Question 1

In the cash budget,the total cash available for needs is calculated using which of the following formulas?

Accepted Answer

A) ending cash + receipts 
B) beginning cash + receipts 
C) beginning cash + receipts - disbursements 
D) beginning cash + projected depreciation expense 
A) ending cash + receipts 
B) beginning cash + receipts 
C) beginning cash + receipts - disbursements 
D) beginning cash + projected depreciation expense B

Question 2

Advanced Enterprises reports year-end information from 2018 as follows:
 
Advanced is developing the 2019 budget.In 2019 the company would like to increase selling prices by 14.5%,and as a result expects a decrease in sales volume of 9%.All other operating expenses are expected to remain constant.Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost.
Should Advanced increase the selling price in 2019?

Accepted Answer

A) Yes,because operating income increases for 2019. 
B) Yes,because sales revenue increases for 2019. 
C) No,because sales volume decreases for 2019. 
D) No,because gross margin decreases for 2019. 
A) Yes,because operating income increases for 2019. 
B) Yes,because sales revenue increases for 2019. 
C) No,because sales volume decreases for 2019. 
D) No,because gross margin decreases for 2019. A

Question 3

________ is the usual starting point for budgeting.

Accepted Answer

A) The revenues budget 
B) The estimated net income 
C) The production budget 
D) The cash budget 
A) The revenues budget 
B) The estimated net income 
C) The production budget 
D) The cash budget A

Question 4

For next year,Roberts,Inc. ,has budgeted sales of 20,000 units,targeted ending finished goods inventory of 1,650 units,and beginning finished goods inventory of 750 units.All other inventories are zero.How many units should be produced next year?

Accepted Answer

A) 19,100 units 
B) 20,000 units 
C) 20,900 units 
D) 22,400 units 
A) 19,100 units 
B) 20,000 units 
C) 20,900 units 
D) 22,400 units

Question 5

Estate Corp. ,has the following information:
 
Purchases are paid for in the following manner:
 
What is the expected balance in Accounts Payable as of April 30?

Accepted Answer

A) $38,220 
B) $39,192 
C) $29,400 
D) $18,288 
A) $38,220 
B) $39,192 
C) $29,400 
D) $18,288

Question 6

Preparation of the budgeted balance sheet is the final step in preparing the operating budget.

Accepted Answer

A) True 
 B)False

Question 7

A responsibility center is a part,segment,or subunit of an organization,whose manager is accountable for a specified set of activities that impact revenues,costs,or profits and in the case of an investment center,profits.

Accepted Answer

A) True 
 B)False

Question 8

The benefit of engaging lower level management in the budget preparation process is that it helps to streamline the budget process.

Accepted Answer

A) True 
 B)False

Question 9

A limitation of using past performance as a basis for judging actual results is that ________.

Accepted Answer

A) future conditions can be different from the past 
B) any undervaluation of profits in the past period is likely to continue 
C) any subsequent change in accounting treatment will distort performance evaluation 
D) they tend to distort results when current and past conditions are similar 
A) future conditions can be different from the past 
B) any undervaluation of profits in the past period is likely to continue 
C) any subsequent change in accounting treatment will distort performance evaluation 
D) they tend to distort results when current and past conditions are similar

Question 10

Costs such as supervision,plant and equipment (production)depreciation,maintenance,supplies,and power.are included in the ________.

Accepted Answer

A) capital expenditures budget 
B) distribution costs budget 
C) revenues budget 
D) manufacturing overhead budget 
A) capital expenditures budget 
B) distribution costs budget 
C) revenues budget 
D) manufacturing overhead budget

Question 11

A responsibility center is a part,segment,or subunit of an organization whose manager is accountable for a specified set of activities.

Accepted Answer

A) True 
 B)False

Question 12

Freemore Company has the following sales budget for the last six months of 2018:
 
Sales are immediately due,however the cash collection of sales,historically,has been as follows:
 
Cash collections for October are ________.

Accepted Answer

A) $102,850 
B) $186,360 
C) $199,450 
D) $181,390 
A) $102,850 
B) $186,360 
C) $199,450 
D) $181,390

Question 13

Antique Brass Company has budgeted sales volume of 122,000 units and budgeted production of 114,000 units,while 24,000 units are in beginning finished goods inventory.How many units are targeted for ending finished goods inventory?

