Question 1

Which of the following best describes a production budget?

Accepted Answer

A) A budget that is based on sales projections plus an estimate of desired ending finished goods inventory less beginning finished goods inventory.. 
B) An estimate of all production costs,other than direct materials,necessary to achieve a desired level of production. 
C) A short-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) A budget that is based on sales projections plus an estimate of desired ending finished goods inventory less beginning finished goods inventory.. 
B) An estimate of all production costs,other than direct materials,necessary to achieve a desired level of production. 
C) A short-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 2

Muraki Company has one product and sold 10,000 units in the first quarter of 2012.The company expects to sell 15% more units in the first quarter of 2013,at a price of $50 per unit.Based on this information,what is the amount of sales revenue that will appear in the budgeted income statement for the first quarter of 2013?

Accepted Answer

A) $500,000 
B) $550,000 
C) $575,000 
D) $600,000 
E) None of the answer choices is correct. 
A) $500,000 
B) $550,000 
C) $575,000 
D) $600,000 
E) None of the answer choices is correct.

Question 3

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 cash collections be in April?

Accepted Answer

A) $1,880,000 
B) $2,060,000 
C) $2,000,000 
D) $1,920,000 
E) None of the answer choices is correct. 
A) $1,880,000 
B) $2,060,000 
C) $2,000,000 
D) $1,920,000 
E) None of the answer choices is correct.

Question 4

Fireside Inc.had sales as follows during 2012:
 
Fireside expects sales in each quarter of 2013 to be 15% more than the respective quarters for 2012.If each unit sells for $40,what amounts will appear as sales revenue in the quarterly sales budgets for 2013?

Accepted Answer

A) $690,000;$713,000;$828,000;$736,000 
B) $741,750;$741,750;$741,750;$741,750 
C) $540,000;$558,000;$648,000;$576,000 
D) $600,000;$620,000;$720,000;$640,000 
E) None of the answer choices is correct. 
A) $690,000;$713,000;$828,000;$736,000 
B) $741,750;$741,750;$741,750;$741,750 
C) $540,000;$558,000;$648,000;$576,000 
D) $600,000;$620,000;$720,000;$640,000 
E) None of the answer choices is correct.

Question 5

In general,the budgeted income statement is probably the most carefully scrutinized component of the master budget.

Accepted Answer

A) True 
 B)False

Question 6

Victoria Company's policy is to keep 20% of the next month's sales in ending inventory.If Victoria meets this policy for its ending inventory in May,and sales are expected to be 14,000 units in June and 20,000 units in July,how many units need to be produced in June?

Accepted Answer

A) 20,800 units 
B) 12,800 units 
C) 18 000 units 
D) 15,200 units 
E) None of the answer choices is correct. 
A) 20,800 units 
B) 12,800 units 
C) 18 000 units 
D) 15,200 units 
E) None of the answer choices is correct.

Question 7

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 dollar amount of merchandise inventory will be purchased in April?

Accepted Answer

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

Question 8

Which of the following best describes the selling and administrative budget?

Accepted Answer

A) A series of budget schedules outlining the organization's plans for the upcoming period. 
B) An estimate of cash expenditures for long-term assets. 
C) An estimate of all operating costs other than production costs. 
D) A budget that is based on sales projections plus an estimate of desired ending finished goods inventory less beginning finished goods inventory. 
E) None of the answer choices is correct. 
A) A series of budget schedules outlining the organization's plans for the upcoming period. 
B) An estimate of cash expenditures for long-term assets. 
C) An estimate of all operating costs other than production costs. 
D) A budget that is based on sales projections plus an estimate of desired ending finished goods inventory less beginning finished goods inventory. 
E) None of the answer choices is correct.

Question 9

Freeman Company plans to sell 65,000 units in June and 72,500 units in July.Freeman's policy is to keep 30% 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) 86,750 units 
B) 106,250 units 
C) 67,250 units 
D) 62,750 units 
E) None of the answer choices is correct. 
A) 86,750 units 
B) 106,250 units 
C) 67,250 units 
D) 62,750 units 
E) None of the answer choices is correct.

