Deck 8: Budgeting for Planning and Control

Question 1

What does the budget committee do?

A)It has the responsibility to generate the budget.
B)It resolves differences that may arise as the budget is prepared.
C)It prepares financial statements for the auditor.
D)It ensures that the budgets comply with IFRS.

Answer 1

B

Question 2

Who has the responsibility to review the budget,provide policy guidelines and budgetary goals,resolve differences that may arise as the budget is prepared,approve the final budget,and monitor the actual performance of the organization as the year unfolds?

A)president
B)budget director
C)financial committee
D)budget committee

Answer 2

D

Question 3

What is an operating budget?

A)a forecast of expected operating expenses
B)a forecast of operating expenses and related revenues
C)a forecast of units of production
D)a forecast of the income-generating activities of a firm

Answer 3

D

Question 4

Which of the following is the first component of the master budget?

A)sales budget
B)capital budget
C)cost of goods sold budget
D)budget to actual variance analysis

Question 5

Which of the following is the most common starting point in the information-gathering process for budgeting?

A)the personnel forecast
B)the sales forecast
C)the production forecast
D)the projected income statement

Question 6

What is a continuous budget?

A)The budget is prepared for a one-year period that corresponds to the companys fiscal year.
B)A continuous budget is a monthly budget.
C)As a month/period expires in the budget,an additional month/period in the future is added.
D)The budget focuses only on the financial aspects of the company.

Question 7

What is the definition of control?

A)the process of setting standards,receiving feedback,and taking corrective action
B)a quantification of plans,stated in either physical or financial terms,or both
C)identification of corporate objectives
D)a comprehensive financial plan

Question 8

Which of the following is NOT a responsibility of the budget committee?

A)prepare financial statements
B)provide policy guidelines
C)provide budgeting goals
D)resolve differences that may arise as the budget is prepared

Question 9

Which budgets are concerned with the inflows and outflows of cash and with financial position?

A)master budgets
B)operating budgets
C)financial budgets
D)continuous budgets

Question 10

Amy Company produces and sells bikes.It expects to sell 15,000 bikes in March and had 1,200 bikes in finished goods inventory at the end of February.Amy Company would like to complete operations in March with at least 1,500 completed bikes in inventory.The bikes sell for $100 each. What would be the total sales for March?

A)$1,380,000
B)$1,470,000
C)$1,500,000
D)$1,650,000

Question 11

What is the process of setting standards,receiving feedback on actual performance,and taking corrective action whenever actual performance deviates significantly from planned performance?

A)monitoring
B)control
C)eye balling
D)comparing

Question 12

Canceco Company produces and sells pillows. It expects to sell 10,000 pillows in the current year and had 1,000 pillows in finished goods inventory at the end of the previous year. Canceco would like to complete operations in the current year with at least 1,250 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for $5 each.

-Refer to the figure.What would be the total sales for the current year?

A)$50,000
B)$51,250
C)$55,000
D)$56,250

Question 13

What is the term for the quantitative expressions of plans stated in physical or financial terms,or both?

A)budgets
B)financial statements
C)cost of goods sold statements
D)cost of goods manufactured statements

Question 14

Which of the following is a disadvantage of budgeting?

A)It forces managers to plan.
B)It provides resource information that can be used to improve decision making.
C)It aids in the use of resources and employees by setting a benchmark that can be used for the subsequent evaluation of performance.
D)It consumes a lot of employee time and energy.

Question 15

Which of the following is a moving 12-month budget?

A)continuous budget
B)flexible budget
C)zero-based budget
D)participative budget

Question 16

Who is responsible for directing and coordinating the overall budgeting process?

A)chief financial officer
B)president
C)budget director
D)treasurer

Question 17

Which of the following is an operating budget?

A)budgeted statement of cash flows
B)capital expenditures budget
C)budgeted income statement
D)cash budget

Question 18

Which of the following factors is a disadvantage of preparing operating budgets?

A)It provides resource information that can be used to improve decision making.
B)It improves communication and coordination.
C)It aids in the use of resources and employees by setting a benchmark that can be used for the subsequent evaluation of performance.
D)It can be very time consuming and resource intensive.

Question 19

Which budgets are concerned with the income-generating activities of a firm?

A)master budgets
B)operating budgets
C)financial budgets
D)continuous budgets

Question 20

Which budgets are comprehensive financial plans made up of various individual departmental and activity budgets?

