Question 1

Activity-based budgeting and kaizen budgeting are really equivalent in meaning.

Accepted Answer

A) True 
 B)False  False

Question 2

Alberto and Marko have just purchased a small soap manufacturing company that was having financial difficulties.After a brief operating period,they decided that the company's main problem was the lack of any financial planning.The company made a good product and market potential was great.
Required:
Explain why a company needs a good budgeting plan.Specifically address the need for a master budget.

Accepted Answer

The master budget is a series of interrelated budgets that quantify management's expectations about a company's revenues,expenses,net income,cash flows,and financial position.When administered wisely,a budget:
1.provides a framework for judging performance
2.motivates managers and employees;and
3.promotes coordination and communication among subunits within the company.

Question 3

Actual results should NOT be compared against past performance because:

Accepted Answer

A) past results may contain mistakes and substandard performance. 
B) past performance is an indicator of future performance. 
C) future conditions will be similar to past conditions. 
D) past results will never happen again. 
A) past results may contain mistakes and substandard performance. 
B) past performance is an indicator of future performance. 
C) future conditions will be similar to past conditions. 
D) past results will never happen again. A

Question 4

Sensitivity analysis incorporates continuous improvement into budgeted amounts.

Accepted Answer

A) True 
 B)False

Question 5

The time coverage of a budget should be:

Accepted Answer

A) one year. 
B) guided by the purpose of the budget. 
C) longer rather than shorter. 
D) covered by the period of the design,manufacture and sale of the product. 
A) one year. 
B) guided by the purpose of the budget. 
C) longer rather than shorter. 
D) covered by the period of the design,manufacture and sale of the product.

Question 6

To create greater commitment to the budget,top-management should create the budget and then share it with lower-level managers.

Accepted Answer

A) True 
 B)False

Question 7

A responsibility accounting system could:

Accepted Answer

A) exclude all uncontrollable costs. 
B) exclude controllable costs. 
C) segregate uncontrollable costs from controllable costs. 
D) Both A and C are correct. 
A) exclude all uncontrollable costs. 
B) exclude controllable costs. 
C) segregate uncontrollable costs from controllable costs. 
D) Both A and C are correct.

Question 8

Answer the following questions using the information below:
Pilbara Co Pty Ltd expects to sell 6000 ceramic vases for $20 each.Direct materials costs are $2,direct manufacturing labour is $10,and manufacturing overhead is $3 per vase.The following inventory levels apply to 2017:
 $$\begin{array} { l r r } 
& \text { Beginning inventory } & \text { Ending inventory } \
\text { Direct materials } & 1000 \text { units } & 1000 \text { units } \
\text { Work-in-process inventory } & 0 \text { units } & 0 \text { units } \
\text { Finished goods inventory } & 400 \text { units } & 500 \text { units }
\end{array}$$
-How many ceramic vases need to be produced in 2018?

Accepted Answer

A) 6000 vases 
B) 6100 vases 
C) 7000 vases 
D) 5900 vases 
A) 6000 vases 
B) 6100 vases 
C) 7000 vases 
D) 5900 vases

Question 9

When administered wisely,budgets promote communication and coordination among the various subunits of the organisation.

Accepted Answer

A) True 
 B)False

Question 10

For next year,Toowong Inc.has budgeted sales of 70 000 units,target ending finished goods inventory of 1000 units,and beginning finished goods inventory of 9800 units.All other inventories are zero.How many units should be produced next year?

Accepted Answer

A) 60 000 units 
B) 58 800 units 
C) 61 200 units 
D) 64 800 units 
A) 60 000 units 
B) 58 800 units 
C) 61 200 units 
D) 64 800 units

Question 11

Since fixed manufacturing overhead is fixed,it is not normally included in the operating budget.

Accepted Answer

A) True 
 B)False

Question 12

Discuss the importance of the sales forecast and items that influence its accuracy.

Accepted Answer

All other budgets are based on informati

Question 13

Operating decisions PRIMARILY deal with:

Accepted Answer

A) the use of scarce resources. 
B) satisfying shareholders. 
C) acquiring equipment and buildings. 
D) how to obtain funds to acquire resources. 
A) the use of scarce resources. 
B) satisfying shareholders. 
C) acquiring equipment and buildings. 
D) how to obtain funds to acquire resources.

Question 14

Budgeting is most useful when it is integrated with a company's strategy.