Question 10

All of the following appear on the direct labor budget except:

Accepted Answer

A) units to be produced. 
B) labor rate per hour. 
C) direct labor hours per unit. 
D) indirect labor hours per unit. 
E) None of the answer choices is correct. 
A) units to be produced. 
B) labor rate per hour. 
C) direct labor hours per unit. 
D) indirect labor hours per unit. 
E) None of the answer choices is correct.

Question 11

All of the following appear on the manufacturing overhead budget except:

Accepted Answer

A) direct materials cost per unit. 
B) indirect materials cost per unit. 
C) indirect labor cost per unit. 
D) total variable overhead costs. 
E) None of the answer choices is correct. 
A) direct materials cost per unit. 
B) indirect materials cost per unit. 
C) indirect labor cost per unit. 
D) total variable overhead costs. 
E) None of the answer choices is correct.

Question 12

Budgeted manufacturing overhead costs include all of the following except:

Accepted Answer

A) direct materials used in production. 
B) depreciation of manufacturing equipment. 
C) indirect materials used in production. 
D) indirect labor such as the salary of a factory supervisor. 
E) None of the answer choices is correct. 
A) direct materials used in production. 
B) depreciation of manufacturing equipment. 
C) indirect materials used in production. 
D) indirect labor such as the salary of a factory supervisor. 
E) None of the answer choices is correct.

Question 13

In the budgeting process,the dollar amount for goods sold during the month but not collected is called:

Accepted Answer

A) accounts receivable. 
B) inventory. 
C) accounts payable. 
D) cash. 
E) None of the answer choices is correct. 
A) accounts receivable. 
B) inventory. 
C) accounts payable. 
D) cash. 
E) None of the answer choices is correct.

Question 14

A budget committee is primarily responsible for overseeing the budget process and approving the master budget.

Accepted Answer

A) True 
 B)False

Question 15

The units to be produced in the production budget is typically the same as the expected sales in units in the sales budget.

Accepted Answer

A) True 
 B)False

Question 16

Cathy's Cookies produces cookies for resale at local grocery stores.The company is currently in the process of establishing a master budget on a quarterly basis for this coming fiscal year,which ends December 31.Prior year quarterly sales were as follows (1 unit = 1 batch):
   
Unit sales are expected to increase 20 percent,and each unit is expected to sell for $5.Management prefers to maintain ending finished goods inventory equal to 15 percent of next quarter's sales.Assume finished goods inventory at the end of the fourth quarter budget period is estimated to be 2,000 units.
(1)Prepare a sales budget for Cathy's Cookies.
(2)Prepare a production budget for Cathy's Cookies.

Accepted Answer

(1)Sales b

Question 17

All of the following appear on the direct materials purchases budget except:

Accepted Answer

A) units to be produced. 
B) projected sales in units. 
C) quantity of direct materials to be purchased. 
D) quantity of desired direct materials ending inventory. 
E) None of the answer choices is correct. 
A) units to be produced. 
B) projected sales in units. 
C) quantity of direct materials to be purchased. 
D) quantity of desired direct materials ending inventory. 
E) None of the answer choices is correct.

Question 18

In the direct materials purchases budget,the key equation used to determine direct materials to be purchased is:

Accepted Answer

A) Materials needed in production - Desired materials in ending inventory + Materials in beginning inventory. 
B) Materials needed in production + Desired materials in ending inventory + Materials in beginning inventory. 
C) Materials needed in production + Desired materials in ending inventory - Materials in beginning inventory. 
D) Materials needed in production - Desired materials in ending inventory - Materials in beginning inventory. 
E) None of the answer choices is correct. 
A) Materials needed in production - Desired materials in ending inventory + Materials in beginning inventory. 
B) Materials needed in production + Desired materials in ending inventory + Materials in beginning inventory. 
C) Materials needed in production + Desired materials in ending inventory - Materials in beginning inventory. 
D) Materials needed in production - Desired materials in ending inventory - Materials in beginning inventory. 
E) None of the answer choices is correct.