Accepted Answer

A) 24,000 units 
B) 32,000 units 
C) 8,000 units 
D) 16,000 units 
A) 24,000 units 
B) 32,000 units 
C) 8,000 units 
D) 16,000 units

Question 14

Three Bears Manufacturing produces an auto-quartz watch movement called OM362.Three Bears expects to sell 20,000 units of OM362 and to have an ending finished inventory of 7,000 units.Currently,it has a beginning finished inventory of 1,200 units.Each unit of OM362 requires two labor operations,three labor hour(s)of assembling and three labor hour(s)of polishing.The direct labor rate for assembling is $14 per assembling hour and the direct labor rate for polishing is $17.50 per polishing hour.
The expected cost of direct labor for OM362 is ________.

Accepted Answer

A) $1,890,000 
B) $2,003,400 
C) $2,438,100 
D) $2,551,500 
A) $1,890,000 
B) $2,003,400 
C) $2,438,100 
D) $2,551,500

Question 15

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

Accepted Answer

A well-prepared operating budget should

Question 16

Sensitivity analysis is a useful tool that helps managers evaluate risks.

Accepted Answer

A) True 
 B)False

Question 17

The operating budget process generally concludes with the preparation of the ________.

Accepted Answer

A) production budget 
B) cash flow statement 
C) balance sheet 
D) budgeted income statement 
A) production budget 
B) cash flow statement 
C) balance sheet 
D) budgeted income statement

Question 18

The use of activity-based budgeting is growing because of ________.

Accepted Answer

A) the increased use of activity-based costing 
B) the increased use of kaizen costing 
C) increases in work-in-process inventory 
D) increases in direct materials inventory 
A) the increased use of activity-based costing 
B) the increased use of kaizen costing 
C) increases in work-in-process inventory 
D) increases in direct materials inventory

Question 19

Explain what is meant by sensitivity analysis in budgeting,and discuss how managers might use sensitivity analysis in practice.

Accepted Answer

Sensitivity analysis is a "what-if" tech

Question 20

Kaizen budgeting involves ________.

Accepted Answer

A) large cost reductions 
B) management directed improvements 
C) continual small cost reductions 
D) continual small revenue increases 
A) large cost reductions 
B) management directed improvements 
C) continual small cost reductions 
D) continual small revenue increases

Exam 6: Master Budget and Responsibility Accounting

In the cash budget,the total cash available for needs is calculated using which of the following formulas?

________ is the usual starting point for budgeting.

For next year,Roberts,Inc. ,has budgeted sales of 20,000 units,targeted ending finished goods inventory of 1,650 units,and beginning finished goods inventory of 750 units.All other inventories are zero.How many units should be produced next year?

Estate Corp. ,has the following information: Purchases are paid for in the following manner: What is the expected balance in Accounts Payable as of April 30?

Preparation of the budgeted balance sheet is the final step in preparing the operating budget.

A responsibility center is a part,segment,or subunit of an organization,whose manager is accountable for a specified set of activities that impact revenues,costs,or profits and in the case of an investment center,profits.

The benefit of engaging lower level management in the budget preparation process is that it helps to streamline the budget process.

A limitation of using past performance as a basis for judging actual results is that ________.

Costs such as supervision,plant and equipment (production)depreciation,maintenance,supplies,and power.are included in the ________.

A responsibility center is a part,segment,or subunit of an organization whose manager is accountable for a specified set of activities.

Freemore Company has the following sales budget for the last six months of 2018: Sales are immediately due,however the cash collection of sales,historically,has been as follows: Cash collections for October are ________.

Antique Brass Company has budgeted sales volume of 122,000 units and budgeted production of 114,000 units,while 24,000 units are in beginning finished goods inventory.How many units are targeted for ending finished goods inventory?

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

Sensitivity analysis is a useful tool that helps managers evaluate risks.

The operating budget process generally concludes with the preparation of the ________.

The use of activity-based budgeting is growing because of ________.

Explain what is meant by sensitivity analysis in budgeting,and discuss how managers might use sensitivity analysis in practice.

Kaizen budgeting involves ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

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