Question 1

A master budget refers to a company's sales budget that includes all of its segments or departments.

Accepted Answer

A) True 
 B)False

Question 2

A company reports the following information from its sales account and sales budget: 
$\begin{array}{lr}
\text { Sales }&\text { May } & \$52,000 \
&\text { June } & 47,000\\
\text { Expected }&\text { July } & \$ 45,000 \
\text { Sales: } \
&\text { August } & 55,000 \
&\text { September } & 60,000
\end{array}$
Cash sales are normally 30% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:

Accepted Answer

A)  $58,500 
B)  $56,500 
C)  $60,000 
D)  $80,500 
E)  $55,000 
A)  $58,500 
B)  $56,500 
C)  $60,000 
D)  $80,500 
E)  $55,000

Question 3

In preparing a budget for the last three months of the current year, Urban Company is planning the units of merchandise it must order each month. The company's policy is to have 15% of the next month's sales in its inventory at the end of each month. Projected sales for October, November, and December are 27,000 units, 29,500 units, and 32,500 units, respectively. How many units must be ordered in November?

Accepted Answer

The answer of In preparing a budget for the last...

Question 4

The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.

Accepted Answer

A) True 
 B)False

Question 5

Which budget must be completed after a cash budget is prepared?

Accepted Answer

A)  Capital expenditures budget. 
B)  Sales budget. 
C)  Merchandise purchases budget. 
D)  General and administrative expense budget. 
E)  Budgeted income statement. 
A)  Capital expenditures budget. 
B)  Sales budget. 
C)  Merchandise purchases budget. 
D)  General and administrative expense budget. 
E)  Budgeted income statement.

Question 6

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and revising those budgets as each period is completed.

Accepted Answer

A) True 
 B)False

Question 7

Airtex Company budgeted the following credit sales during the current year: September, $90,000; October, $123,000; November, $105,000; December, $111,000. Experience has shown that cash from credit sales is received as follows: 10% in the month of sale, 50% in the first month after sale, 35% in the second month after sale, and 5% is uncollectible. How much cash should Eastern Company expect to collect in November from all current and past credit sales?

Accepted Answer

The answer of Airtex Company budgeted the following credit sales...

Question 8

The manufacturing budget shows only the direct materials needed for production.

Accepted Answer

A) True 
 B)False

Question 9

In preparing financial budgets:

Accepted Answer

A)  The budgeted balance sheet is usually prepared last. 
B)  The cash budget is usually not prepared. 
C)  The budgeted income statement is usually not prepared. 
D)  The capital expenditures budget is usually prepared last. 
E)  The merchandise purchases budget is key. 
A)  The budgeted balance sheet is usually prepared last. 
B)  The cash budget is usually not prepared. 
C)  The budgeted income statement is usually not prepared. 
D)  The capital expenditures budget is usually prepared last. 
E)  The merchandise purchases budget is key.

Question 10

Operating budgets include all the following budgets except the:

Accepted Answer

A)  Sales budget. 
B)  Selling expense budget. 
C)  Cash budget. 
D)  Merchandise purchases budget. 
E)  General and administrative expense budget. 
A)  Sales budget. 
B)  Selling expense budget. 
C)  Cash budget. 
D)  Merchandise purchases budget. 
E)  General and administrative expense budget.

Question 11

What is a cash budget? How can management use a cash budget?

Accepted Answer

A cash budget shows expected cash inflow

Question 12

A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

Accepted Answer

A)  Traditional budgeting. 
B)  Management budgeting. 
C)  Master budgeting. 
D)  Activity-based budgeting. 
E)  Cash budgeting. 
A)  Traditional budgeting. 
B)  Management budgeting. 
C)  Master budgeting. 
D)  Activity-based budgeting. 
E)  Cash budgeting.

Question 13

David, Inc. is preparing its master budget for the second quarter. The following sales and production data have been forecasted:  
Finished goods inventory on March 31: 120 units
Raw materials inventory on March 31: 450 pounds
Desired ending inventory each month:
Finished goods: 30% of next month's sales
Raw materials: 25% of next month's production needs
Number of pounds of raw material required per finished unit: 4 lb.
Number of direct labor hours to produce each unit: 3 hours
Labor rate per hour: $10
(a) How many units should be produced during April and May?
(b) How many pounds of raw materials should be purchased in April?
(c) What is the budgeted labor cost for April?

Accepted Answer

The answer of David, Inc. is preparing its master budget...

Question 14

A plan that shows the predicted costs for direct materials, direct labor, and overhead to be incurred in manufacturing the units in the production budget is called the:

Accepted Answer

A)  Sales budget. 
B)  Merchandise purchases budget. 
C)  Production budget. 
D)  Rolling budget. 
E)  Manufacturing budget. 
A)  Sales budget. 
B)  Merchandise purchases budget. 
C)  Production budget. 
D)  Rolling budget. 
E)  Manufacturing budget.

