233289982 Chapter 9 Quiz Info

8/18/2019 233289982 Chapter 9 Quiz Info

1/98

Managerial Accounting, 3e (Braun/Tietz)

Chapter 9 The Master Budget

1) Strategic planning involves setting short-term goals extending three to four months into the future.

Answer: FALSE

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective Thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that

comprise the master budget

2) Budgeting is helpful to plan for cash inflows and outflows.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2




3) A budget is a quantitative expression of a plan that helps managers coordinate and implement the

plan.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective ThinkingLearning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that


4) Budgets do not provide benchmarks to help managers evaluate performance.

Answer: FALSE

Diff: 1

LO: 9-1

EOC: S9-2




5) Budgets communicate financial plans throughout the company.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2



1

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall


2/98


6) One of the key benefits of budgeting is that it forces managers to plan.

Answer: TRUE

Diff: 1

LO: 9-1EOC: S9-2




7) The capital expenditures budget is not part of the operating budget.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2




8) The master budget is the set of budgeted financial statements and supporting schedules for the entire

organization.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2




9) The master budget includes both the operating budgets and the financial budgets.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2




10) Management uses budgeting to express its plans and to assess how well it's reaching its goals.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2




2



3/98

11) Strategic planning involves setting long-term goals that extend 5-10 years into the future.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective ThinkingLearning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that


12) A rolling budget is a budget that is continuously updated so that the next 12 months of operations are

always budgeted.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2


Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets thatcomprise the master budget

13) The financial budgets project the collection and payment of cash, as well as forecast the company's

budgeted balance sheet.

Answer: TRUE

Diff: 1

LO: 9-1

EOC: S9-2




14) Budget committees most often would include all of the following peopleexcept

A) CEO

B) Research and development manager

C) Shareholder

D) Marketing manager

Answer: C

Diff: 1

LO: 9-1

EOC: S9-2




3



4/98

15) Budgets are used for all of the following,except

A) planning for the future.

B) controlling operations.

C) recording actual results.

D) directing operations.

Answer: CDiff: 1

LO: 9-1

EOC: S9-2




16) Strategic planning involves

A) setting long-term goals that extend 5-10 years into the future.

B) setting short-term goals that extend one year into the future.

C) setting goals for next month.D) executing directives from the board of directors.

Answer: A

Diff: 1

LO: 9-1

EOC: S9-2




17) A rolling budget is a budget that

A) extends 5-10 years into the future.

B) is continuously updated, so that the next 12 months of operations are always budgeted.

C) begins with zero for each expense, and then amounts are added in.

D) is rolled out by upper management.

Answer: B

Diff: 1

LO: 9-1

EOC: S9-2




4



5/98

18) Most companies use ________ when developing the budgets each year.

A) a top-down approach

B) zero-based budgets

C) slack-based budgets

D) participative budgeting

Answer: DDiff: 1

LO: 9-1

EOC: S9-2




19) Which of the following is a potential disadvantage of participative budgeting?

A) Managers are more likely to be motivated by budgets they helped to create.

B) Managers may build slack into the budget.

C) Managers should have more detailed knowledge for creating realistic budgets.

D) None of the above are true.

Answer: B

Diff: 1

LO: 9-1

EOC: S9-2




20) Managers may intentionally build slack into the budget

A) to have the resources they need in the event of budget cuts.

B) to make their performance look worse.

C) because of certainty about the future.

D) because of all of the above.

Answer: A

Diff: 1

LO: 9-1

EOC: S9-2




5



6/98

21) Managers may intentionally build slack into the budget

A) because of uncertainty about the future.

B) to make their performance look better.

C) to have the resources they need in the event of budget cuts.

D) because of all of the above.

Answer: DDiff: 1

LO: 9-1

EOC: S9-2




22) The budget committee

A) rarely has the final say on the budget.

B) usually is made up of the accounting staff.

C) usually is made up of managers from all areas of the value chain.D) usually is made up of the Board of Directors.

Answer: C

Diff: 1

LO: 9-1

EOC: S9-2




23) All of the following are functions of the budget committeeexcept

A) reviews submitted budgets.

B) determines the bonuses awarded to those who achieve budget targets.

C) approves the final budget.

D) removes unwarranted slack.

Answer: B

Diff: 1

LO: 9-1

EOC: S9-2




6



7/98

24) Which of the following is the starting place for budgeting?

A) Last year's budget

B) Last year's actual amounts

C) Zero

D) Any of the above

Answer: DDiff: 1

LO: 9-1

EOC: S9-2




25) Which of the following is an advantage of zero-based budgeting?

A) It is time consuming.

B) It forces managers to justify every dollar put in the budget, so some expenses may be lower than they

were in previous years.C) It is labor intensive.

D) All of the above are advantages.

Answer: B

Diff: 1

LO: 9-1

EOC: S9-2




26) The ________ budget is part of the financial budgets.

