Question 1

All of the following items can appear on the cash collections and cash payments budget except:

Accepted Answer

A) direct labor. 
B) depreciation expense. 
C) selling and administrative. 
D) direct materials. 
E) None of the answer choices is correct. 
A) direct labor. 
B) depreciation expense. 
C) selling and administrative. 
D) direct materials. 
E) None of the answer choices is correct. B

Question 2

When an employee is paid a bonus for meeting budgeted sales goals,all of the following are ways the employee might manipulate the numbers to improve her chances of getting the bonus except:

Accepted Answer

A) underestimating budgeted costs. 
B) overestimating budgeted costs. 
C) underestimating sales growth. 
D) underestimating budgeted sales. 
E) All of the answer choices are correct. 
A) underestimating budgeted costs. 
B) overestimating budgeted costs. 
C) underestimating sales growth. 
D) underestimating budgeted sales. 
E) All of the answer choices are correct. A

Question 3

All of the following appear on the selling and administrative budget except:

Accepted Answer

A) cash payments for selling and administrative costs. 
B) advertising costs. 
C) units to be produced. 
D) depreciation deduction. 
E) None of the answer choices is correct. 
A) cash payments for selling and administrative costs. 
B) advertising costs. 
C) units to be produced. 
D) depreciation deduction. 
E) None of the answer choices is correct. C

Question 4

When preparing a production budget,the desired ending finished goods inventory for the first period is:

Accepted Answer

A) the beginning finished goods inventory for the second period. 
B) always the same as the beginning finished goods inventory for the first period. 
C) not used in this budget. 
D) always less than the beginning finished goods inventory for the second period. 
E) None of the answer choices is correct. 
A) the beginning finished goods inventory for the second period. 
B) always the same as the beginning finished goods inventory for the first period. 
C) not used in this budget. 
D) always less than the beginning finished goods inventory for the second period. 
E) None of the answer choices is correct.

Question 5

Exhibit 9-2
Bowline Inc.is a distributor which sells one product for $60 per unit.Bowline pays $33 to buy the product.In addition,fixed costs total $42,000 per month.Bowline wishes to maintain an inventory at the end of each month equal to 25% of the next month's projected sales.Purchases are paid in the month after purchase.
Bowline makes all sales on credit and collects 30% in the month of sale and 70% in the month after sale.Budgeted monthly sales in units for the first five months of 2013 are as follows:
  
-Refer to Exhibit 9-2.What dollar amount of merchandise inventory will be purchased in April?

Accepted Answer

A) $957,000 
B) $528,000 
C) $1,452,000 
D) $1,023,000 
E) None of the answer choices is correct. 
A) $957,000 
B) $528,000 
C) $1,452,000 
D) $1,023,000 
E) None of the answer choices is correct.

Question 6

Which of the following best describes a master budget?

Accepted Answer

A) An estimate of cash expenditures for long-term assets. 
B) An estimate of all operating costs other than production. 
C) A long-term budget that focuses on the daily operations of the organization. 
D) A series of budget schedules outlining the organization's plans for the upcoming period. 
E) None of the answer choices is correct. 
A) An estimate of cash expenditures for long-term assets. 
B) An estimate of all operating costs other than production. 
C) A long-term budget that focuses on the daily operations of the organization. 
D) A series of budget schedules outlining the organization's plans for the upcoming period. 
E) None of the answer choices is correct.

Question 7

Alta Vista Company plans to sell 90,000 units in June and 135,000 units in July.The company's policy is to keep 15% of the next month's sales in ending inventory.If the ending inventory in May was consistent with this policy,how many units should be produced in June?

Accepted Answer

A) 110,250 units 
B) 83,250 units 
C) 96,750 units 
D) 123,750 units 
E) There is not enough information to answer this question. 
A) 110,250 units 
B) 83,250 units 
C) 96,750 units 
D) 123,750 units 
E) There is not enough information to answer this question.

Question 8

A top-down approach to budgeting motivates employees and leads to greater budget acceptance.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 9-1
Sporting Inc.is a distributor which sells one product for $100 per unit.Sporting pays $60 to buy the product.In addition,fixed costs total $60,000 per month.Sporting wishes to maintain an inventory at the end of each month equal to 30% of the next month's projected sales.Purchases are paid in the month after purchase.
Sporting makes all sales on credit and collects 40% in the month of sale and 60% in the month after sale.Budgeted monthly sales in units for the first five months of 2013 are as follows:
  
-Refer to Exhibit 9-1.What will accounts payable be at the end of April?

Accepted Answer

A) $552,000 
B) $1,272,000 
C) $1,128,000 
D) $1,848,000 
E) None of the answer choices is correct. 
A) $552,000 
B) $1,272,000 
C) $1,128,000 
D) $1,848,000 
E) None of the answer choices is correct.