A)master budgets
B)operating budgets
C)financial budgets
D)continuous budgets

Question 21

Oriental Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of the current year is as follows:
$$\begin{array} { l l } \text { Month } & \text { Sales } \\\hline \text { October } & 10,000 \\\text { November } & 14,000 \\\text { December } & 13,000\end{array}$$ Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January of the following year sales is projected at 16,000 lamps.

-Refer to the figure .What is the expected sales revenue for December?

A)$100,000
B)$250,000
C)$325,000
D)$350,000

Question 22

The following forecasted sales pertain to Norah Company: $\begin{array}{lr}\text { Month } & \text { Sales } \\\hline \text { April } & \$ 200,000 \\\text { May } & 250,000 \\\text { June } & 150,000 \\\text { July } & 100,000\end{array}$ $\text { Finished goods inventory as of March } 31 \quad \quad \quad \quad 4,000 \text { units }$ The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of the next month's sales.
What is the budgeted beginning balance in units for finished goods inventory on June 1?

A)2,000 units
B)2,500 units
C)3,000 units
D)4,000 units

Question 23

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months is: $$\begin{array} { l l } \text { Month } & \text { Sales } \\\hline \text { January } & 3,000 \\\text { February } & 4,200 \\\text { March } & 3,900\end{array}$$ Finished goods inventory at the end of December was 900 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.General Corporation expects to sell the boxes for $5 each.April sales are projected at 4,500 boxes.
What is the expected sales revenue for March?

A)$4,500
B)$15,000
C)$19,500
D)$21,000

Question 24

Amy Company produces and sells bikes.It expects to sell 15,000 bikes in March and had 1,200 bikes in finished goods inventory at the end of February.Amy Company would like to complete operations in March with at least 1,500 completed bikes in inventory.The bikes sell for $100 each. How many bikes would be produced in March?

A)13,800 bikes
B)14,700 bikes
C)15,000 bikes
D)15,300 bikes

Question 25

Ben Company has the following sales forecast for the next quarter: April,20,000 units; May,24,000 units; June,28,000 units.Sales totalled 16,000 units in March.The March finished goods inventory was 4,000 units.End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales.

-What is the planned production for Ben Company for April?

A)19,200 units
B)20,800 units
C)21,200 units
D)24,800 units

Question 26

What is the formula used to compute the units to be produced?

A)Units produced = Units sold
B)Units produced = Units sold + Units in beginning inventory + Units in ending inventory
C)Units produced = Units sold + Units in beginning inventory - Units in ending inventory
D)Units produced = Units sold - Units in beginning inventory + Units in ending inventory

Question 27

Oriental Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of the current year is as follows:
$$\begin{array} { l l } \text { Month } & \text { Sales } \\\hline \text { October } & 10,000 \\\text { November } & 14,000 \\\text { December } & 13,000\end{array}$$ Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January of the following year sales is projected at 16,000 lamps.

-Refer to the figure.How many lamps should be produced in October?

A)9,500 lamps
B)10,000 lamps
C)10,500 lamps
D)14,000 lamps

Question 28

The following forecasted sales pertain to Norah Company: $\begin{array}{lr}\text { Month } & \text { Sales } \\\hline \text { April } & \$ 200,000 \\\text { May } & 250,000 \\\text { June } & 150,000 \\\text { July } & 100,000\end{array}$ $\text { Finished goods inventory as of March } 31 \quad\quad\quad 4,000 \text { units }$ The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of the next month's sales.
How many units are expected to be produced in April?

A)19,000 units
B)20,000 units
C)21,000 units
D)25,000 units

Question 29

Jordan Manufacturing Company expects to incur the following per-unit costs for 1,000 units of production: $$\begin{array} { l l } \text { Direct materils } & 3 \mathrm { lb } \text { @ } \$ 5 = \$ 15 \\\text { Direct labou } & 1 \mathrm { hr } @ \$ 6 = \$ 6 \\\text { Variable overhead } & 75 \% \text { of direct labour costs } \\\text { Fixed overhead } & 50 \% \text { of direct labour costs }\end{array}$$

- What is the total amount of overhead included in the overhead budget?