A) cash

B) sales

C) direct materials

D) operating expense

Answer: A

Diff: 1

LO: 9-1

EOC: S9-2




7



8/98


A) direct labor

B) capital expenditure

C) budgeted income statement

D) manufacturing overhead

Answer: BDiff: 1

LO: 9-1

EOC: S9-2





A) production

B) budgeted income statement

C) budgeted balance sheetD) sales

Answer: C

Diff: 1

LO: 9-1

EOC: S9-2




29) The ________ budget is part of the operating budgets.

A) capital expenditure

B) budgeted balance sheet

C) production

D) cash

Answer: C

Diff: 1

LO: 9-1

EOC: S9-2




8



9/98

30) Which of the following alternatives reflects the proper order of preparing components of the master

budget?

1. Production budget

2. Sales budget

3. Direct materials budget

A) 2, 3, 1B) 1, 3, 2

C) 3, 1, 2

D) 2, 1, 3

Answer: D

Diff: 1

LO: 9-1

EOC: S9-2




31) Which of the following is an advantage of the budgeting process?

A) Coordinates the activities of the organization

B) Assures that the lowest cost materials will be obtained

C) Assures the company will achieve its objectives

D) Guarantees that a profit will be achieved

Answer: A

Diff: 1

LO: 9-1

EOC: S9-2




32) Regarding the budgeting process, which of the following statements istrue?

A) The budget should always be designed by top corporate management.

B) The budget should be approved by the company's external auditors.

C) The budget should be designed from the bottom up, with input from employees at all levels.

D) All of the listed statements are true regarding the budgeting process.

Answer: C

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Analytical Thinking



9



10/98

33) Which of the following is a benefit of budgeting?

A) Focuses management's attention on the future

B) Improved decision-making processes

C) Improved motivation by employees

D) All of the above

Answer: DDiff: 1

LO: 9-1

EOC: S9-2




34) Which of the following statements about budgeting isnottrue?

A) Budgeting is an aid to planning and control.

B) The operating budget should be prepared by top management, rather than mid-management

personnel, because they have the overall objectives of the company in mind.C) Budgets help to coordinate the activities of the entire organization.

D) Budgets promote communication and coordination between departments.

Answer: B

Diff: 1

LO: 9-1

EOC: S9-2




35) Which of the following alternatives reflects the proper order of preparing components of the master

budget?

1. Financial budget

2. Operating budget

3. Capital expenditures budget

A) 1, 3, 2

B) 2, 3, 1

C) 1, 2, 3

D) 3, 1, 2

Answer: B

Diff: 2

LO: 9-1

EOC: S9-2




10



11/98

36) Which of the following budgets is a major part of the master budget and focuses on the income

statement and its supporting schedules?

A) cash

B) operating

C) capital expenditures

D) financialAnswer: B

Diff: 1

LO: 9-1

EOC: S9-2




37) Which of the following budgets is the cornerstone of the master budget?

A) sales

B) cashC) budgeted balance sheet

D) operating expense

Answer: A

Diff: 1

LO: 9-1

EOC: S9-2




38) "Sets the targeted revenue and expenses for the period" is best described by which of the following

terms?

A) Responsibility center

B) Capital budget

C) Operating budget

D) Sensitivity analysis

Answer: C

Diff: 1

LO: 9-1

EOC: S9-2




11



12/98

39) "The comprehensive budget" is best described by which term below?

A) Operating budget

B) Sensitivity analysis

C) Responsibility center

D) Master budget

Answer: DDiff: 1

LO: 9-1

EOC: S9-2




40) List and describe three reasons why a company and its managers could benefit from the use of

budgeting.

Answer:

1. Planning: The budgeting process forces managers to spend time planning for the future, rather thanonly concerning themselves with daily operations.

2. Coordination and Communication: The budget coordinates a company's activities. It forces managers to

consider relations among operations across the entire value chain.

3. Benchmarking: Budgets provide a benchmark that motivates employees and helps managers evaluate

performance. The budget provides a target that most managers will try to achieve, especially if they

participated in the budgeting process and the budget has been set at a realistic level.

Diff: 2

LO: 9-1

EOC: S9-2




41) When creating the sales budget, management simply takes the sales from the year before and divides

that total by 12 months. Thus, each month will always predict the same amount of budgeted sales.

Answer: FALSE

Diff: 1

LO: 9-2

EOC: E9-16




42) The first component of the operating budget is the production budget.

Answer: FALSE

Diff: 1

LO: 9-2

EOC: E9-16



12



13/98


43) The three components of the operating budget are the sales budget; inventory, purchases and cost of

goods sold budget; and the cash budget.

Answer: FALSE

Diff: 1LO: 9-2

EOC: E9-23




44) The sales budget must be prepared after every other component of the operating budget.

