Question 1

Differences between budgeted amounts and actual amounts are called budget variances.

Accepted Answer

A) True 
 B)False

Question 2

Gold Company has the following balances at 31st December 2010: Cash $6,000; accounts receivable $34,000 ($10,000 from November and $24,000 from December); merchandise inventory $40,000; and accounts payable $20,000 (for merchandise purchases only). Budgeted sales follow:   Other data:
· Sales are 40% cash, 50% collected during the following month, and 10% collected during the second month after sale. A 3% cash discount is given on cash sales
· Cost of goods sold is 40% of sales
· Ending inventory must be 140% of the next month's cost of sales
· Purchases are paid 70% in month of purchase and 30% in the following month
· The selling and administrative cost function is: $6,000 + $0.2 × sales. This includes $1,000 for depreciation
· All costs are paid in the month incurred
· Minimum cash balance requirement is $6,000
Cash receipts for April will be

Accepted Answer

A)  $38,800 
B)  $77,800 
C)  $100,000 
D)  $68,800 
A)  $38,800 
B)  $77,800 
C)  $100,000 
D)  $68,800

Question 3

An advantage of a flexible budget is that it

Accepted Answer

A)  Allows comparisons of the actual costs with those that should have been incurred 
B)  Considers only variable costs 
C)  Allows management freedom in meeting goals 
D)  Allows comparison of actual costs to master budget costs 
A)  Allows comparisons of the actual costs with those that should have been incurred 
B)  Considers only variable costs 
C)  Allows management freedom in meeting goals 
D)  Allows comparison of actual costs to master budget costs

Question 4

Ray Company's projected sales budget for the next four months is as follows:   Beginning inventory for the year is 27,000 units. Ending inventory for each month should be 30% of the next month's sales. How many units should the company produce in January?

Accepted Answer

A)  106,000 
B)  90,000 
C)  70,000 
D)  78,000 
A)  106,000 
B)  90,000 
C)  70,000 
D)  78,000

Question 5

TFS Ltd, a retail company selling hotel furniture, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below:   TFS' actual profit for the next fiscal year will be

Accepted Answer

A)  Greater than the budgeted profit 
B)  Less than the budgeted profit 
C)  Equal to the budgeted profit 
D)  Undeterminable from the information given 
A)  Greater than the budgeted profit 
B)  Less than the budgeted profit 
C)  Equal to the budgeted profit 
D)  Undeterminable from the information given

Question 6

One objective of budgeting is motivating managers to

Accepted Answer

A)  Eliminate all variances. 
B)  Use resources efficiently. 
C)  Lessen the need for communication. 
D)  Establish prices for external sales of goods and services. 
A)  Eliminate all variances. 
B)  Use resources efficiently. 
C)  Lessen the need for communication. 
D)  Establish prices for external sales of goods and services.

Question 7

The cash budget is included in an organisation's operating budget.

Accepted Answer

A) True 
 B)False

Question 8

Planning Systems, has forecast the following unit sales and production for the next year, by quarter: A finished unit requires one unit of material A and two units of material B. There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories.
How much material B must be purchased in quarter 1?

Accepted Answer

A)  264 
B)  196 
C)  204 
D)  256 
A)  264 
B)  196 
C)  204 
D)  256

Question 9

The shortest period for which a cash budget can be prepared is six months.

Accepted Answer

A) True 
 B)False

Question 10

Budget variances cannot be calculated from a static budget.

Accepted Answer

A) True 
 B)False

Question 11

Uncontrollable external factors can create challenges in measuring the results for which managers should be held responsible. Which of the following is the best example of an uncontrollable external factor for a manager who oversees all of the operations for a business?

Accepted Answer

A)  Production volumes were above normal levels so that overtime was paid to direct labor employees 
B)  Poor quality direct materials were purchased so more materials than usual were required in the manufacturing process 
C)  Raw materials prices changed because of a change in environmental laws. 
D)  Utilities costs were higher than normal even though weather and usage were typical for that time of year 
A)  Production volumes were above normal levels so that overtime was paid to direct labor employees 
B)  Poor quality direct materials were purchased so more materials than usual were required in the manufacturing process 
C)  Raw materials prices changed because of a change in environmental laws. 
D)  Utilities costs were higher than normal even though weather and usage were typical for that time of year

Question 12

At the end of 2009, SWP prepared its master budget for 2010. Selected amounts from that budget, along with actual results for 2010, are presented below: Which items in the table have unfavorable variances?

Accepted Answer

A)  Marketing expense and cost of goods sold 
B)  Cost of goods sold and sales 
C)  Interest revenue and research and development expense 
D)  Interest revenue and cost of goods sold 
A)  Marketing expense and cost of goods sold 
B)  Cost of goods sold and sales 
C)  Interest revenue and research and development expense 
D)  Interest revenue and cost of goods sold

Question 13

Which of the following is based on forecasts of specific volumes of products or services?

Accepted Answer

A)  Variance analysis 
B)  Flexible budgets 
C)  Static budgets 
D)  Financial statements 
A)  Variance analysis 
B)  Flexible budgets 
C)  Static budgets 
D)  Financial statements

Question 14

When evaluating actual results at the end of an accounting period, the static budget provides an appropriate benchmark for actual operations.