A)$3,000
B)$4,500
C)$7,500
D)$11,250

Question 30

The following forecasted sales pertain to Reject City: $\begin{array}{lr}\text { Month } & \text { Sales } \\\hline \text { June } & \$ 160,000 \\\text { July } & 200,000 \\\text { August } & 120,000 \\\text { September } & 80,000\end{array}$ Finshed goods inventory as of May 31 $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 6,000 units Reject City has a selling price of $5 per unit and expects to maintain ending inventories equal to 25 percent of next month's sales.
How many units are expected to be produced in June?

A)36,000 units
B)42,000 units
C)50,000 units
D)82,000 units

Question 31

Bug Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months.

-Refer to the figure.How many units of steel are expected in the material inventory at the end of the second month?

A)30
B)35
C)40
D)45

Question 32

In a merchandising organization,the merchandise purchases budget replaces what budget from a manufacturing firm?

A)the administrative expense budget
B)the pro-forma income statement
C)the production budget
D)the cost of goods sold budget

Question 33

Ben Company has the following sales forecast for the next quarter: April,20,000 units; May,24,000 units; June,28,000 units.Sales totalled 16,000 units in March.The March finished goods inventory was 4,000 units.End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales.

- What is the planned ending inventory of finished goods for May?

A)3,200 units
B)4,000 units
C)5,000 units
D)5,600 units.

Question 34

Oriental Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of the current year is as follows:
$$\begin{array} { l l } \text { Month } & \text { Sales } \\\hline \text { October } & 10,000 \\\text { November } & 14,000 \\\text { December } & 13,000\end{array}$$ Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January of the following year sales is projected at 16,000 lamps.

-Refer to the figure.How many lamps should be produced in November?

A)10,500 lamps
B)11,000 lamps
C)13,750 lamps
D)14,000 lamps

Question 35

Canceco Company produces and sells pillows. It expects to sell 10,000 pillows in the current year and had 1,000 pillows in finished goods inventory at the end of the previous year. Canceco would like to complete operations in the current year with at least 1,250 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for $5 each.

-Refer to the figure.How many pillows would be produced in the current year?

A)10,000 pillows
B)10,250 pillows
C)11,000 pillows
D)11,250 pillows

Question 36

Bug Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months.

-Refer to the figure.How many units of wood are expected to be used in production during the second month?

A)10,000
B)12,000
C)12,500
D)15,000

Question 37

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months are as follows:
$\begin{array}{ll}\text { Month } & \text { Sales } \\\hline \text { January } & 3,000 \\\text { February } & 4,200 \\\text { March } & 3,900\end{array}$
Finished goods inventory at the end of December was 900 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.General Corporation expects to sell the boxes for $5 each.April sales are projected at 4,500 boxes.

-
How many boxes should be produced in January?

A)2,940 boxes
B)3,000 boxes
C)3,060 boxes
D)3,840 boxes

Question 38

Oriental Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of the current year is as follows:
$$\begin{array} { l l } \text { Month } & \text { Sales } \\\hline \text { October } & 10,000 \\\text { November } & 14,000 \\\text { December } & 13,000\end{array}$$ Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January of the following year sales is projected at 16,000 lamps.

-Refer to the figure.In going from the sales budget to the production budget,what should adjustments to the sales budget be made for?

A)finished goods inventories
B)cash receipts
C)factory overhead costs
D)selling expenses

Question 39

Jordan Manufacturing Company expects to incur the following per-unit costs for 1,000 units of production: $\begin{array}{ll} \text {Direct materials } & \text { \( 3 \mathrm{lb} @ \$ 5=\$ 15 \) } \\ \text { Direct labour } & \text { 1 hr \( \$ 6=\$ 6 \)} \\ \text { Variable overhead } & \text { \( 75 \% \) of direct labour costs} \\ \text { Fized overhead } & \text {\( 50 \% \) of direct labour costs } \\\end{array}$



-What is the total amount of direct labour included in the direct labour budget?

A)$6
B)$6,000
C)$7,500
D)$28,500

Question 40

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months are as follows:
$\begin{array}{ll}\text { Month } & \text { Sales } \\\hline \text { January } & 3,000 \\\text { February } & 4,200 \\\text { March } & 3,900\end{array}$
Finished goods inventory at the end of December was 900 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.General Corporation expects to sell the boxes for $5 each.April sales are projected at 4,500 boxes.

-
How many boxes should be produced in February?

A)4,140 boxes
B)4,200 boxes
C)4,260 boxes
D)3,900 boxes

Question 41

Which of the following is a financial budget?

A)cost of goods sold budget
B)budgeted balance sheet
C)marketing expense budget
D)production budget

Question 42

Freedom Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000.
Accounts receivable on December 31 were $45,000.