Question 10

The first line that appears on the direct labor budget is:

Accepted Answer

A) direct labor hours per unit. 
B) projected sales in units. 
C) units to be produced. 
D) quantity of beginning direct materials ending inventory. 
E) None of the answer choices is correct. 
A) direct labor hours per unit. 
B) projected sales in units. 
C) units to be produced. 
D) quantity of beginning direct materials ending inventory. 
E) None of the answer choices is correct.

Question 11

Service companies tend to have more budget schedules than manufacturing companies.

Accepted Answer

A) True 
 B)False

Question 12

An operating budget is used to communicate plans to:

Accepted Answer

A) Customers. 
B) Employees. 
C) Shareholders. 
D) Suppliers. 
E) All of the answer choices are correct. 
A) Customers. 
B) Employees. 
C) Shareholders. 
D) Suppliers. 
E) All of the answer choices are correct.

Question 13

In a production budget,if the units to be produced is equal to the expected sales in units,then desired units of ending inventory is equal to the units in beginning inventory.

Accepted Answer

A) True 
 B)False

Question 14

The production budget for Ventura Company shows the company expects to produce 3,000 units in the first quarter and 3,200 units in the second quarter.Each unit requires 30 pounds of direct materials at a cost of $5 per pound.The company prefers to maintain raw materials inventory equal to 25 percent of next quarter's materials needed in production.Each unit of product requires four direct labor hours at a cost of $20 per hour.Variable overhead cost per unit is $5 for indirect materials,$8 for indirect labor,and $12 for other items.Fixed overhead cost per quarter is $90,000 for salaries,$50,000 for rent,and $10,000 for depreciation.
Prepare a manufacturing overhead budget for the first quarter.

Accepted Answer

Manufacturing Overhead Budget:

Question 15

Sawyer Inc.plans to sell 75,000 units in September and 165,000 units in October.Sawyer's policy is to keep 25% of the next month's sales in ending inventory.If the ending inventory in August was consistent with this policy,how many units should be produced in September?

Accepted Answer

A) 15,000 units 
B) 97,500 units 
C) 135,000 units 
D) 52,500 units 
E) None of the answer choices is correct. 
A) 15,000 units 
B) 97,500 units 
C) 135,000 units 
D) 52,500 units 
E) None of the answer choices is correct.

Question 16

Conflicts rarely exist between the planning and control phases of budgeting.

Accepted Answer

A) True 
 B)False

Question 17

To determine how many units to produce in a period for the production budget,you would use all of the following except:

Accepted Answer

A) the number of units in beginning finished goods inventory. 
B) the number of units in beginning raw materials inventory. 
C) the expected sales in units. 
D) the desired number of units in ending finished goods inventory. 
E) None of the answer choices is correct. 
A) the number of units in beginning finished goods inventory. 
B) the number of units in beginning raw materials inventory. 
C) the expected sales in units. 
D) the desired number of units in ending finished goods inventory. 
E) None of the answer choices is correct.

Question 18

Miller Inc.had the following sales during 2012:
 
Miller expects sales in each quarter of 2013 to be 10% more than the respective quarters for 2012.If each unit sells for $110,what amounts will appear as sales revenue in the quarterly sales budgets for 2013?

Accepted Answer

A) $990,000;$1,089,000;$1,386,000;$1,188,000 
B) $1,100,000;$1,210,000;$1,540,000;$1,320,000 
C) $1,421,750;$1,421,750;$1,421,750;$1,421,750 
D) $1,210,000;$1,331,000;$1,694,000;$1,452,000 
E) None of the answer choices is correct. 
A) $990,000;$1,089,000;$1,386,000;$1,188,000 
B) $1,100,000;$1,210,000;$1,540,000;$1,320,000 
C) $1,421,750;$1,421,750;$1,421,750;$1,421,750 
D) $1,210,000;$1,331,000;$1,694,000;$1,452,000 
E) None of the answer choices is correct.

Question 19

All of the following are required to calculate the cost of goods sold in the budgeted income statement except:

Accepted Answer

A) the manufacturing overhead costs per unit. 
B) the selling and administrative costs per unit. 
C) the number of units sold. 
D) the direct material and direct labor costs per unit. 
E) None of the answer choices is correct. 
A) the manufacturing overhead costs per unit. 
B) the selling and administrative costs per unit. 
C) the number of units sold. 
D) the direct material and direct labor costs per unit. 
E) None of the answer choices is correct.

Question 20

The production budget for Ventura Company shows the company expects to produce 3,000 units in the first quarter and 3,200 units in the second quarter.Each unit requires 30 pounds of direct materials at a cost of $5 per pound.The company prefers to maintain raw materials inventory equal to 25 percent of next quarter's materials needed in production.
Prepare a direct materials purchases budget for the first quarter.

