Question 1

Lion Industries required production for June is 132,000 units.To make one unit of finished product, three pounds of direct material Z are required.Actual beginning and desired ending inventories of direct material Z are 300,000 and 330,000 pounds, respectively.How many pounds of direct material Z must be purchased?

Accepted Answer

A) 378,000. 
B) 396,000. 
C) 408,000. 
D) 426,000.

Question 2

A purchases budget is used instead of a production budget by

Accepted Answer

A) merchandising companies. 
B) service enterprises. 
C) not-for-profit organizations. 
D) manufacturing companies.

Question 3

Kam Department Store reported the following information for 2016: $\begin{array}{lr}
&\text { October }&\text { November }&\text { December }\
\text { Budgeted sales }&\$1,240,000&\$1,160,000&\$1,440,000
\end{array}$ 
-All sales are on credit. 
-Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
How much cash will Kam receive in November?

Accepted Answer

A) $580,000 
B) $1,300,000 
C) $1,200,000 
D) $1,160,000

Question 4

Correy Inc.reported the following information for 2016: $\begin{array}{lr}
&\text { October }&\text { November }&\text { December }\
\text { Budgeted sales } & \$ 460,000 & \$ 440,000 & \$ 540,000 \
\text { Budgeted purchases } & \$ 240,000 & \$ 256,000 & \$ 288,000
\end{array}$ •All sales are on credit. 
•Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
•Cost of goods sold is 35% of sales.
•Correy purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month.
•Accounts payable is used only for inventory acquisitions.
How much cash will Correy receive during November?

Accepted Answer

A) $220,000 
B) $490,000 
C) $450,000 
D) $440,000

Question 5

On January 1, Kale Company has a beginning cash balance of $42,000.During the year, the company expects cash disbursements of $340,000 and cash receipts of $290,000.If Kale requires an ending cash balance of $40,000, the company must borrow

Accepted Answer

A) $32,000. 
B) $40,000. 
C) $48,000. 
D) $92,000.

Question 6

The following information was taken from Southgate Industry's cash budget for the month of July: $\begin{array}{lr}
\text { Beginning cash balance } & \$ 480,000 \
\text { Cash receipts } & 304,000 \
\text { Cash disbursements } & 544,000
\end{array}$ If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company would have to borrow is

Accepted Answer

A) $160,000. 
B) $80,000. 
C) $240,000. 
D) $96,000.

Question 7

The direct materials budget shows: $\begin{array}{ll}
\text { Units to be produced } & 3,000 \
\text { Total pounds needed for production } & 9,000 \
\text { Total materials required } & 9,900
\end{array}$ What are the direct materials per unit?

Accepted Answer

A) .33 pounds 
B) 3.0 pounds 
C) 3.3 pounds 
D) Cannot be determined from the data provided.

Question 8

Grey Company has 24,000 units in beginning finished goods.If sales are expected to be 120,000 units for the year and Grey desires ending finished goods of 30,000 units, how many units must the company produce?

Accepted Answer

A) 114,000 
B) 120,000 
C) 126,000 
D) 150,000

Question 9

The budget committee would not normally include the

Accepted Answer

A) research director. 
B) treasurer. 
C) sales manager. 
D) external auditor.

Question 10

Instead of a production budget, a merchandiser will prepare a

Accepted Answer

A) pseudo-production budget. 
B) merchandise purchases budget. 
C) master time sheet. 
D) sales forecast.

Question 11

The total direct labor hours required in preparing a direct labor budget are calculated using the

Accepted Answer

A) sales forecast. 
B) production budget. 
C) direct materials budget. 
D) sales budget.

Question 12

A manufacturing overhead budget is not needed if the company develops a predeter-mined overhead rate to apply overhead.

Accepted Answer

A) True 
 B)False

Question 13

Comma Manufacturing budgets on an annual basis for its fiscal year.The following beginning and ending inventory levels are planned for the fiscal year of July 1, 2016 to June 30, 2017: $$\text { Raw Materials } \frac { \text { June } 30,2017 } { 3,000 \text { kilos } } \quad \frac { \text { June } 30,2016 } { 2,000 \text { kilos } }$$ Three kilos of raw materials are needed to produce each unit of finished product.If Comma Manufacturing plans to produce 560,000 units during the 2016-2017 fiscal year, how many kilos of materials will the company need to purchase for its production during the year?

Accepted Answer

A) 1,681,000 
B) 1,686,000 
C) 1,680,000 
D) 1,678,000

Question 14

Correy Company reported the following information for 2016: $\begin{array}{lr}
&\text { October }&\text { November }&\text { December }\
\text { Budgeted sales } & \$ 460,000 & \$ 440,000 & \$ 540,000 \
\text { Budgeted purchases } & \$ 240,000 & \$ 256,000 & \$ 288,000
\end{array}$ •Cost of goods sold is 35% of sales. 
•Correy purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month.
•Accounts payable is used only for inventory acquisitions.
How much is the budgeted balance for Accounts Payable at October 31, 2016?

Accepted Answer

A) $96,000 
B) $144,000 
C) $204,000 
D) $102,400

Question 15

Financial planning models and statistical and mathematical techniques may be used in forecasting sales.

Accepted Answer

A) True 
 B)False

Question 16

Accounting generally has the responsibility for

Accepted Answer

A) setting company goals. 
B) expressing the budget in financial terms. 
C) enforcing the budget. 
D) administration of the budget.

Question 17

Which of the following would not appear as a fixed expense on a selling and administrative expense budget?

Accepted Answer

A) Freight-out 
B) Office salaries 
C) Property taxes 
D) Depreciation

Question 18

Which one of the following sections would not appear on a cash budget?

Accepted Answer

A) Cash receipts 
B) Financing 
C) Investing 
D) Cash disbursements

Question 19

In service enterprises, the critical factor in budgeting is coordinating materials and equipment with anticipated services.

Accepted Answer

A) True 
 B)False

Question 20

The number of direct labor hours needed for production is obtained from the production budget.

Accepted Answer

A) True 
 B)False

Exam 9: Reporting and Analyzing Long-Lived Assets

A purchases budget is used instead of a production budget by

On January 1, Kale Company has a beginning cash balance of $42,000.During the year, the company expects cash disbursements of $340,000 and cash receipts of $290,000.If Kale requires an ending cash balance of $40,000, the company must borrow

The direct materials budget shows: $\begin{array}{ll}\text { Units to be produced } & 3,000 \\\text { Total pounds needed for production } & 9,000 \\\text { Total materials required } & 9,900\end{array}$ What are the direct materials per unit?

Grey Company has 24,000 units in beginning finished goods.If sales are expected to be 120,000 units for the year and Grey desires ending finished goods of 30,000 units, how many units must the company produce?

The budget committee would not normally include the

Instead of a production budget, a merchandiser will prepare a

The total direct labor hours required in preparing a direct labor budget are calculated using the

A manufacturing overhead budget is not needed if the company develops a predeter-mined overhead rate to apply overhead.

Financial planning models and statistical and mathematical techniques may be used in forecasting sales.

Accounting generally has the responsibility for

Which of the following would not appear as a fixed expense on a selling and administrative expense budget?

Which one of the following sections would not appear on a cash budget?

In service enterprises, the critical factor in budgeting is coordinating materials and equipment with anticipated services.

The number of direct labor hours needed for production is obtained from the production budget.