-Refer to the figure.What would Freedom Manufacturing Company expect to have as an accounts receivable balance on March 31?

A)$39,600
B)$45,000
C)$55,500
D)$90,000

Question 43

Which of the following is NOT a component of the cash budget?

A)sales forecast
B)cash disbursements
C)financing
D)cash excess or deficiency

Question 44

Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below:
The June 30th balance sheet follows:
$$\begin{array} { l r l r } \text { Cash } & \$ 25,000 & \text { Accounts payable } & \text { 45,000 } \\\text { Accounts receivable } & 110,000 & \text { Capital stock } & 300,000 \\\text { Inventary } & 54,000 & \text { Retained earrings } & 94,000 \\\text { Building and equipment (net) } & 250,000 & &\end{array}$$ Actual sales for June and budgeted sales for July,August,and September are given below:
$$\begin{array} { l l } \text { June } & \$ 137,500 \\\text { July } & 360,000 \\\text { August } & 400,000 \\\text { September } & 320,000\end{array}$$ Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One quarter of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000,and the monthly depreciation expenses are $7,000.

-Refer to the figure.What is the balance of the retained earnings account at the end of July?

A)$94,000
B)$188,000
C)$360,000
D)$398,000

Question 45

Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below:
The June 30th balance sheet follows:
$$\begin{array} { l r l r } \text { Cash } & \$ 25,000 & \text { Accounts payable } & \text { 45,000 } \\\text { Accounts receivable } & 110,000 & \text { Capital stock } & 300,000 \\\text { Inventary } & 54,000 & \text { Retained earrings } & 94,000 \\\text { Building and equipment (net) } & 250,000 & &\end{array}$$ Actual sales for June and budgeted sales for July,August,and September are given below:
$$\begin{array} { l l } \text { June } & \$ 137,500 \\\text { July } & 360,000 \\\text { August } & 400,000 \\\text { September } & 320,000\end{array}$$ Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One quarter of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000,and the monthly depreciation expenses are $7,000.

-Refer to the figure.What is the balance of the building and equipment (net)account at the end of July?

A)$243,000
B)$250,000
C)$257,000
D)$300,000

Question 46

Kara Corporation has the following sales forecasts for the selected three-month period:
$$\begin{array} { l l } \text { Month } & \text { sales } \\\hline \text { July } & \$24,000 \\\text { August } & 14,000 \\\text { September } & 16,000\end{array}$$ Seventy percent of sales are collected in the month of the sale,and the remainder are collected in the following month.
$$\begin{array} { l r } \text { Accounts recervable balance (July 1) } &\$20,000\\\text { Cash balance (July 1) } & 10,0000\end{array}$$ Minimum cash balance is $10,000.Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).

-Refer to the figure.What is the cash balance at the end of July,assuming that cash is received only from customers and that $40,000 is paid out during April?

A)$6,800
B)$10,800
C)$16,800
D)$20,000

Question 47

Michael Corporation has the following sales forecasts for the first three months: $$\begin{array} { l l } \text { Month } & \text { sales } \\\hline \text { January } & \$ 36,000 \\\text { February } & 24,000 \\\text { March } & 40,000\end{array}$$ Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month.
$$\begin{array} { l l } \text { Accaunts recervable balance (January 1) } & \$16,000 \\\text { Cash balance (January 1) } & 12,000 \\\text { Minimun cash balance needed } &20,000\end{array}$$

- What is the cash balance at the end of January,assuming that cash is received only from customers and that $48,000 is paid out during January?

A)$19,400
B)$20,600
C)$21,000
D)$23,400

Question 48

The following forecasted sales pertain to Reject City: $$\begin{array} { l r } \text { Month } & \text { Sales } \\\text { June } & \$ 160,000 \\\text { July } & 200,000 \\\text { August } & 120,000 \\\text { September } & 80,000\end{array}$$ Finished goods inventory as of May 31 $\quad$$\quad$$\quad$$\quad$ 6,000 units Reject City has a selling price of $5 per unit and expects to maintain ending inventories equal to 25 percent of next month's sales.
What is the budgeted beginning balance in units for finished goods inventory on August 1?

