Question 1

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 2

Marker Products Inc sells all of its products on credit.The company expects to collect 65 percent of sales in the quarter of sale and 35 percent the quarter following the sale.Accounts receivable at the end of last year totaled $3 million,all of which will be collected in the first quarter of the coming year.Marker's sales budget shows the following projected sales revenues:
 $$\begin{array} { r r } 
\text { Quarter 1: } & \$ 8,800,000 \
\text { Quarter 2: } & \$ 11,000,000 \
\text { Quarter 3: } & \$ 11,440,000 \
\text { Quarter 4: } & \$ 10,560,000
\end{array}$$ 
Prepare a budget for cash collections from sales for each of the four quarters.

Accepted Answer

Sales cash collections budget:

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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:
 $\begin{array}{ll}
\text { January } & 20,000 \text { units } \
\text { February } & 25,000 \text { units } \
\text { March } & 28,000 \text { units } \
\text { April } & 30,000 \text { units } \
\text { May } & 26,000 \text { units }
\end{array}$
-Refer to Exhibit 9-2.What will accounts receivable be at the end of February?

Accepted Answer

A) $450,000 
B) $1,500,000 
C) $1,050,000 
D) $375,000 
E) None of the answer choices is correct. 
A) $450,000 
B) $1,500,000 
C) $1,050,000 
D) $375,000 
E) None of the answer choices is correct.

Question 5

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):
 $\begin{array}{ll}
\text { First quarter: } & 8,000 \text { units } \
\text { Second quarter: } & 9,600 \text { units } \
\text { Third quarter: } & 12,000 \text { units } \
\text { Fourth quarter: } & 10,400 \text { units }
\end{array}$ 
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 budget:
 @#IMG-DLM& 
(2)Production budget

Question 6

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:
 $\begin{array}{ll}
\text { January } & 10,000 \text { units } \
\text { February } & 15,000 \text { units } \
\text { March } & 18,000 \text { units } \
\text { April } & 20,000 \text { units } \
\text { May } & 16,000 \text { units }
\end{array}$
-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 7

Silo Company has one product and sold 35,000 units in the first quarter of 2016.The company expects to sell 30% more units in the first quarter of 2013,at a price of $20 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) $910,000 
B) $700,000 
C) $1,183,000 
D) $730,000 
E) None of the answer choices is correct. 
A) $910,000 
B) $700,000 
C) $1,183,000 
D) $730,000 
E) None of the answer choices is correct.

Question 8

All of the following appear on the budgeted income statement except:

Accepted Answer

A) selling and administrative expenses. 
B) cost of goods sold. 
C) accounts payable. 
D) sales. 
E) None of the answer choices is correct. 
A) selling and administrative expenses. 
B) cost of goods sold. 
C) accounts payable. 
D) sales. 
E) None of the answer choices is correct.

Question 9

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

Accepted Answer

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

Question 10

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.
$$\begin{array} { l l } 
\text { October } & \$ 3,900,000 \
\text { Novernber } & \$ 4,350,000 \
\text { Decerrber } & \$ 4,725,000
\end{array}$$
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.

Question 11

Merchandising companies and service organizations do not use production budgets.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 14

The production budget is based on sales projections plus an estimate of desired ending finished goods inventory,less beginning finished goods inventory.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) units to be produced. 
B) direct labor cost per unit. 
C) indirect labor cost per unit. 
D) total fixed overhead costs. 
E) None of the answer choices is correct. 
A) units to be produced. 
B) direct labor cost per unit. 
C) indirect labor cost per unit. 
D) total fixed overhead costs. 
E) None of the answer choices is correct.

Question 16

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 17

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 18

Bailey Company purchases all direct materials on credit.The company expects to pay 60 percent of purchases in the quarter of purchase and 40 percent the following quarter.Accounts payable at the end of last year totaled $1,000,000,all of which will be paid in the first quarter of this coming year.Bailey's direct materials purchases budget shows the following projected cost of materials to be purchased:
 $$\begin{array} { l l } 
\text { Quarter 1: } & \$ 2,150,000 \
\text { Quarter 2: } & \$ 2,250,000 \
\text { Quarter 3: } & \$ 2,470,000 \
\text { Quarter 4: } & \$ 2,230,000
\end{array}$$ 
Prepare a cash payments budget for purchases of materials for each of the four quarters.

Accepted Answer

Budget for cash payments for p

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Sugar Pine Inc.collects 30% of its sales in the month of sale and the other 70% in the following month.The following shows budgeted sales for January through March.
$\begin{array}{ll}
\text { January } & \$ 250,000 \
\text { February } & \$ 325,000 \
\text { March } & \$ 387,500
\end{array}$
What is the amount of cash receipts budgeted for February?

Accepted Answer

A) $97,500 
B) $271,250 
C) $272,500 
D) $302,500 
E) None of the answer choices is correct. 
A) $97,500 
B) $271,250 
C) $272,500 
D) $302,500 
E) None of the answer choices is correct.

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

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

All of the following appear on the budgeted income statement except:

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

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. October \ 3,900,000 Novernber \ 4,350,000 Decerrber \ 4,725,000 What is the amount of cash receipts budgeted for November?

Merchandising companies and service organizations do not use production budgets.

Which of the following best describes a master budget?

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

The production budget is based on sales projections plus an estimate of desired ending finished goods inventory,less beginning finished goods inventory.

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

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

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?

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

Sugar Pine Inc.collects 30% of its sales in the month of sale and the other 70% in the following month.The following shows budgeted sales for January through March. January \ 250,000 February \ 325,000 March \ 387,500 What is the amount of cash receipts budgeted for February?

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 appear on the direct materials purchases budget except:

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

All of the following appear on the budgeted income statement except:

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

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. October \ 3,900,000 Novernber \ 4,350,000 Decerrber \ 4,725,000 What is the amount of cash receipts budgeted for November?

Merchandising companies and service organizations do not use production budgets.

Which of the following best describes a master budget?

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

The production budget is based on sales projections plus an estimate of desired ending finished goods inventory,less beginning finished goods inventory.

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

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

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?

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

Sugar Pine Inc.collects 30% of its sales in the month of sale and the other 70% in the following month.The following shows budgeted sales for January through March. January \ 250,000 February \ 325,000 March \ 387,500 What is the amount of cash receipts budgeted for February?

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