Question 1

Which of the following budgets do not provide information needed for the budgeted balance sheet?

Accepted Answer

A) Materials purchases budget 
B) Production budget 
C) Selling and administrative expense budget 
D) Cash budget

Question 2

Parker Corp. ,which operates on a calendar year,expects to sell 4,000 units in October,and expects sales to increase 20% each month thereafter.Sales price is expected to stay constant at $8 per unit.What are budgeted revenues for the fourth quarter?

Accepted Answer

A) $32,000 
B) $96,000 
C) $115,200 
D) $116,480

Question 3

A top-down approach to budgeting is one that is:

Accepted Answer

A) participative. 
B) motivational. 
C) imposed. 
D) tight.

Question 4

Budgeted production is calculated by:

Accepted Answer

A) adding budgeted unit sales to budgeted beginning finished goods inventory,and subtracting budgeted ending finished goods inventory. 
B) adding budgeted unit sales to budgeted beginning work in process inventory,and subtracting budgeted ending work in process inventory. 
C) adding budgeted unit sales to budgeted ending finished goods inventory,and subtracting budgeted beginning finished goods inventory. 
D) adding budgeted unit sales to budgeted ending work in process inventory,and subtracting budgeted beginning work in process inventory.

Question 5

Which of the following budgets would not exist for a merchandising firm?

Accepted Answer

A) Sales budget 
B) Purchases budget 
C) Production budget 
D) Selling and administrative expense budget

Question 6

Jeremy Inc.produces leather handbags.The production budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Each handbag requires 0.5 square meters of leather.Jeremy Inc.'s leather inventory policy is 30% of next month's production needs.If the leather policy is met,what will the July 1 inventory be?

Accepted Answer

A) 750 square meters 
B) 1,050 square meters 
C) 1,825 square meters 
D) 300 square meters

Question 7

A ________ is the vision of what management wants the organization to achieve over the long term.

Accepted Answer

A) Strategic plan 
B) Long-term objective 
C) Short-term objective 
D) Tactic

Question 8

Gertrude Products expects the following sales of its single product:
  Gertrude desires an ending finished goods inventory to be equal to 10% of the next month's sales needs.July 1 inventory is projected to be 800 units.Each unit requires 5 pounds of Chemical A and 14 pounds of Chemical B.July 1 materials inventory includes 8,600 pounds of Chemical A and 76,000 pounds of Chemical B.Gertrude desires to maintain a Chemical A inventory equal to 20% of next month's production needs and a Chemical B inventory equal to 100% of next month's production needs.
a.Prepare a production budget for Gertrude for as many months as is possible.
b.Prepare a direct materials purchases budget for both Chemical A and Chemical B for the months of July through September.

Accepted Answer

The answer of Gertrude Products expects the following sales of...

Question 9

Which of the following terms is generally not used to describe the forward-oriented nature of the budgeting process?

Accepted Answer

A) Predicted 
B) Estimated 
C) Hoped for 
D) Expected

Question 10

Jackson Inc.produces leather handbags.The production budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Each handbag requires 0.5 square meters of leather.Jackson Inc.'s leather inventory policy is 30% of next month's production needs.On July 1 leather inventory was expected to be 1,000 square meters.What will leather purchases be in July?

Accepted Answer

A) 2,300 square meters 
B) 2,550 square meters 
C) 2,700 square meters 
D) 3,575 square meters

Question 11

________ are the specific goals that managers want to achieve over a 5- to 10-year horizon.

Accepted Answer

A) Strategic plans 
B) Long-term objectives 
C) Short-term objectives 
D) Tactics

Question 12

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

Accepted Answer

A) Budgeted cash collections 
B) Budgeted cash payments 
C) Depreciation expense 
D) Cash borrowed or repaid

Question 13

The budget translates a company's objectives into financial terms.

Accepted Answer

A) True 
 B)False

Question 14

Crest Products expects the following sales of its single product:
  Crest desires an ending finished goods inventory to be equal to 30% of the next month's sales needs.August 1 inventory is projected to be 7,800 units.Each finished unit requires 2 units of component X and 11 units of component Z.August 1 materials inventory includes 5,000 units of component X and 184,000 units of component Z.Crest desires to maintain a component X inventory equal to 10% of next month's production needs and a component Z inventory equal to 70% of next month's production needs.
a.Prepare a production budget for Crest for as many months as is possible.
b.Prepare a direct materials purchases budget for both Component X and Component Z for the months of August through October.

Accepted Answer

The answer of Crest Products expects the following sales of...

Question 15

Sugar Co.has forecast sales for the next four months as follows: July 4,000 units,August 6,000 units,September 7,500 units,and October 8,000 units.Sugar's policy is to have an ending inventory of 40% of the next month's sales needs on hand.July 1 inventory is projected to be 1,500 units.Manufacturing overhead is budgeted to be $17,000 plus $5 per unit produced.
a.Prepare a production budget for Sugar for as many months as is possible.
b.Prepare a manufacturing overhead budget for the three months July - September.Be sure to include a total for the quarter as well.

Accepted Answer

The answer of Sugar Co.has forecast sales for the next...

Question 16

Control is a forward-looking process while planning is a backward-looking one.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following sequences is correct?

Accepted Answer

A) Sales budget - production budget - direct materials budget - budgeted income statement 
B) Budgeted income statement - direct materials budget - production budget - sales budget 
C) Cash receipts budget - sales budget - production budget - budgeted income statement 
D) Inventory budget - production budget - sales budget - selling and administrative budget

Question 18

An advantage of budgeting is that it provides a benchmark for evaluating performance.

Accepted Answer

A) True 
 B)False

Question 19

Jaybird Inc.produces leather handbags.The sales budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Jaybird Inc.'s ending finished goods inventory policy is 10% of the following month's sales.Each handbag requires 1.3 hours of unskilled labor (paid $8 per hour)and 2.2 hours of skilled labor (paid $15 per hour).What will be the total labor cost for the month of August?

Accepted Answer

A) $24,675 
B) $225,680 
C) $303,800 
D) $305,970

Question 20

The direct labor budget is based on budgeted sales levels.

Accepted Answer

A) True 
 B)False

Exam 8: Budgetary Planning

Which of the following budgets do not provide information needed for the budgeted balance sheet?

Parker Corp. ,which operates on a calendar year,expects to sell 4,000 units in October,and expects sales to increase 20% each month thereafter.Sales price is expected to stay constant at $8 per unit.What are budgeted revenues for the fourth quarter?

A top-down approach to budgeting is one that is:

Budgeted production is calculated by:

Which of the following budgets would not exist for a merchandising firm?

A ________ is the vision of what management wants the organization to achieve over the long term.

Which of the following terms is generally not used to describe the forward-oriented nature of the budgeting process?

________ are the specific goals that managers want to achieve over a 5- to 10-year horizon.

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

The budget translates a company's objectives into financial terms.

Control is a forward-looking process while planning is a backward-looking one.

Which of the following sequences is correct?

An advantage of budgeting is that it provides a benchmark for evaluating performance.

The direct labor budget is based on budgeted sales levels.