Question 1

Budget preparation is best done in a top-down managerial approach.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Grason Corporation is preparing a budgeted balance sheet for 2018.The retained earnings balance at December 31,2017 was $533,500.The 2018 budgeted income statement shows expected net income of $112,000.The company expects to declare dividends during 2018 amounting to $40,000.The expected balance in retained earnings on the 2018 budgeted balance sheet is:

Accepted Answer

A) $533,500. 
B) $605,500. 
C) $645,500. 
D) $493,500. 
E) $685,500. 
A) $533,500. 
B) $605,500. 
C) $645,500. 
D) $493,500. 
E) $685,500.

Question 4

The capital expenditures budget summarizes the effects of investing activities on cash.

Accepted Answer

A) True 
 B)False

Question 5

A sporting equipment store expects to purchase $8,000 of ski boots in October.The store had $2,000 of ski boots in merchandise inventory at the beginning of October,and expects to have $3,000 of ski boots in merchandise inventory at the end of October to cover part of anticipated November sales.What is the budgeted cost of goods sold for October?

Accepted Answer

A) $5,000. 
B) $7,000. 
C) $8,000. 
D) $9,000. 
E) $10,000. 
A) $5,000. 
B) $7,000. 
C) $8,000. 
D) $9,000. 
E) $10,000.

Question 6

Webster Corporation is preparing a master budget for the first quarter.The company budgets production of 2,680 units in January,2,600 units in February and 2,740 units in March.Each unit requires 0.6 hours of direct labor.The direct labor rate is $12 per hour.Compute the budgeted direct labor cost for the first quarter budget.

Accepted Answer

A) $56,160. 
B) $57,744. 
C) $96,240. 
D) $93,600. 
E) $48,120. 
A) $56,160. 
B) $57,744. 
C) $96,240. 
D) $93,600. 
E) $48,120.

Question 7

What is a merchandise purchases budget? How is the merchandise purchases budget prepared?

Accepted Answer

A merchandise purchases budget is used b

Question 8

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

Accepted Answer

A) Business capacity. 
B) Forecasted economic and market conditions. 
C) Prediction of unit sales. 
D) The capital expenditures budget. 
E) Proposed selling expenses,such as advertising. 
A) Business capacity. 
B) Forecasted economic and market conditions. 
C) Prediction of unit sales. 
D) The capital expenditures budget. 
E) Proposed selling expenses,such as advertising.

Question 9

The master budget process usually ends with:

Accepted Answer

A) The production budget. 
B) The sales budget. 
C) The selling expense budget. 
D) The budgeted balance sheet. 
E) The overhead budget. 
A) The production budget. 
B) The sales budget. 
C) The selling expense budget. 
D) The budgeted balance sheet. 
E) The overhead budget.

Question 10

A budget is best described as:

Accepted Answer

A) A formal statement of a company's future plans usually expressed in monetary terms. 
B) A master control device. 
C) An informal statement of company's future plans usually expressed in monetary terms. 
D) The most crucial component of a company's evaluation process. 
E) The minimum acceptable performance level. 
A) A formal statement of a company's future plans usually expressed in monetary terms. 
B) A master control device. 
C) An informal statement of company's future plans usually expressed in monetary terms. 
D) The most crucial component of a company's evaluation process. 
E) The minimum acceptable performance level.

Question 11

Part of the budgeting process is summarizing the financial statement effects on the budgeted income statement and the budgeted balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

A formal statement of future plans,usually expressed in monetary terms,is a:

Accepted Answer

A) Variance report. 
B) Position statement. 
C) Budget. 
D) Prospectus. 
E) Variance analysis. 
A) Variance report. 
B) Position statement. 
C) Budget. 
D) Prospectus. 
E) Variance analysis.

Question 13

Ratchet Manufacturing anticipates total sales for August,September,and October of $200,000,$210,000,and $220,500 respectively.Cash sales are normally 25% of total sales and the remaining sales are on credit.All credit sales are collected in the first month after the sale.Compute the amount of cash received for September.

Accepted Answer

A) $150,000. 
B) $202,500. 
C) $157,500. 
D) $102,500. 
E) $307,500. 
A) $150,000. 
B) $202,500. 
C) $157,500. 
D) $102,500. 
E) $307,500.

Question 14

The capital expenditures budget summarizes the effects of financing activities on cash.

Accepted Answer

A) True 
 B)False

Question 15

Budgeting is an informal plan for future business activities.

Accepted Answer

A) True 
 B)False

Question 16

Cahuilla Corporation predicts the following sales in units for the coming four months:   Each month's ending Finished Goods Inventory in units should be 40% of the next month's sales.March 31 Finished Goods inventory is 96 units.A finished unit requires five pounds of direct material B at a cost of $2.00 per pound.The March 31 Raw Materials Inventory has 200 pounds of direct material B.Each month's ending Raw Materials Inventory should be 30% of the following month's production needs.
-The budgeted purchases of pounds of direct material B during May should be:

Accepted Answer

A) 1,422 lbs. 
B) 288 lbs. 
C) 1,854 lbs. 
D) 276 lbs. 
E) 1,008 lbs. 
A) 1,422 lbs. 
B) 288 lbs. 
C) 1,854 lbs. 
D) 276 lbs. 
E) 1,008 lbs.

Question 17

Zhang Industries budgets production of 300 units in June and 310 units in July.Each unit requires 1.5 hours of direct labor.The direct labor rate is $14 per hour.The indirect labor rate is $21 per hour.Compute the budgeted direct labor cost for July.

Accepted Answer

A) $6,300. 
B) $6,510. 
C) $9,450. 
D) $9,765. 
E) $16,275. 
A) $6,300. 
B) $6,510. 
C) $9,450. 
D) $9,765. 
E) $16,275.

Question 18

Greco Company has prepared the following forecasts of monthly unit sales:
 
Greco wants the number of units in its inventory at the end of each month to 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?

Accepted Answer

(1)July's beginning

Question 19

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n):

Accepted Answer

A) Sales budget. 
B) General and administrative budget. 
C) Capital expenditures budget. 
D) Selling expense budget. 
E) Purchases budget. 
A) Sales budget. 
B) General and administrative budget. 
C) Capital expenditures budget. 
D) Selling expense budget. 
E) Purchases budget.

Question 20

A budget is a formal statement of future plans,usually expressed in monetary terms.

Accepted Answer

A) True 
 B)False

Exam 20: Master Budgets and Performance Planning

Budget preparation is best done in a top-down managerial approach.

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

The capital expenditures budget summarizes the effects of investing activities on cash.

What is a merchandise purchases budget? How is the merchandise purchases budget prepared?

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

The master budget process usually ends with:

A budget is best described as:

Part of the budgeting process is summarizing the financial statement effects on the budgeted income statement and the budgeted balance sheet.

A formal statement of future plans,usually expressed in monetary terms,is a:

The capital expenditures budget summarizes the effects of financing activities on cash.

Budgeting is an informal plan for future business activities.

Zhang Industries budgets production of 300 units in June and 310 units in July.Each unit requires 1.5 hours of direct labor.The direct labor rate is $14 per hour.The indirect labor rate is $21 per hour.Compute the budgeted direct labor cost for July.

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n):

A budget is a formal statement of future plans,usually expressed in monetary terms.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

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 Analysis

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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