A)6,000 units
B)6,400 units
C)8,000 units
D)10,000 units

Question 49

The following forecasted sales pertain to Tigers, Inc.
$$\begin{array} { l r } \text { Month } & \text { Sales } \\\text { September } & \$ 400,000 \\\text { October } & 500,000 \\\text { November } & 300,000 \\\text { December } & 200,000\end{array}$$
$\begin{array}{llr} \text {Accounts receivable as of August 31 } &\$70,000\\ \text { Finished goods inventory as of August 31 } &8,000\text{units}\\\end{array}$

The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month’s sales.

-Refer to the figure.How much is accounts receivable as of October 31?

A)$200,000
B)$240,000
C)$420,000
D)$460,000

Question 50

Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below:
The June 30th balance sheet follows:
$$\begin{array} { l r l r } \text { Cash } & \$ 25,000 & \text { Accounts payable } & \text { 45,000 } \\\text { Accounts receivable } & 110,000 & \text { Capital stock } & 300,000 \\\text { Inventary } & 54,000 & \text { Retained earrings } & 94,000 \\\text { Building and equipment (net) } & 250,000 & &\end{array}$$ Actual sales for June and budgeted sales for July,August,and September are given below:
$$\begin{array} { l l } \text { June } & \$ 137,500 \\\text { July } & 360,000 \\\text { August } & 400,000 \\\text { September } & 320,000\end{array}$$ Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One quarter of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000,and the monthly depreciation expenses are $7,000.

-Refer to the figure.What is the balance of the accounts payable at the end of July?

A)$55,500
B)$93,000
C)$120,000
D)$166,500

Question 51

Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below:
The June 30th balance sheet follows:
$$\begin{array} { l r l r } \text { Cash } & \$ 25,000 & \text { Accounts payable } & \text { 45,000 } \\\text { Accounts receivable } & 110,000 & \text { Capital stock } & 300,000 \\\text { Inventary } & 54,000 & \text { Retained earrings } & 94,000 \\\text { Building and equipment (net) } & 250,000 & &\end{array}$$ Actual sales for June and budgeted sales for July,August,and September are given below:
$$\begin{array} { l l } \text { June } & \$ 137,500 \\\text { July } & 360,000 \\\text { August } & 400,000 \\\text { September } & 320,000\end{array}$$ Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One quarter of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000,and the monthly depreciation expenses are $7,000.

-Refer to the figure.What is the balance of the accounts receivable at the end of July?

A)$110,000
B)$288,000
C)$360,000
D)$398,000

Question 52

Michael Corporation has the following sales forecasts for the first three months: $$\begin{array} { l l } \text { Month } & \text { sales } \\\hline \text { January } & \$ 36,000 \\\text { February } & 24,000 \\\text { March } & 40,000\end{array}$$ Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month.
$$\begin{array} { l l } \text { Accaunts recervable balance (January 1) } & \$16,000 \\\text { Cash balance (January 1) } & 12,000 \\\text { Minimun cash balance needed } &20,000\end{array}$$

- Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month.
$$\begin{array} { l l } \text { Accounts recevable balance (January } 1 )&\$16,000 \\\text { Cash balance (January } 1 ) & 12,000\end{array}$$ Minimum cash balance is $20,000.Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).How much cash would be collected in March from sales?

A)$32,000
B)$34,400
C)$48,000
D)$58,400

Question 53

Kara Corporation has the following sales forecasts for the selected three-month period:
$$\begin{array} { l l } \text { Month } & \text { sales } \\\hline \text { July } & \$24,000 \\\text { August } & 14,000 \\\text { September } & 16,000\end{array}$$ Seventy percent of sales are collected in the month of the sale,and the remainder are collected in the following month.
$$\begin{array} { l r } \text { Accounts recervable balance (July 1) } &\$20,000\\\text { Cash balance (July 1) } & 10,0000\end{array}$$ Minimum cash balance is $10,000.Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).

-Refer to the figure.How much cash would be collected in September from sales?

A)$15,400
B)$16,000
C)$17,000
D)$20,000

Question 54

Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below:
The June 30th balance sheet follows:
$$\begin{array} { l r l r } \text { Cash } & \$ 25,000 & \text { Accounts payable } & \text { 45,000 } \\\text { Accounts receivable } & 110,000 & \text { Capital stock } & 300,000 \\\text { Inventary } & 54,000 & \text { Retained earrings } & 94,000 \\\text { Building and equipment (net) } & 250,000 & &\end{array}$$ Actual sales for June and budgeted sales for July,August,and September are given below:
$$\begin{array} { l l } \text { June } & \$ 137,500 \\\text { July } & 360,000 \\\text { August } & 400,000 \\\text { September } & 320,000\end{array}$$ Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One quarter of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000,and the monthly depreciation expenses are $7,000.