Accepted Answer

Direct Materials Purchases Budget:
 @#IMG-DLM& 
*D

All of the following items can appear on the cash collections and cash payments budget except:

When an employee is paid a bonus for meeting budgeted sales goals,all of the following are ways the employee might manipulate the numbers to improve her chances of getting the bonus except:

All of the following appear on the selling and administrative budget except:

When preparing a production budget,the desired ending finished goods inventory for the first period is:

Which of the following best describes a master budget?

Alta Vista Company plans to sell 90,000 units in June and 135,000 units in July.The company's policy is to keep 15% of the next month's sales in ending inventory.If the ending inventory in May was consistent with this policy,how many units should be produced in June?

A top-down approach to budgeting motivates employees and leads to greater budget acceptance.

The first line that appears on the direct labor budget is:

Service companies tend to have more budget schedules than manufacturing companies.

An operating budget is used to communicate plans to:

In a production budget,if the units to be produced is equal to the expected sales in units,then desired units of ending inventory is equal to the units in beginning inventory.

Sawyer Inc.plans to sell 75,000 units in September and 165,000 units in October.Sawyer's policy is to keep 25% of the next month's sales in ending inventory.If the ending inventory in August was consistent with this policy,how many units should be produced in September?

Conflicts rarely exist between the planning and control phases of budgeting.

To determine how many units to produce in a period for the production budget,you would use all of the following except:

Miller Inc.had the following sales during 2012: Miller expects sales in each quarter of 2013 to be 10% more than the respective quarters for 2012.If each unit sells for $110,what amounts will appear as sales revenue in the quarterly sales budgets for 2013?

All of the following are required to calculate the cost of goods sold in the budgeted income statement except:

What Is Managerial Accounting

How Is Job Costing Used to Track Production Costs

How Does an Organization Use Activity-Based Costing to Allocate Overhead Costs

How Is Process Costing Used to Track Production Costs

How Do Organizations Identify Cost Behavior Patterns

How Is Cost-Volume-Profit Analysis Used for Decision Making

How Are Relevant Revenues and Costs Used to Make Decisions

How Is Capital Budgeting Used to Make Decisions

How Do Managers Evaluate Performance Using Cost Variance Analysis

How Do Managers Evaluate Performance in Decentralized Organizations

How Is the Statement of Cash Flows Prepared and Used

How Do Managers Use Financial and Nonfinancial Performance Measures

Filters

Exam 9: How Are Operating Budgets Created

All of the following items can appear on the cash collections and cash payments budget except:

When an employee is paid a bonus for meeting budgeted sales goals,all of the following are ways the employee might manipulate the numbers to improve her chances of getting the bonus except:

All of the following appear on the selling and administrative budget except:

When preparing a production budget,the desired ending finished goods inventory for the first period is:

Which of the following best describes a master budget?

Alta Vista Company plans to sell 90,000 units in June and 135,000 units in July.The company's policy is to keep 15% of the next month's sales in ending inventory.If the ending inventory in May was consistent with this policy,how many units should be produced in June?

A top-down approach to budgeting motivates employees and leads to greater budget acceptance.

The first line that appears on the direct labor budget is:

Service companies tend to have more budget schedules than manufacturing companies.

An operating budget is used to communicate plans to:

In a production budget,if the units to be produced is equal to the expected sales in units,then desired units of ending inventory is equal to the units in beginning inventory.

Sawyer Inc.plans to sell 75,000 units in September and 165,000 units in October.Sawyer's policy is to keep 25% of the next month's sales in ending inventory.If the ending inventory in August was consistent with this policy,how many units should be produced in September?

Conflicts rarely exist between the planning and control phases of budgeting.

To determine how many units to produce in a period for the production budget,you would use all of the following except:

Miller Inc.had the following sales during 2012: Miller expects sales in each quarter of 2013 to be 10% more than the respective quarters for 2012.If each unit sells for $110,what amounts will appear as sales revenue in the quarterly sales budgets for 2013?

All of the following are required to calculate the cost of goods sold in the budgeted income statement except:

What Is Managerial Accounting

How Is Job Costing Used to Track Production Costs

How Does an Organization Use Activity-Based Costing to Allocate Overhead Costs

How Is Process Costing Used to Track Production Costs

How Do Organizations Identify Cost Behavior Patterns

How Is Cost-Volume-Profit Analysis Used for Decision Making

How Are Relevant Revenues and Costs Used to Make Decisions

How Is Capital Budgeting Used to Make Decisions

How Do Managers Evaluate Performance Using Cost Variance Analysis

How Do Managers Evaluate Performance in Decentralized Organizations

How Is the Statement of Cash Flows Prepared and Used

How Do Managers Use Financial and Nonfinancial Performance Measures

Filters