Question 1

Operating budgets include all of the following EXCEPT:

Accepted Answer

A) the revenues budget. 
B) the administrative costs budget. 
C) the budgeted income statement. 
D) the budgeted balance sheet. 
A) the revenues budget. 
B) the administrative costs budget. 
C) the budgeted income statement. 
D) the budgeted balance sheet.

Question 2

Answer the following questions using the information below:
The following information pertains to Reef Producers Company:
 $\begin{array} { l l c } \text { Month } & \text { Sales } & \text { Purchases } \ \text { January } & \$ 48000 & \$ 16000 \ \text { February } & \$ 64000 & \$ 23000 \ \text { March } & \$ 80000 & \$ 38000 \end{array}$

- Cash is collected from customers in the following manner:

$\begin{array}{ll}
\text { Month of sale } & 30 \% \
\text { Month following the sale } & 70 \%
\end{array}$

$40 \%$ of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
- Labour costs are $20 \%$ of sales. Other operating costs are $\$ 15000$ per month (including $\$ 4000$ of depreciation). Both of these are paid in the month incurred. The cash balance on 1 March is $\$ 4000$. A minimum cash balance of $\$ 3000$ is required at the end of the month. Money can be borrowed in multiples of $\$ 1000$.
-How much cash will be collected from customers in March?

Accepted Answer

A) $80 000 
B) $68 800 
C) $57 000 
D) None of these answers are correct. 
A) $80 000 
B) $68 800 
C) $57 000 
D) None of these answers are correct.

Question 3

Describe the benefits to an organisation of preparing an operating budget.

Accepted Answer

A well-prepared operating budget should

Question 4

A four-quarter rolling budget encourages management to be thinking about the next 12 months.

Accepted Answer

A) True 
 B)False

Question 5

The direct materials usage budget is based on:

Accepted Answer

A) the predetermined factory overhead rate. 
B) budgeted sales dollars. 
C) the units to be produced during a period. 
D) the amount of labour-hours worked. 
A) the predetermined factory overhead rate. 
B) budgeted sales dollars. 
C) the units to be produced during a period. 
D) the amount of labour-hours worked.

Question 6

Answer the following questions using the information below:
Cathfree Inc.expects to sell 35 000 athletic uniforms for $70 each in 2018.Direct materials costs are $20,direct manufacturing labour is $8,and manufacturing overhead is $6 for each uniform.The following inventory levels apply to 2017:
 $$\begin{array} { l r r } 
& \text { Beginning inventory } & \text { Ending inventory } \
\text { Direct materials } & 12000 \text { units } & 10000 \text { units } \
\text { Work-in-process inventory } & 0 \text { units } & 0 \text { units } \
\text { Finished goods inventory } & 6000 \text { units } & 5000 \text { units }
\end{array}$$
-What is the amount budgeted for cost of goods manufactured in 2018?

Accepted Answer

A) $986 000 
B) $1 020 000 
C) $1 156 000 
D) $1 190 000 
A) $986 000 
B) $1 020 000 
C) $1 156 000 
D) $1 190 000

Question 7

________ budgeting and budgeting for specific activities are key building blocks of the master budget.

Accepted Answer

A) Master 
B) Kaizen 
C) Cash 
D) Capital 
A) Master 
B) Kaizen 
C) Cash 
D) Capital

Question 8

Budgeted manufacturing overhead costs include all types of factory expenses EXCEPT:

Accepted Answer

A) indirect labour such as the salary of the plant supervisor. 
B) variable items such as plant supplies. 
C) fixed items such as depreciation of manufacturing machinery. 
D) direct labour and direct materials. 
A) indirect labour such as the salary of the plant supervisor. 
B) variable items such as plant supplies. 
C) fixed items such as depreciation of manufacturing machinery. 
D) direct labour and direct materials.

Question 9

Budgeting is a time-consuming process that involves all levels of management.

Accepted Answer

A) True 
 B)False

Question 10

The operating budget is that part of the master budget that includes the capital expenditures budget,cash budget,budgeted balance sheet,and the budgeted cash flow statement.

Accepted Answer

A) True 
 B)False

Question 11

________ approaches,such as regression and trend analysis,can help in sales forecasting.

Accepted Answer

A) Behavioural 
B) Historical 
C) Empirical 
D) Statistical 
A) Behavioural 
B) Historical 
C) Empirical 
D) Statistical

Question 12

In response to pressures from consumers,investors,governments and non-governmental organisations,many companies proactively manage and report on environmental performance.

Accepted Answer

A) True 
 B)False

Question 13

A rolling budget is created by continually adding a month,quarter or ___________ to the period that just ended.