-Refer to the figure.What is the balance of the inventory account at the end of July?

A)$54,000
B)$60,000
C)$124,000
D)$216,000

Question 55

Van Gogh Inc.is constructing its marketing budget.
$\begin{array}{lcccc}&\text { 1st quarter } & \text { 2nd quarter } & \text { 3rd quarter } & \text { 4th quarter }\\\text { Sales } & 30,000 & 40,000 & 50,000 & 60,000 \\\text { Production } & 35,000 & 45,000 & 55,000 & 65,000\end{array}$
Commissions are $3 per unit sold.Salesperson salaries are $100,000 per quarter.Depreciation is $25,000 per quarter.Travel is $10,000 per quarter.Advertising is $50,000 in the first quarter; $40,000 in the second quarter; $60,000 in the third quarter; and $55,000 in the fourth quarter.What is the budgeted marketing expense for the third quarter?
a.$345,000
b.$360,000
c.$735,000
d.$795,000

Question 56

The following forecasted sales pertain to Tigers, Inc.
$$\begin{array} { l r } \text { Month } & \text { Sales } \\\text { September } & \$ 400,000 \\\text { October } & 500,000 \\\text { November } & 300,000 \\\text { December } & 200,000\end{array}$$
$\begin{array}{llr} \text {Accounts receivable as of August 31 } &\$70,000\\ \text { Finished goods inventory as of August 31 } &8,000\text{units}\\\end{array}$

The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month’s sales.

-Refer to the figure.How many dollars are expected to be collected in October?

A)$240,000
B)$420,000
C)$460,000
D)$510,000

Question 57

Freedom Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000.
Accounts receivable on December 31 were $45,000.

-Refer to the figure.How many dollars are expected to be collected in September?

A)$7,000
B)$21,000
C)$33,000
D)$40,000

Question 58

Freedom Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000.
Accounts receivable on December 31 were $45,000.

-Refer to the figure.What are the expected cash collections of Freedom Manufacturing Company for March?

A)$64,500
B)$69,600
C)$90,000
D)$114,600

Question 59

Freedom Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000.
Accounts receivable on December 31 were $45,000.

-Refer to the figure.How many dollars are expected to be collected in December?

A)$23,500
B)$26,500
C)$30,500
D)$37,000

Question 60

Which of the following is a financial budget?

A)capital expenditures budget
B)sales budget
C)budgeted income statement
D)overhead budget

Question 61

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What is the static budget variance for total fixed overhead?

A)$0
B)$50 F
C)$50 U
D)$100 U

Question 62

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What is the flexible budget for direct materials cost?

A)$3,500
B)$3,600
C)$3,900
D)$4,200

Question 63

Which of the following does a static budget provide?

A)expected costs for a range of activity
B)budgeted costs for the actual level of activity
C)budgeted costs for a predetermined level of activity
D)expected costs for the actual performance level

Question 64

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What was the actual cost for direct materials?

A)$3,500
B)$3,600
C)$3,900
D)$4,500

Question 65

What type of budget is developed around one particular level of activity?

A)static budget
B)continuous budget
C)incremental budget
D)participative budget

Question 66

Sandy Corporation has a sales budget for next month of $50,000.Cost of goods sold is expected to be 60 percent of sales.All goods are purchased in the month used and paid for in the month following their purchase.The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired.Beginning accounts payable is $13,000. What should be the ending accounts payable for Sandy Corporation?

A)$13,000
B)$29,500
C)$30,000
D)$30,500

Question 67

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What is the flexible budget variance for indirect labour?

A)$50 F
B)$150 F
C)$1,200 U
D)$1,250 F

Question 68

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What is the flexible budget variance for supervision?

A)$50 F
B)$50 U
C)$67 F
D)$67 U

Question 69

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What are the total flexible budgeted costs?

A)$10,560
B)$13,460
C)$13,510
D)$15,220

Question 70

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What is the static budget for total variable costs?

A)$90 U
B)$180 U
C)$790 F
D)$880 F

Question 71

Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below:
The June 30th balance sheet follows:
$$\begin{array} { l r l r } \text { Cash } & \$ 25,000 & \text { Accounts payable } & \text { 45,000 } \\\text { Accounts receivable } & 110,000 & \text { Capital stock } & 300,000 \\\text { Inventary } & 54,000 & \text { Retained earrings } & 94,000 \\\text { Building and equipment (net) } & 250,000 & &\end{array}$$ Actual sales for June and budgeted sales for July,August,and September are given below:
$$\begin{array} { l l } \text { June } & \$ 137,500 \\\text { July } & 360,000 \\\text { August } & 400,000 \\\text { September } & 320,000\end{array}$$ Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One quarter of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000,and the monthly depreciation expenses are $7,000.

-Refer to the figure.What is the balance of the cash account at the end of July?

A)$8,500
B)$15,500
C)$63,500
D)$114,000

Question 72

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What was the static budget variance for rent?

A)$0
B)$50 U
C)$100 F
D)$100 U

Question 73

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What is the flexible budget for rent?

A)$100
B)$200
C)$2,900
D)$2,950

Question 74

Sasha Company has a sales budget for next month of $150,000.Cost of goods sold is expected to be 40 percent of sales.All goods are purchased in the month used and paid for in the month following purchase.The beginning inventory of merchandise is $5,000,and an ending inventory of $6,000 is desired.Beginning accounts payable is $38,000. What should the ending accounts payable be for Sasha Company?

A)$39,000
B)$61,000
C)$89,000
D)$91,000

Question 75

What is the term for a budget that is developed around one particular level of activity?

A)static budget
B)continuous budget
C)incremental budget
D)participative budget

Question 76

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What were the total budgeted costs?

A)$11,440
B)$13,460
C)$13,510
D)$14,340

Question 77

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What is the static budget variance for direct materials?

A)$100 F
B)$100 U
C)$400 F
D)$400 U

Question 78

Schrandt Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below:
The June 30th balance sheet follows:
$$\begin{array} { l r l r } \text { Cash } & \$ 25,000 & \text { Accounts payable } & \text { 45,000 } \\\text { Accounts receivable } & 110,000 & \text { Capital stock } & 300,000 \\\text { Inventary } & 54,000 & \text { Retained earrings } & 94,000 \\\text { Building and equipment (net) } & 250,000 & &\end{array}$$ Actual sales for June and budgeted sales for July,August,and September are given below:
$$\begin{array} { l l } \text { June } & \$ 137,500 \\\text { July } & 360,000 \\\text { August } & 400,000 \\\text { September } & 320,000\end{array}$$ Sales are 20 percent for cash and 80 percent on credit.All credit sales are collected in the month following the sale.There are no bad debts.
The gross margin percentage is 40 percent of sales.The desired ending inventory is equal to 25 percent of the following month's sales.One quarter of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000,and the monthly depreciation expenses are $7,000.

-Refer to the figure.What are the total assets at the end of July?

A)$439,000
B)$446,500
C)$515,500
D)$654,500

Question 79

When budgets are used for control,what is the effect on budgeted amounts?

A)Budgeted amounts from different years are compared.
B)Actual amounts from different years are compared.
C)Budgeted amounts are compared to actual amounts.
D)Actual amounts from the current year are timely.

Question 80

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, Inc., had the following budgeted data:
$\begin{array}{lr}\text { Unit sales } & 26,000 \\\text { Unit production } & 26,000 \\& \\\text { Budgeted fixed overhead: } & \$ 800 \\\text { Supervision } & 2,000 \\\text { Depreciation } & 100 \\\text { Rent } & 1800\end{array}$

$\begin{array}{llr} \text {Budgeted variable costs per unit: } &\\ \text { Direct materials} &\$0.15\\ \text { Direct labour } &0.20\\ \text { Supplies } &0.02\\ \text { Indirect labour } &0.05\\\text{Power}&0.02\end{array}$
$\begin{array}{llr} \text { Actual unit sales} &24,000\\ \text {Actual unit production } &28,000\\\\ \text { Actual fixed overhead:} &\\ \text { Supervision } &\$850\\ \text { Depreciation } &2,000\\ \text { Rent} &100\\\end{array}$

$\begin{array}{llr} \text { Actual variable costs: } &\\ \text {Direct materials } &\$3,500\\ \text { Direct labour} &4,900\\ \text {Supplies } &530\\ \text { Indirect labour} &1,250\\ \text {Power } &470\\\end{array}$



-Refer to the figure.What was the budgeted cost for direct labour?

A)$1,200
B)$1,300
C)$4,800
D)$5,200