Question 1

The behavioural aspect of budgeting is:

Accepted Answer

A)  irrelevant. 
B)  only important for some firms. 
C)  generally important. 
D)  very important. 
A)  irrelevant. 
B)  only important for some firms. 
C)  generally important. 
D)  very important. D

Question 2

Which statement relating to a master budget is not true?

Accepted Answer

A)  Budget targets are fixed and not subject to revision. 
B)  It is a set of interrelated budgets. 
C)  It is normally overseen by a budget committee. 
D)  It is typically prepared for a one-year period that coincides with the entity's financial year. 
A)  Budget targets are fixed and not subject to revision. 
B)  It is a set of interrelated budgets. 
C)  It is normally overseen by a budget committee. 
D)  It is typically prepared for a one-year period that coincides with the entity's financial year. A

Question 3

Which of the following offers the best explanation of goal congruence?

Accepted Answer

A)  Instructing lower levels of management what to do and how to do it. 
B)  All segments working towards the overall goals set by the organisation. 
C)  Rewarding managers who reach their performance targets. 
D)  All the business in an industry working together to solve problems. 
A)  Instructing lower levels of management what to do and how to do it. 
B)  All segments working towards the overall goals set by the organisation. 
C)  Rewarding managers who reach their performance targets. 
D)  All the business in an industry working together to solve problems. B

Question 4

If estimated direct raw materials and direct labour costs are $50 000 in total, what is the direct cost per unit if forecast production is 5000 units?

Accepted Answer

A)  $10 
B)  $25 
C)  $20 
D)  $15 
A)  $10 
B)  $25 
C)  $20 
D)  $15

Question 5

Identify the unfavourable variance.

Accepted Answer

A)  Budgeted income $100 000; actual income $105 000 
B)  Budgeted expenses $80 000; actual expenses $85 000 
C)  Budgeted expenses $32 000; actual expenses $28 000 
D)  Budgeted loss $20 100; actual loss $17 500 
A)  Budgeted income $100 000; actual income $105 000 
B)  Budgeted expenses $80 000; actual expenses $85 000 
C)  Budgeted expenses $32 000; actual expenses $28 000 
D)  Budgeted loss $20 100; actual loss $17 500

Question 6

Which of these methods is least likely to be used to forecast sales?

Accepted Answer

A)  Predictions by sales staff 
B)  Extrapolation of past sales 
C)  Field studies by market research staff 
D)  Predictions by production employees 
A)  Predictions by sales staff 
B)  Extrapolation of past sales 
C)  Field studies by market research staff 
D)  Predictions by production employees

Question 7

The unit purchasing requirements for a retail entity are calculated as:

Accepted Answer

A)  forecast sales in units + desired ending inventory in units + beginning inventory in units. 
B)  forecast sales in units + desired ending inventory in units - beginning inventory in units. 
C)  forecast sales in units - desired ending inventory in units + beginning inventory in units. 
D)  forecast sales in units - desired ending inventory in units - beginning inventory in units. 
A)  forecast sales in units + desired ending inventory in units + beginning inventory in units. 
B)  forecast sales in units + desired ending inventory in units - beginning inventory in units. 
C)  forecast sales in units - desired ending inventory in units + beginning inventory in units. 
D)  forecast sales in units - desired ending inventory in units - beginning inventory in units.

Question 8

Information on cash receipts would come from the:

Accepted Answer

A)  sales budget. 
B)  direct labour budget. 
C)  direct materials budget. 
D)  capital expenditure budget. 
A)  sales budget. 
B)  direct labour budget. 
C)  direct materials budget. 
D)  capital expenditure budget.

Question 9

All of these factors can influence the reliability of the sales forecast except:

Accepted Answer

A)  proposed advertising. 
B)  action of competitors. 
C)  a slow-down in the collection of cash from debtors. 
D)  a rise in general interest rates. 
A)  proposed advertising. 
B)  action of competitors. 
C)  a slow-down in the collection of cash from debtors. 
D)  a rise in general interest rates.

Question 10

The Classy Cats Company has budgeted for sales of 100 000 units of its product for the year. Expected unit costs, based on past experience, should be $60 for direct materials, $40 for direct labour and $30 for manufacturing overhead. Assume no beginning and ending work in process inventories. Classy Cats begins the year with 40 000 finished units on hand and budgets the ending finished goods inventory at 10 000 units. Compute the budgeted production in units and dollars.

Accepted Answer

A)  70 000 units @ $100 = $7 000 000 
B)  70 000 units @ $130 = $9 100 000 
C)  150 000 units @ $100 = $15 000 000 
D)  150 000 units @ $130 = $19 500 000 
A)  70 000 units @ $100 = $7 000 000 
B)  70 000 units @ $130 = $9 100 000 
C)  150 000 units @ $100 = $15 000 000 
D)  150 000 units @ $130 = $19 500 000

Question 11

Which statement relating to the provision of motivation as a benefit of budgeting is not true?

Accepted Answer

A)  When all levels of management participate in preparing the budget it has a better chance of acceptance. 
B)  The budgeted level of performance should be beyond that attainable with a reasonably amount of effort, to provide employees with a challenge. 
C)  An improperly prepared budget may have an adverse effect on motivation. 
D)  To increase the chances of acceptance the budget is best approached from the bottom up. 
A)  When all levels of management participate in preparing the budget it has a better chance of acceptance. 
B)  The budgeted level of performance should be beyond that attainable with a reasonably amount of effort, to provide employees with a challenge. 
C)  An improperly prepared budget may have an adverse effect on motivation. 
D)  To increase the chances of acceptance the budget is best approached from the bottom up.