Question 19

Companies generally obtain sales forecasts from many different sources.

Accepted Answer

A) True 
 B)False

Question 20

Garibaldi Inc.collects 40% of its sales in the month of sale and the other 60% in the following month.The following shows budgeted sales for October through December.
 
What is the amount of cash receipts budgeted for November?

Accepted Answer

A) $4,080,000 
B) $1,740,000 
C) $2,340,000 
D) $2,835,000 
E) None of the answer choices is correct. 
A) $4,080,000 
B) $1,740,000 
C) $2,340,000 
D) $2,835,000 
E) None of the answer choices is correct.

Which of the following best describes a production budget?

Fireside Inc.had sales as follows during 2012: Fireside expects sales in each quarter of 2013 to be 15% more than the respective quarters for 2012.If each unit sells for $40,what amounts will appear as sales revenue in the quarterly sales budgets for 2013?

In general,the budgeted income statement is probably the most carefully scrutinized component of the master budget.

Victoria Company's policy is to keep 20% of the next month's sales in ending inventory.If Victoria meets this policy for its ending inventory in May,and sales are expected to be 14,000 units in June and 20,000 units in July,how many units need to be produced in June?

Which of the following best describes the selling and administrative budget?

Freeman Company plans to sell 65,000 units in June and 72,500 units in July.Freeman's policy is to keep 30% 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?

All of the following appear on the direct labor budget except:

All of the following appear on the manufacturing overhead budget except:

Budgeted manufacturing overhead costs include all of the following except:

In the budgeting process,the dollar amount for goods sold during the month but not collected is called:

A budget committee is primarily responsible for overseeing the budget process and approving the master budget.

The units to be produced in the production budget is typically the same as the expected sales in units in the sales budget.

All of the following appear on the direct materials purchases budget except:

In the direct materials purchases budget,the key equation used to determine direct materials to be purchased is:

Companies generally obtain sales forecasts from many different sources.

Garibaldi Inc.collects 40% of its sales in the month of sale and the other 60% in the following month.The following shows budgeted sales for October through December. What is the amount of cash receipts budgeted for November?

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

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Exam 9: How Are Operating Budgets Created

Which of the following best describes a production budget?

Fireside Inc.had sales as follows during 2012: Fireside expects sales in each quarter of 2013 to be 15% more than the respective quarters for 2012.If each unit sells for $40,what amounts will appear as sales revenue in the quarterly sales budgets for 2013?

In general,the budgeted income statement is probably the most carefully scrutinized component of the master budget.

Victoria Company's policy is to keep 20% of the next month's sales in ending inventory.If Victoria meets this policy for its ending inventory in May,and sales are expected to be 14,000 units in June and 20,000 units in July,how many units need to be produced in June?

Which of the following best describes the selling and administrative budget?

Freeman Company plans to sell 65,000 units in June and 72,500 units in July.Freeman's policy is to keep 30% 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?

All of the following appear on the direct labor budget except:

All of the following appear on the manufacturing overhead budget except:

Budgeted manufacturing overhead costs include all of the following except:

In the budgeting process,the dollar amount for goods sold during the month but not collected is called:

A budget committee is primarily responsible for overseeing the budget process and approving the master budget.

The units to be produced in the production budget is typically the same as the expected sales in units in the sales budget.

All of the following appear on the direct materials purchases budget except:

In the direct materials purchases budget,the key equation used to determine direct materials to be purchased is:

Companies generally obtain sales forecasts from many different sources.

Garibaldi Inc.collects 40% of its sales in the month of sale and the other 60% in the following month.The following shows budgeted sales for October through December. What is the amount of cash receipts budgeted for November?

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