Question 1

Kaizen budgeting does not make sense for profit centres.

Accepted Answer

A) True 
 B)False

Question 2

A financial budget focuses on how operations and planned capital outlays affect ________.

Accepted Answer

A) cash. 
B) inventory. 
C) receivables. 
D) payables. 
A) cash. 
B) inventory. 
C) receivables. 
D) payables.

Question 3

________ analysis is a 'what-if' technique that examines how a result will change if the original predicted data are not achieved or if an underlying assumption changes.

Accepted Answer

A) Strategic 
B) Complex 
C) Sensitivity 
D) Non-financial 
A) Strategic 
B) Complex 
C) Sensitivity 
D) Non-financial

Question 4

Responsibility accounting:

Accepted Answer

A) examines how a result will change if the original plan is not achieved. 
B) is an arrangement of lines of responsibility within the organisation. 
C) explicitly incorporates continuous improvement anticipated during the budget period. 
D) is a system that measures the plans,budgets,actions,and actual results of a responsibility centre. 
A) examines how a result will change if the original plan is not achieved. 
B) is an arrangement of lines of responsibility within the organisation. 
C) explicitly incorporates continuous improvement anticipated during the budget period. 
D) is a system that measures the plans,budgets,actions,and actual results of a responsibility centre.

Question 5

Answer the following questions using the information below:
Beds4us Inc.estimates the following number of mattress sales for the first four months of 2018:
 $$\begin{array} { l r } 
\text { Month } & \text { Sales } \
\text { January } & 6000 \
\text { February } & 8500 \
\text { March } & 7500 \
\text { April } & 7500
\end{array}$$ Finished goods inventory at the end of December is 1500 units.Target ending finished goods inventory is 30% of the next month's sales.
-How many mattresses need to be produced in the first quarter (January,February,March)of 2018?

Accepted Answer

A) 19 400 mattresses 
B) 22 400 mattresses 
C) 22 750 mattresses 
D) 18 500 mattresses 
A) 19 400 mattresses 
B) 22 400 mattresses 
C) 22 750 mattresses 
D) 18 500 mattresses

Question 6

Which one of the following does a variance do?

Accepted Answer

A) Alert managers early to events not easily nor immediately evident. 
B) Reflect the degree of influence that a specific manager has over costs,revenues or related items for which he or she is responsible 
C) Describe the practice of underestimating budgeted revenues,or overestimating budgeted costs,to make budgeted targets more easily achievable 
D) All of these answers are correct. 
A) Alert managers early to events not easily nor immediately evident. 
B) Reflect the degree of influence that a specific manager has over costs,revenues or related items for which he or she is responsible 
C) Describe the practice of underestimating budgeted revenues,or overestimating budgeted costs,to make budgeted targets more easily achievable 
D) All of these answers are correct.

Question 7

________ uses a 'what-if' technique that examines how results will change if the originally predicted data changes.

Accepted Answer

A) A sales forecast 
B) The cash flow statement 
C) A sensitivity analysis 
D) A pro forma financial statement 
A) A sales forecast 
B) The cash flow statement 
C) A sensitivity analysis 
D) A pro forma financial statement

Question 8

Production budget is primarily based on:

Accepted Answer

A) the revenues budget. 
B) the administrative costs budget. 
C) the capital expenditures budget. 
D) the projected profit. 
A) the revenues budget. 
B) the administrative costs budget. 
C) the capital expenditures budget. 
D) the projected profit.

Question 9

Answer the following questions using the information below:
Wallaby Company has the following information:
 $$\begin{array} { l c } 
\text { Month } & \text { Budgeted Purchases } \
\text { January } & \$ 26800 \
\text { February } & 29000 \
\text { March } & 30520 \
\text { April } & 29480 \
\text { May } & 27680
\end{array}$$ Purchases are paid for in the following manner:
10% of the purchase amount in the month of purchase
50% of the purchase amount in the month after purchase
40% of the purchase amount in the month after purchase
-What is the expected Accounts Payable balance as of 31 May?

Accepted Answer

A) $2948 
B) $11 792 
C) $36 704 
D) $24 912 
A) $2948 
B) $11 792 
C) $36 704 
D) $24 912

Question 10

After revenues are budgeted,the manufacturing manager prepares the ________ budget.

Accepted Answer

A) direct materials 
B) direct labour 
C) cost of goods sold 
D) production 
A) direct materials 
B) direct labour 
C) cost of goods sold 
D) production

Question 11

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:
 $$\begin{array} { l r r } 
& \text { Beginning inventory } & \text { Ending inventory } \
\text { Direct materials } & 1000 \text { units } & 1000 \text { units } \
\text { Work-in-process inventory } & 0 \text { units } & 0 \text { units } \
\text { Finished goods inventory } & 400 \text { units } & 500 \text { units }
\end{array}$$
-What are the 2018 budgeted costs for direct materials,direct manufacturing labour,and manufacturing overhead,respectively?

Accepted Answer

A) $12 200;$61 000;$18 300 
B) $2000;$10 000;$3000 
C) $2000;$0;$18 000 
D) $12 000;$60 000;$18 000 
A) $12 200;$61 000;$18 300 
B) $2000;$10 000;$3000 
C) $2000;$0;$18 000 
D) $12 000;$60 000;$18 000

Question 12

The sales forecast should primarily be based on statistical analysis with secondary input from sales managers and sales representatives.