Question 12

How many of these are the benefits of budgeting?
F1S1S1W1F1F1F10F1S1S1W1F1F1F10Budgeting ensures future events will never catch management by surprise
F1S1S1W1F1F1F10F1S1S1W1F1F1F10Budgeting establishes organisational goals
F1S1S1W1F1F1F10F1S1S1W1F1F1F10Budgeting is a means of coordination
F1S1S1W1F1F1F10F1S1S1W1F1F1F10Budgeting provides useful work for accounting staff

Accepted Answer

A)  One 
B)  Two 
C)  Three 
D)  Four 
A)  One 
B)  Two 
C)  Three 
D)  Four

Question 13

The method which would not be used to forecast sales is:

Accepted Answer

A)  extrapolation of past sales. 
B)  predictions by senior management. 
C)  statistical or mathematical techniques. 
D)  working out the maximum production that can be achieved. 
A)  extrapolation of past sales. 
B)  predictions by senior management. 
C)  statistical or mathematical techniques. 
D)  working out the maximum production that can be achieved.

Question 14

Budgeted direct materials purchases in units equals:

Accepted Answer

A)  budgeted direct materials usage plus beginning direct materials less desired ending direct materials. 
B)  budgeted direct materials usage less beginning direct materials plus desired ending direct materials. 
C)  budgeted direct materials in stock plus beginning direct materials inventory less desired ending direct materials. 
D)  budgeted direct materials in stock less beginning direct materials inventory plus desired ending direct materials. 
A)  budgeted direct materials usage plus beginning direct materials less desired ending direct materials. 
B)  budgeted direct materials usage less beginning direct materials plus desired ending direct materials. 
C)  budgeted direct materials in stock plus beginning direct materials inventory less desired ending direct materials. 
D)  budgeted direct materials in stock less beginning direct materials inventory plus desired ending direct materials.

Question 15

It is not necessary in the control phase of budgeting to:

Accepted Answer

A)  decide on management action. 
B)  compare actual performance with budget estimates. 
C)  provide timely information to management. 
D)  investigate all variances. 
A)  decide on management action. 
B)  compare actual performance with budget estimates. 
C)  provide timely information to management. 
D)  investigate all variances.

Question 16

Who should participate in the budgeting process?

Accepted Answer

A)  Division heads 
B)  Senior management 
C)  All levels of management 
D)  Supervisors within a department 
A)  Division heads 
B)  Senior management 
C)  All levels of management 
D)  Supervisors within a department

Question 17

Which of these account balances is not reported on the balance sheet?

Accepted Answer

A)  Cost of sales 
B)  Materials inventory 
C)  Work in progress inventory 
D)  Finished goods inventory 
A)  Cost of sales 
B)  Materials inventory 
C)  Work in progress inventory 
D)  Finished goods inventory

Question 18

Information for Fine Line Fishing Product's cash budget is as follows.
 
Each unit sells for $12 and 80% of sales are on credit. Credit sales are collected as follows: 25% in the quarter of the sale and the balance in the following quarter. How many dollars of 3rd quarter sales will be collected in cash in the 4th quarter?

Accepted Answer

A)  $225 
B)  $2160 
C)  $180 
D)  $2700 
A)  $225 
B)  $2160 
C)  $180 
D)  $2700

Question 19

Purchases of buildings and equipment are formally planned in the:

Accepted Answer

A)  selling and administrative expense budget. 
B)  capital expenditure budget. 
C)  depreciation budget. 
D)  budgeted balance sheet. 
A)  selling and administrative expense budget. 
B)  capital expenditure budget. 
C)  depreciation budget. 
D)  budgeted balance sheet.

Question 20

The budget that should be prepared before the others listed is:

Accepted Answer

A)  manufacturing overhead budget. 
B)  cost of goods manufactured budget. 
C)  cash budget. 
D)  production budget. 
A)  manufacturing overhead budget. 
B)  cost of goods manufactured budget. 
C)  cash budget. 
D)  production budget.

Exam 12: Budgeting for Planning and Control

The behavioural aspect of budgeting is:

Which statement relating to a master budget is not true?

Which of the following offers the best explanation of goal congruence?

If estimated direct raw materials and direct labour costs are $50 000 in total, what is the direct cost per unit if forecast production is 5000 units?

Identify the unfavourable variance.

Which of these methods is least likely to be used to forecast sales?

The unit purchasing requirements for a retail entity are calculated as:

Information on cash receipts would come from the:

All of these factors can influence the reliability of the sales forecast except:

Which statement relating to the provision of motivation as a benefit of budgeting is not true?

How many of these are the benefits of budgeting? Budgeting ensures future events will never catch management by surprise Budgeting establishes organisational goals Budgeting is a means of coordination Budgeting provides useful work for accounting staff

The method which would not be used to forecast sales is:

Budgeted direct materials purchases in units equals:

It is not necessary in the control phase of budgeting to:

Who should participate in the budgeting process?

Which of these account balances is not reported on the balance sheet?

Purchases of buildings and equipment are formally planned in the:

The budget that should be prepared before the others listed is:

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Accounting for Manufacturing

Cost Accounting Systems

Cash Management and Control

Cost-Volume-Profit Analysis for Decision Making

Performance Evaluation for Managers

Differential Analysis, Profitability Analysis and Capital Budgeting

Partnerships: Formation, Operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation, Disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

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