Question 15

Pantheon Company has prepared the following forecasts of monthly sales: $\begin{array}{lr}&\text { July }&\text { August }&\text { September }&\text {October }\ 
\text { Sales in units }&4,500&5,300&4,000&3,700
\end{array}$

Pantheon has decided that the number of units in its inventory at the end of each month should equal 25% of the next month's sales. The budgeted cost per unit is $30.
(1) How many units should be in July's beginning inventory?
(2) What amount should be budgeted for the cost of merchandise purchases in July?
(3) How many units should be purchased in September?

Accepted Answer

(1) July's beginning

Question 16

Assume the Crocs shoe company is preparing its master budget for the first quarter of its calendar year. The following forecasted data relate to the first quarter: $\begin{array}{ll}
\text { Unit sales: } & \
\text { January } & 40,000 \
\text { February } & 60,000 \
\text { March } & 50,000 \
\text { Unit sales price } & \$ 25 \
\text { Cost of goods sold per unit } & \$ 14\
\text { Expenses: }\
\text { Commissions } & 10 \% \text { of sales } \
\text { Rent } & \$ 20,000 \text { month } \
\text { Advertising } & 15 \% \text { of sales } \
\text { Office salaries } & \$ 75,000 / \text { month } \
\text { Depreciation } & \$ 50,000 \text { month } \
\text { Interest } & 15 \% \text { annully on a } \$ 250,000 \text { note }\
&\text { payable }\\text { Tax rate }&40\%
\end{array}$
Prepare a budgeted income statement for this first quarter.

Accepted Answer

The answer of Assume the Crocs shoe company is preparing...

Question 17

Lara Company has budgeted the following credit sales during the current year: September, $25,000; October, $36,000; November, $30,000; December, $32,000. Experience has shown that payment for the credit sales is received as follows: 20% in the month of sale, 60% in the first month after sale, and 20% in the second month after sale. What will be the balance in Accounts Receivable at the end of November?

Accepted Answer

A)  $26,600 
B)  $31,200 
C)  $33,800 
D)  $39,600 
E)  $25,200 
A)  $26,600 
B)  $31,200 
C)  $33,800 
D)  $39,600 
E)  $25,200

Question 18

Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31. Its gross profit rate is 20% of sales, and its September 30 inventory is $32,500. If the December 31 inventory is targeted at $41,500, budgeted purchases for the fourth quarter should be:

Accepted Answer

A)  $134,000 
B)  $109,000 
C)  $91,500 
D)  $25,000 
E)  $91,000 
A)  $134,000 
B)  $109,000 
C)  $91,500 
D)  $25,000 
E)  $91,000

Question 19

A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is called a(n):

Accepted Answer

A)  Rolling balance sheet. 
B)  Continuous balance sheet. 
C)  Budgeted balance sheet. 
D)  Cash balance sheet. 
E)  Operating balance sheet. 
A)  Rolling balance sheet. 
B)  Continuous balance sheet. 
C)  Budgeted balance sheet. 
D)  Cash balance sheet. 
E)  Operating balance sheet.

Question 20

A formal statement of future plans, usually expressed in monetary terms, is a:

Accepted Answer

A)  Variance report. 
B)  Position statement. 
C)  Budget. 
D)  Prospectus. 
E)  Variance analysis. 
A)  Variance report. 
B)  Position statement. 
C)  Budget. 
D)  Prospectus. 
E)  Variance analysis.

A master budget refers to a company's sales budget that includes all of its segments or departments.

The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.

Which budget must be completed after a cash budget is prepared?

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and revising those budgets as each period is completed.

The manufacturing budget shows only the direct materials needed for production.

In preparing financial budgets:

Operating budgets include all the following budgets except the:

What is a cash budget? How can management use a cash budget?

A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

A plan that shows the predicted costs for direct materials, direct labor, and overhead to be incurred in manufacturing the units in the production budget is called the:

Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31. Its gross profit rate is 20% of sales, and its September 30 inventory is $32,500. If the December 31 inventory is targeted at $41,500, budgeted purchases for the fourth quarter should be:

A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is called a(n):

A formal statement of future plans, usually expressed in monetary terms, is a:

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

Filters

Exam 20: Master Budgets and Performance Planning

A master budget refers to a company's sales budget that includes all of its segments or departments.

The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.

Which budget must be completed after a cash budget is prepared?

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and revising those budgets as each period is completed.

The manufacturing budget shows only the direct materials needed for production.

In preparing financial budgets:

Operating budgets include all the following budgets except the:

What is a cash budget? How can management use a cash budget?

A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

A plan that shows the predicted costs for direct materials, direct labor, and overhead to be incurred in manufacturing the units in the production budget is called the:

Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31. Its gross profit rate is 20% of sales, and its September 30 inventory is $32,500. If the December 31 inventory is targeted at $41,500, budgeted purchases for the fourth quarter should be:

A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is called a(n):

A formal statement of future plans, usually expressed in monetary terms, is a:

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

Filters