Accepted Answer

A) True 
 B)False

Question 15

Steve Company uses the following flexible budget formula for monthly repair cost: total cost = $700 + $0.40 per machine hour. The annual operating budget calls for 35,000 hours of planned machine time. Budgeted repair cost is

Accepted Answer

A)  $14,000 
B)  $14,700 
C)  $22,400 
D)  $22,000 
A)  $14,000 
B)  $14,700 
C)  $22,400 
D)  $22,000

Question 16

Planning Systems, has forecast the following unit sales and production for the next year, by quarter: A finished unit requires one unit of material A and two units of material B. There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories.
How much material A must be purchased in quarter 2?

Accepted Answer

A)  138 
B)  142 
C)  156 
D)  162 
A)  138 
B)  142 
C)  156 
D)  162

Question 17

To address the difference between budgeted cash receipts and budgeted cash disbursements, managers also budget which of the following?

Accepted Answer

A)  Debits and credits 
B)  Short-term borrowing or investments 
C)  Dividend payments 
D)  Net income 
A)  Debits and credits 
B)  Short-term borrowing or investments 
C)  Dividend payments 
D)  Net income

Question 18

In a cash budget, operating cash receipts include

Accepted Answer

A)  Repayments of long-term debt. 
B)  Purchases of plant assets. 
C)  Cash receipts from accounts receivable collections. 
D)  Liquidation of investments. 
A)  Repayments of long-term debt. 
B)  Purchases of plant assets. 
C)  Cash receipts from accounts receivable collections. 
D)  Liquidation of investments.

Question 19

At the end of 2009, SWP prepared its master budget for 2010. Selected amounts from that budget, along with actual results for 2010, are presented below:   SWP's total budget variance for the data provided is

Accepted Answer

A)  $29,400 favorable 
B)  $29,400 unfavorable 
C)  $40,600 favorable 
D)  $40,600 unfavorable 
A)  $29,400 favorable 
B)  $29,400 unfavorable 
C)  $40,600 favorable 
D)  $40,600 unfavorable

Question 20

Static budgets

Accepted Answer

A)  I and III only 
B)  II and III only 
C)  I and II only 
D)  I, II, and III 
A)  I and III only 
B)  II and III only 
C)  I and II only 
D)  I, II, and III

Differences between budgeted amounts and actual amounts are called budget variances.

An advantage of a flexible budget is that it

Ray Company's projected sales budget for the next four months is as follows: Beginning inventory for the year is 27,000 units. Ending inventory for each month should be 30% of the next month's sales. How many units should the company produce in January?

TFS Ltd, a retail company selling hotel furniture, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: TFS' actual profit for the next fiscal year will be

One objective of budgeting is motivating managers to

The cash budget is included in an organisation's operating budget.

The shortest period for which a cash budget can be prepared is six months.

Budget variances cannot be calculated from a static budget.

Uncontrollable external factors can create challenges in measuring the results for which managers should be held responsible. Which of the following is the best example of an uncontrollable external factor for a manager who oversees all of the operations for a business?

At the end of 2009, SWP prepared its master budget for 2010. Selected amounts from that budget, along with actual results for 2010, are presented below: Which items in the table have unfavorable variances?

Which of the following is based on forecasts of specific volumes of products or services?

When evaluating actual results at the end of an accounting period, the static budget provides an appropriate benchmark for actual operations.

Steve Company uses the following flexible budget formula for monthly repair cost: total cost = $700 + $0.40 per machine hour. The annual operating budget calls for 35,000 hours of planned machine time. Budgeted repair cost is

To address the difference between budgeted cash receipts and budgeted cash disbursements, managers also budget which of the following?

In a cash budget, operating cash receipts include

At the end of 2009, SWP prepared its master budget for 2010. Selected amounts from that budget, along with actual results for 2010, are presented below: SWP's total budget variance for the data provided is

Static budgets

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Standard Costs, Flexible Budgets and Variance Analysis

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters

Exam 11: Operational Budgets

Differences between budgeted amounts and actual amounts are called budget variances.

An advantage of a flexible budget is that it

Ray Company's projected sales budget for the next four months is as follows: Beginning inventory for the year is 27,000 units. Ending inventory for each month should be 30% of the next month's sales. How many units should the company produce in January?

TFS Ltd, a retail company selling hotel furniture, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: TFS' actual profit for the next fiscal year will be

One objective of budgeting is motivating managers to

The cash budget is included in an organisation's operating budget.

The shortest period for which a cash budget can be prepared is six months.

Budget variances cannot be calculated from a static budget.

Uncontrollable external factors can create challenges in measuring the results for which managers should be held responsible. Which of the following is the best example of an uncontrollable external factor for a manager who oversees all of the operations for a business?

At the end of 2009, SWP prepared its master budget for 2010. Selected amounts from that budget, along with actual results for 2010, are presented below: Which items in the table have unfavorable variances?

Which of the following is based on forecasts of specific volumes of products or services?

When evaluating actual results at the end of an accounting period, the static budget provides an appropriate benchmark for actual operations.

Steve Company uses the following flexible budget formula for monthly repair cost: total cost = $700 + $0.40 per machine hour. The annual operating budget calls for 35,000 hours of planned machine time. Budgeted repair cost is

To address the difference between budgeted cash receipts and budgeted cash disbursements, managers also budget which of the following?

In a cash budget, operating cash receipts include

At the end of 2009, SWP prepared its master budget for 2010. Selected amounts from that budget, along with actual results for 2010, are presented below: SWP's total budget variance for the data provided is

Static budgets

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Standard Costs, Flexible Budgets and Variance Analysis

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters