Question 1

Which of the following budgets would be prepared by manufacturing companies but not merchandising companies?

Accepted Answer

A)  Sales budget 
B)  Cash receipts budget 
C)  Production budget 
D)  Selling and administrative expenses budget 
A)  Sales budget 
B)  Cash receipts budget 
C)  Production budget 
D)  Selling and administrative expenses budget C

Question 2

The usual starting point when developing a sales forecast is:

Accepted Answer

A)  the production budget. 
B)  the cash budget. 
C)  last year's level of sales. 
D)  competitor budget information. 
A)  the production budget. 
B)  the cash budget. 
C)  last year's level of sales. 
D)  competitor budget information. C

Question 3

Enloe Manufacturing has prepared a production budget for June. Management has determined that the total required production for June is 680,000 units when an ending inventory of 50,000 units is desired and the beginning inventory is 30,000 units. Based on the above information, what were June's budgeted sales?

Accepted Answer

A)  660,000 units 
B)  700,000 units 
C)  760,000 units 
D)  680,000 units 
A)  660,000 units 
B)  700,000 units 
C)  760,000 units 
D)  680,000 units A

Question 4

Last year, Garrison Manufacturing sold 250,000 units at $8 each. Both sales volume and sales price are expected to increase by 15 percent in the upcoming year. The expected sales revenue for the upcoming year is:

Accepted Answer

A)  $2,645,000 
B)  $2,300,000 
C)  $2,000,000 
D)  $1,955,000 
A)  $2,645,000 
B)  $2,300,000 
C)  $2,000,000 
D)  $1,955,000

Question 5

If a company has prepared a sales budget, is it still necessary for them to prepare a cash receipts budget? Why or why not?

Accepted Answer

Yes, they should still prepare a cash re

Question 6

McCourt Inc. manufacturers a unique product. The company's controller has prepared the following static budget for the month of February:   Actual production during February was 275 units and actual direct labor cost was $2,900.
If McCourt prepares a flexible budget for February, the projected direct labor cost would be:

Accepted Answer

A)  $2,750 
B)  $2,900 
C)  $3,000 
D)  $3,165 
A)  $2,750 
B)  $2,900 
C)  $3,000 
D)  $3,165

Question 7

Which of the following statements is true regarding budgeting?

Accepted Answer

A)  It is primarily focused on past performance. 
B)  It is primarily a bookkeeping task. 
C)  It should be built from the ground up each year. 
D)  It involves input from a broad range of managers. 
A)  It is primarily focused on past performance. 
B)  It is primarily a bookkeeping task. 
C)  It should be built from the ground up each year. 
D)  It involves input from a broad range of managers.

Question 8

ABC Manufacturing sells widgets for $6.00 each. The marketing department has prepared the following second quarter sales forecast (in units) for 2013:
   Required: Prepare a sales budget for each month and the total for the quarter. Include all column and row headings

Accepted Answer

The answer of ABC Manufacturing sells widgets for $6.00 each....

Question 9

Sellars Inc. manufactures widgets. On June 30, the company had 2,000 widgets in inventory. The company's policy is to maintain a widget ending inventory equal to 10% of next month's sales. In addition, each widget manufactured requires 6 minutes of assembly and inspecting time at a cost of $.25 per minute. The company expects the following sales activity for the third quarter of the year:
  What is the projected direct labor cost for August?

Accepted Answer

A)  $55,800 
B)  $57,000 
C)  $61,500 
D)  $58,200 
A)  $55,800 
B)  $57,000 
C)  $61,500 
D)  $58,200

Question 10

Carson Products Inc. manufactures LEDs (light emitting diodes) for use in vehicles. On September 30, the company had 5,000 LED units in inventory. The company's policy is to maintain a LED ending inventory equal to 25% of next month's expected sales. In addition, each LED manufactured requires 2 minutes of assembly and inspecting time at a cost of $.30 per minute. The company expects the following sales activity for the fourth quarter of the year:
  What is the projected direct labor cost for November?

Accepted Answer

A)  $72,000 
B)  $63,000 
C)  $60,000 
D)  $57,000 
A)  $72,000 
B)  $63,000 
C)  $60,000 
D)  $57,000

Question 11

Pellini Products Inc. is a manufacturer of paper products. For which of the following activities would Pellini be more likely to use a flexible budget than a static budget?

Accepted Answer

A)  For planning the quantity of direct materials that will be need to be purchased in the upcoming year. 
B)  For planning the estimated cash receipts in the upcoming year. 
C)  For estimating the number of direct labor hours employees will need to work in the upcoming year. 
D)  For the evaluation of whether or not employees made the most efficient use of their time during the year. 
A)  For planning the quantity of direct materials that will be need to be purchased in the upcoming year. 
B)  For planning the estimated cash receipts in the upcoming year. 
C)  For estimating the number of direct labor hours employees will need to work in the upcoming year. 
D)  For the evaluation of whether or not employees made the most efficient use of their time during the year.

Question 12

Broughton Corp. has prepared a production budget for February. Management has determined that the total required production for February is 180,000 units when an ending inventory of 20,000 units is desired and the beginning inventory is 5,000 units. Based on the above information, what were February's budgeted sales?

Accepted Answer

A)  195,000 units 
B)  180,000 units 
C)  165,000 units 
D)  185,000 units 
A)  195,000 units 
B)  180,000 units 
C)  165,000 units 
D)  185,000 units

Question 13

Prior to the start of 2013, Proctor Inc. estimated budgeted sales at 225,000 units. At the start of 2013, there were 8,000 units in beginning finished goods. During 2013, 215,000 units were produced and 220,000 units were sold. How many units should Proctor's 2013 flexible sales budget be based upon?

Accepted Answer

A)  225,000 units 
B)  220,000 units 
C)  207,000 units 
D)  212,000 units 
A)  225,000 units 
B)  220,000 units 
C)  207,000 units 
D)  212,000 units

Question 14

Jones Manufacturing Jones Manufacturing sells unique decorative water fountains. The company has prepared the following forecast for the first quarter of 2013:
  Ending inventory at December 31, 2012 was budgeted at 300 units. Management would like the desired quantity of finished goods inventory at the end of each month to be equal to 15 percent of next month's budgeted unit sales. April's sales are projected to be 3,200 units.
Each completed unit of finished product requires 2.5 pounds of compounding material at a cost of $4.00 per pound. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month.
Refer to the Jones Manufacturing information above. The total required production of water fountains for the first quarter of 2013 is:

Accepted Answer

A)  8,800 units 
B)  8,020 units 
C)  8,620 units 
D)  8,980 units 
A)  8,800 units 
B)  8,020 units 
C)  8,620 units 
D)  8,980 units

Question 15

In September of 2013, Mitford Products Inc. began doing business as a corporation. The company plans to start making its first purchases in October of 2013. They have the following purchases budgeted for the last quarter of 2013:   Mitford has worked out agreements with its various suppliers to pay for one-third of a month's purchases each month, beginning in the month of purchase, until the purchases are paid in full. No purchases were made prior to October.
What are expected total cash disbursements for the last quarter of 2013?

Accepted Answer

A)  $1,490,000 
B)  $ 723,333 
C)  $1,006,667 
D)  $1,446,667 
A)  $1,490,000 
B)  $ 723,333 
C)  $1,006,667 
D)  $1,446,667

Question 16

Newman Products is preparing their first quarter production budget. The desired ending inventory of finished goods for the month of January becomes:

Accepted Answer

A)  the required production for the month of January. 
B)  the budgeted sales for the month of February. 
C)  the beginning inventory for the month of February. 
D)  the required production for the month of February. 
A)  the required production for the month of January. 
B)  the budgeted sales for the month of February. 
C)  the beginning inventory for the month of February. 
D)  the required production for the month of February.