Accepted Answer

A) week 
B) year 
C) day 
D) weekend 
A) week 
B) year 
C) day 
D) weekend

Question 14

All of the following statements about multinational companies are true EXCEPT:

Accepted Answer

A) Management accountants in multinational companies need to budget in different currencies. 
B) Multinational companies earn revenues and incur expenses in one currency. 
C) Management accountants in multinational companies need to budget for foreign exchange rates. 
D) Besides currency issues,multinational companies need to understand the political,legal and,in particular,economic environments of the different countries in which they operate. 
A) Management accountants in multinational companies need to budget in different currencies. 
B) Multinational companies earn revenues and incur expenses in one currency. 
C) Management accountants in multinational companies need to budget for foreign exchange rates. 
D) Besides currency issues,multinational companies need to understand the political,legal and,in particular,economic environments of the different countries in which they operate.

Question 15

The best way to explain how to prepare an operating budget is with by walking through the steps a company would take to develop it.

Accepted Answer

A) True 
 B)False

Question 16

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.
-Should Newcastle increase the selling price in 2019?

Accepted Answer

A) No,because sales volume decreases for 2019. 
B) Yes,because operating profit is increased for 2019. 
C) Yes,because sales revenue is increased for 2019. 
D) No,because operating profit decreases for 2019. 
A) No,because sales volume decreases for 2019. 
B) Yes,because operating profit is increased for 2019. 
C) Yes,because sales revenue is increased for 2019. 
D) No,because operating profit decreases for 2019.

Question 17

If the selling price per unit is increased,which of the following will result when performing a sensitivity analysis?

Accepted Answer

A) Per unit fixed administrative costs will increase 
B) Total costs for sales commissions and other nonmanufacturing variable costs will increase 
C) Per unit direct materials purchase price will increase 
D) Total volume of sales will increase 
A) Per unit fixed administrative costs will increase 
B) Total costs for sales commissions and other nonmanufacturing variable costs will increase 
C) Per unit direct materials purchase price will increase 
D) Total volume of sales will increase

Question 18

An organisation structure is an arrangement of lines of responsibility within the entity.

Accepted Answer

A) True 
 B)False

Question 19

If inventoriable costs in the operating budget are going to be in accordance with Generally Accepted Accounting Principles (GAAP),they include only variable manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 20

To reduce budgetary slack management may:

Accepted Answer

A) incorporate challenging targets. 
B) reduce projected cost targets by 10% across all areas. 
C) award bonuses for achieving budgeted amounts. 
D) use external benchmark performance measures. 
A) incorporate challenging targets. 
B) reduce projected cost targets by 10% across all areas. 
C) award bonuses for achieving budgeted amounts. 
D) use external benchmark performance measures.

Operating budgets include all of the following EXCEPT:

Describe the benefits to an organisation of preparing an operating budget.

A four-quarter rolling budget encourages management to be thinking about the next 12 months.

The direct materials usage budget is based on:

________ budgeting and budgeting for specific activities are key building blocks of the master budget.

Budgeted manufacturing overhead costs include all types of factory expenses EXCEPT:

Budgeting is a time-consuming process that involves all levels of management.

The operating budget is that part of the master budget that includes the capital expenditures budget,cash budget,budgeted balance sheet,and the budgeted cash flow statement.

________ approaches,such as regression and trend analysis,can help in sales forecasting.

In response to pressures from consumers,investors,governments and non-governmental organisations,many companies proactively manage and report on environmental performance.

A rolling budget is created by continually adding a month,quarter or ___________ to the period that just ended.

All of the following statements about multinational companies are true EXCEPT:

The best way to explain how to prepare an operating budget is with by walking through the steps a company would take to develop it.

If the selling price per unit is increased,which of the following will result when performing a sensitivity analysis?

An organisation structure is an arrangement of lines of responsibility within the entity.

If inventoriable costs in the operating budget are going to be in accordance with Generally Accepted Accounting Principles (GAAP),they include only variable manufacturing costs.

To reduce budgetary slack management may:

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

Operating budgets include all of the following EXCEPT:

Describe the benefits to an organisation of preparing an operating budget.

A four-quarter rolling budget encourages management to be thinking about the next 12 months.

The direct materials usage budget is based on:

________ budgeting and budgeting for specific activities are key building blocks of the master budget.

Budgeted manufacturing overhead costs include all types of factory expenses EXCEPT:

Budgeting is a time-consuming process that involves all levels of management.

The operating budget is that part of the master budget that includes the capital expenditures budget,cash budget,budgeted balance sheet,and the budgeted cash flow statement.

________ approaches,such as regression and trend analysis,can help in sales forecasting.

In response to pressures from consumers,investors,governments and non-governmental organisations,many companies proactively manage and report on environmental performance.

A rolling budget is created by continually adding a month,quarter or ___________ to the period that just ended.

All of the following statements about multinational companies are true EXCEPT:

The best way to explain how to prepare an operating budget is with by walking through the steps a company would take to develop it.

If the selling price per unit is increased,which of the following will result when performing a sensitivity analysis?

An organisation structure is an arrangement of lines of responsibility within the entity.

If inventoriable costs in the operating budget are going to be in accordance with Generally Accepted Accounting Principles (GAAP),they include only variable manufacturing costs.

To reduce budgetary slack management may:

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