Accepted Answer

A) True 
 B)False

Question 15

Answer the following questions using the information below:
The following information pertains to the January operating budget for Canberra Corporation.
∙ Budgeted sales for January $100 000 and for February $200 000.
∙ Collections for sales are 70% in the month of sale and 30% the next month.
∙ Gross margin is 30% of sales.
∙ Administrative costs are $10 000 each month.
∙ Beginning accounts receivable is $20 000.
∙ Beginning inventory is $14 000.
∙ Beginning accounts payable is $60 000.(All from inventory purchases. )
∙ Purchases are paid in full the following month.
∙ Desired ending inventory is 20% of next month's cost of goods sold (COGS).
-For January,budgeted cash payments for purchases are:

Accepted Answer

A) $70 000. 
B) $14 000. 
C) $60 000. 
D) None of these answers are correct. 
A) $70 000. 
B) $14 000. 
C) $60 000. 
D) None of these answers are correct.

Question 16

Albury Enterprises reports year-end information from 2018 as follows:
 $$\begin{array} { l r } 
\text { Sales ( } 80000 \text {  units) } & \$ 640000 \
\text { Cost of goods sold } & \underline { 40000 } \\
\text { Gross margin }  & 160000 \
\text { Operating expenses }& \underline { 130000 } \\
\text { Operating expenses } & \$ 30000
\end{array}$$
 Albury is developing the 2019 budget.In 2019 the company would like to increase selling prices by 8%,and as a result expects a decrease in sales volume of 10%.All other operating expenses are expected to remain constant.Assume that COGS is a variable cost and that operating expenses are a fixed cost.
-What is budgeted cost of goods sold for 2019?

Accepted Answer

A) $345 600 
B) $432 000 
C) $480 000 
D) $311 040 
A) $345 600 
B) $432 000 
C) $480 000 
D) $311 040

Question 17

The operating budget process generally concludes with the preparation of the:

Accepted Answer

A) budgeted income statement. 
B) research and development budget. 
C) production budget. 
D) distribution budget. 
A) budgeted income statement. 
B) research and development budget. 
C) production budget. 
D) distribution budget.

Question 18

Tumbi Umbi Company expects to manufacture and sell 30 000 baskets in 2018 for $6 each.There are 3000 baskets in beginning finished goods inventory with target ending inventory of 4000 baskets.The company keeps no work-in-process inventory.What amount of sales revenue will be reported on the 2018 budgeted income statement?

Accepted Answer

A) $186 000 
B) $180 000 
C) $174 000 
D) $204 000 
A) $186 000 
B) $180 000 
C) $174 000 
D) $204 000

Question 19

Well-managed companies usually cycle through the four budgeting steps during the course of the financial year:

Accepted Answer

A) True 
 B)False

Question 20

One of the most valuable benefits of budgeting is that it helps managers:

Accepted Answer

A) communicate. 
B) learn. 
C) develop new strategies. 
D) acquire power. 
A) communicate. 
B) learn. 
C) develop new strategies. 
D) acquire power.

Activity-based budgeting and kaizen budgeting are really equivalent in meaning.

Actual results should NOT be compared against past performance because:

Sensitivity analysis incorporates continuous improvement into budgeted amounts.

The time coverage of a budget should be:

To create greater commitment to the budget,top-management should create the budget and then share it with lower-level managers.

A responsibility accounting system could:

When administered wisely,budgets promote communication and coordination among the various subunits of the organisation.

For next year,Toowong Inc.has budgeted sales of 70 000 units,target ending finished goods inventory of 1000 units,and beginning finished goods inventory of 9800 units.All other inventories are zero.How many units should be produced next year?

Since fixed manufacturing overhead is fixed,it is not normally included in the operating budget.

Discuss the importance of the sales forecast and items that influence its accuracy.

Operating decisions PRIMARILY deal with:

Budgeting is most useful when it is integrated with a company's strategy.

The operating budget process generally concludes with the preparation of the:

Well-managed companies usually cycle through the four budgeting steps during the course of the financial year:

One of the most valuable benefits of budgeting is that it helps managers:

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters

Exam 11: Budgeting, Management Control and Responsibility Accounting

Activity-based budgeting and kaizen budgeting are really equivalent in meaning.

Actual results should NOT be compared against past performance because:

Sensitivity analysis incorporates continuous improvement into budgeted amounts.

The time coverage of a budget should be:

To create greater commitment to the budget,top-management should create the budget and then share it with lower-level managers.

A responsibility accounting system could:

When administered wisely,budgets promote communication and coordination among the various subunits of the organisation.

For next year,Toowong Inc.has budgeted sales of 70 000 units,target ending finished goods inventory of 1000 units,and beginning finished goods inventory of 9800 units.All other inventories are zero.How many units should be produced next year?

Since fixed manufacturing overhead is fixed,it is not normally included in the operating budget.

Discuss the importance of the sales forecast and items that influence its accuracy.

Operating decisions PRIMARILY deal with:

Budgeting is most useful when it is integrated with a company's strategy.

The operating budget process generally concludes with the preparation of the:

Well-managed companies usually cycle through the four budgeting steps during the course of the financial year:

One of the most valuable benefits of budgeting is that it helps managers:

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters