

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Exam 7: Master Budgets and Performance Planning

A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

Why is the sales budget usually prepared first?

Which of the following is not a benefit derived from budgeting?

The merchandise purchases budget is the starting point for preparing the master budget.

Which of the following factors is least likely to be considered in preparing a sales budget?

Kabuki Company's policy is to have 16% of the next month's sales as desired ending inventory.Estimated sales are shown in the following table.Given this data, what are Kabuki's estimated purchases for March? March April May Expected sales units 9,400 8,900 7,300

The budget process is a continuous activity of planning, revising, and evaluating business activities.

The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.

Which budget must be completed after a cash budget is prepared?

___________________________ is a budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities.

Merchandising companies prepare the production budget after preparing the sales budget.

A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a(n):

The financial budgets include the cash budget and the capital expenditures budget.

A capital expenditures budget is prepared before the operating budgets.

Assume that total sales for January are budgeted to be $50,000.What are the expected cash receipts for January from the current and past sales? Round all calculations to full dollar amounts.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

Filters