Accepted Answer

A) True 
 B)False

Question 13

ERP systems store vast quantities of information about the materials,machines and equipment,labour,power,maintenance and set-ups needed to manufacture different products.

Accepted Answer

A) True 
 B)False

Question 14

Answer the following questions using the information below:
Newcastle Enterprises reports the year-end information from 2018 as follows:
 $\begin{array}{lr}
\text { Sales (70 000 units) } & \$ 720000 \
\text { Cost of goods sold } & \underline{370000} \
& \
\text { Gross margin } & 350000 \
\text { Operating expenses } & \underline{200000} \
& \
\text { Operating profit } & \underline{ \$ 150000}
\end{array}$
 Newcastle is developing the 2019 budget.In 2019 the company would like to increase selling prices by 4%,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 the budgeted cost of goods sold for 2019?

Accepted Answer

A) $333 000 
B) $370 000 
C) $218 400 
D) $196 560 
A) $333 000 
B) $370 000 
C) $218 400 
D) $196 560

Question 15

The master budget reflects the impact of operating decisions,but not financing decisions.

Accepted Answer

A) True 
 B)False

Question 16

Answer the following questions using the information below:
Ku-ring-gai & Co expects to sell 25 000 pool cues for $12.00 each.Direct materials costs are $2.00,direct manufacturing labour is $4.00,and manufacturing overhead is $0.80 per pool cue.The following inventory levels apply to 2017:
 $$\begin{array} { l r r } 
& \text { Beginning inventory } & \text { Ending inventory } \
\text { Direct materials } & 24000 \text { units } & 24000 \text { units } \
\text { Work-in-process inventory } & 0 \text { units } & 0 \text { units } \
\text { Finished goods inventory } & 2000 \text { units } & 2500 \text { units }
\end{array}$$
-What are the 2018 budgeted costs for direct materials,direct manufacturing labour,and manufacturing overhead,respectively?

Accepted Answer

A) $0;$96 000;$19 200 
B) $80 000;$40 000;$16 000 
C) $39 000;$78 000;$15 600 
D) $51 000;$102 000;$20 400 
A) $0;$96 000;$19 200 
B) $80 000;$40 000;$16 000 
C) $39 000;$78 000;$15 600 
D) $51 000;$102 000;$20 400

Question 17

To prepare the cash budget,all of the following budgets are required EXCEPT:

Accepted Answer

A) cost of goods sold budget. 
B) capital expenditures budget. 
C) revenue budget. 
D) budgeted balance sheet. 
A) cost of goods sold budget. 
B) capital expenditures budget. 
C) revenue budget. 
D) budgeted balance sheet.

Question 18

The kaizen approach means examining the effect of changes on the budgeted results.

Accepted Answer

A) True 
 B)False

Question 19

The possibility of exchange rate fluctuations does not influence the budgeting procedures in a multinational corporation.

Accepted Answer

A) True 
 B)False

Question 20

Listed below are elements of the master budget.Determine whether each budget is an operating budget or a financial budget.Place an O for operating budget or F for a financial budget.
1.Capital expenditures budget
2.Cost of goods sold budget
3.Revenues budget
4.Budgeted cash flow statement
5.Distribution costs budget
6.Marketing costs budget
7.Cash budget
8.Direct materials cost budget
9.Budgeted balance sheet
10.Budgeted income statement

Accepted Answer

1.F
2.O
3.

Kaizen budgeting does not make sense for profit centres.

A financial budget focuses on how operations and planned capital outlays affect ________.

________ analysis is a 'what-if' technique that examines how a result will change if the original predicted data are not achieved or if an underlying assumption changes.

Responsibility accounting:

Which one of the following does a variance do?

________ uses a 'what-if' technique that examines how results will change if the originally predicted data changes.

Production budget is primarily based on:

After revenues are budgeted,the manufacturing manager prepares the ________ budget.

The sales forecast should primarily be based on statistical analysis with secondary input from sales managers and sales representatives.

ERP systems store vast quantities of information about the materials,machines and equipment,labour,power,maintenance and set-ups needed to manufacture different products.

The master budget reflects the impact of operating decisions,but not financing decisions.

To prepare the cash budget,all of the following budgets are required EXCEPT:

The kaizen approach means examining the effect of changes on the budgeted results.

The possibility of exchange rate fluctuations does not influence the budgeting procedures in a multinational corporation.

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

Kaizen budgeting does not make sense for profit centres.

A financial budget focuses on how operations and planned capital outlays affect ________.

________ analysis is a 'what-if' technique that examines how a result will change if the original predicted data are not achieved or if an underlying assumption changes.

Responsibility accounting:

Which one of the following does a variance do?

________ uses a 'what-if' technique that examines how results will change if the originally predicted data changes.

Production budget is primarily based on:

After revenues are budgeted,the manufacturing manager prepares the ________ budget.

The sales forecast should primarily be based on statistical analysis with secondary input from sales managers and sales representatives.

ERP systems store vast quantities of information about the materials,machines and equipment,labour,power,maintenance and set-ups needed to manufacture different products.

The master budget reflects the impact of operating decisions,but not financing decisions.

To prepare the cash budget,all of the following budgets are required EXCEPT:

The kaizen approach means examining the effect of changes on the budgeted results.

The possibility of exchange rate fluctuations does not influence the budgeting procedures in a multinational corporation.

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