Question 17

Grainger Manufacturing Inc. produces outdoor grills. On March 31, the company had 120 grills in inventory. The company's policy is to maintain a grill inventory equal to 15% of next month's sales. The company expects the following sales activity for the second quarter of the year:
   Sales for July and August are expected to be 1,800 units and 1,400 units, respectively. Each completed unit of finished product requires 3 pounds of a heat resistant plastic material which costs $4.00 per pound. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month. The company had 600 pounds of plastic on hand at the end of March.
Required:

Accepted Answer

The answer of Grainger Manufacturing Inc. produces outdoor grills. On...

Question 18

Following is a list of items that appear in the budgeted financial statements of a company.
   Identify the budgets from where each of the above is derived from.

Accepted Answer

The answer of Following is a list of items that...

Question 19

Upton Products Inc. would like to prepare a summary cash budget for the first quarter of 2013. The following information regarding operating activities from the cash receipts and cash disbursements budgets are available:   The following information is also available:
  What is the cash balance at the end of March expected to be?

Accepted Answer

A)  $(1,000) 
B)  $ 0 
C)  $ 1,000 
D)  $ 2,000 
A)  $(1,000) 
B)  $ 0 
C)  $ 1,000 
D)  $ 2,000

Question 20

Which of the following is not an advantage of the budgeting process?

Accepted Answer

A)  It can help management identify potential bottlenecks. 
B)  It can help facilitate goal congruence throughout the organization. 
C)  It encourages management to focus on the past and not be distracted by current activities of the organization. 
D)  It encourages communication among various departments in the organization. 
A)  It can help management identify potential bottlenecks. 
B)  It can help facilitate goal congruence throughout the organization. 
C)  It encourages management to focus on the past and not be distracted by current activities of the organization. 
D)  It encourages communication among various departments in the organization.

Which of the following budgets would be prepared by manufacturing companies but not merchandising companies?

The usual starting point when developing a sales forecast is:

Last year, Garrison Manufacturing sold 250,000 units at $8 each. Both sales volume and sales price are expected to increase by 15 percent in the upcoming year. The expected sales revenue for the upcoming year is:

If a company has prepared a sales budget, is it still necessary for them to prepare a cash receipts budget? Why or why not?

Which of the following statements is true regarding budgeting?

ABC Manufacturing sells widgets for $6.00 each. The marketing department has prepared the following second quarter sales forecast (in units) for 2013: Required: Prepare a sales budget for each month and the total for the quarter. Include all column and row headings

Pellini Products Inc. is a manufacturer of paper products. For which of the following activities would Pellini be more likely to use a flexible budget than a static budget?

Newman Products is preparing their first quarter production budget. The desired ending inventory of finished goods for the month of January becomes:

Following is a list of items that appear in the budgeted financial statements of a company. Identify the budgets from where each of the above is derived from.

Which of the following is not an advantage of the budgeting process?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Activity-Based Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

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Exam 9: The Use of Budgets in Planning and Decision Making

Which of the following budgets would be prepared by manufacturing companies but not merchandising companies?

The usual starting point when developing a sales forecast is:

Last year, Garrison Manufacturing sold 250,000 units at $8 each. Both sales volume and sales price are expected to increase by 15 percent in the upcoming year. The expected sales revenue for the upcoming year is:

If a company has prepared a sales budget, is it still necessary for them to prepare a cash receipts budget? Why or why not?

Which of the following statements is true regarding budgeting?

ABC Manufacturing sells widgets for $6.00 each. The marketing department has prepared the following second quarter sales forecast (in units) for 2013: Required: Prepare a sales budget for each month and the total for the quarter. Include all column and row headings

Pellini Products Inc. is a manufacturer of paper products. For which of the following activities would Pellini be more likely to use a flexible budget than a static budget?

Newman Products is preparing their first quarter production budget. The desired ending inventory of finished goods for the month of January becomes:

Following is a list of items that appear in the budgeted financial statements of a company. Identify the budgets from where each of the above is derived from.

Which of the following is not an advantage of the budgeting process?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Activity-Based Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

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