Answer: FALSE

Diff: 1

LO: 9-2

EOC: E9-16




45) Budgeting includes planning for ending inventory.

Answer: TRUE

Diff: 1

LO: 9-2

EOC: E9-18




46) The sales budget is the cornerstone of the master budget.

Answer: TRUE

Diff: 1

LO: 9-2

EOC: E9-23




13



14/98

47) On the production budget, the number of units to be produced is computed as

A) unit sales + desired end inventory + beginning inventory.

B) unit sales + desired end inventory - beginning inventory.

C) unit sales - desired end inventory - beginning inventory.

D) unit sales - desired end inventory + beginning inventory.

Answer: BDiff: 1

LO: 9-2

EOC: E9-18A




48) On the direct labor budget, the total quantity of direct labor hours needed is computed as

A) units to be produced × direct labor hour per unit.

B) quantity needed for production + indirect labor hours - direct labor hours.

C) units to be produced - indirect labor hours × cost per labor hour.

D) estimated direct labor hours needed × cost per hour.

Answer: A

Diff: 1

LO: 9-2

EOC: E9-18A




49) On the direct materials budget, the total quantity of direct materials needed is computed as

A) quantity needed for production + desired end inventory of DM - beginning inventory of DM.

B) units to be produced + desired end inventory of DM - beginning inventory of DM.

C) units to be produced - desired end inventory of DM + beginning inventory of DM.

D) quantity needed for production - desired end inventory of DM + beginning inventory DM.

Answer: A

Diff: 1

LO: 9-2

EOC: E9-18A




14



15/98

50) The ________ budget is the only budget stated ONLY in units, not dollars.

A) production

B) sales

C) direct materials

D) manufacturing overhead

Answer: ADiff: 1

LO: 9-2

EOC: E9-18A




51) The ________ budget starts with the number of units to be produced.

A) production

B) operating expense

C) direct materials

D) All of these choices start with the number of units to be produced.

Answer: C

Diff: 1

LO: 9-2

EOC: E9-23A




52) The ________ budget begins with the number of units to be sold.

A) manufacturing overhead

B) direct materials

C) production

D) capital expenditures

Answer: C

Diff: 1

LO: 9-2

EOC: E9-16A




15



16/98

53) Which of the following budgets usually shows separate sections for fixed and variable costs?

A) Direct materials and manufacturing overhead budget

B) Manufacturing overhead budget and production budget

C) Production budget and manufacturing overhead budget

D) Operating expense budget and manufacturing overhead budget

Answer: DDiff: 1

LO: 9-2

EOC: E9-23A




54) Which of the following budgets or financial statements is part of the operating budget?

A) Sales budget

B) Budgeted balance sheet

C) Capital expenditures budgetD) Cash budget

Answer: A

Diff: 1

LO: 9-2

EOC: E9-16




55) The ________ is a plan that shows the units to be sold and the projected selling price and is also the

starting point in the budgeting process.

A) cash budget

B) budgeted statement of cash flows

C) budgeted income statement

D) sales budget

Answer: D

Diff: 1

LO: 9-2

EOC: E9-16




16



17/98

56) Which of the following isnot part of the operating budget?

A) Inventory, purchases and cost of goods sold budget

B) Cash budget

C) Sales budget

D) Budgeted income statement

Answer: BDiff: 1

LO: 9-2

EOC: E9-23




57) Which of the following isnot included in the operating budget?

A) Budgeted income statement

B) Sales budget

C) Inventory budgetD) Budgeted balance sheet

Answer: D

Diff: 1

LO: 9-2

EOC: E9-23




58) In preparing the operating budget, the first step is preparing the

A) cash budget.

B) sales budget.

C) budgeted income statement.

D) purchases budget.

Answer: B

Diff: 1

LO: 9-2

EOC: E9-23




17



18/98

59) Desired ending inventory is 20% of next month's sales. If cost of goods sold is $300,000 and next

month's sales is $900,000, which of the following statements is true regarding purchases?

A) Purchases will be more than cost of goods sold.

B) Purchases cannot be predicted from the information given.

C) Purchases will be less than cost of goods sold.

D) Purchases will equal cost of goods sold.Answer: B

Diff: 2

LO: 9-2

EOC: E9-18




60) Desired ending inventory is 25% more than beginning inventory. If purchases total $160,000, which of

the following statements istrue regarding cost of goods sold (COGS)?

A) COGS will exceed cost of goods available for sale.B) COGS will be less than purchases.

C) COGS will exceed purchases.

D) COGS will equal $55,000.

Answer: B

Diff: 3

LO: 9-2

EOC: E9-18




61) Loyal Pet Company expects to sell 5,000 beefy dog treats in January and 9,000 in February for $3 each.

What will be the total sales revenue reflected in the sales budget for those months?

A) January $15,000; February $27,000

B) January $1,667; February $3,000

C) January $3,000; February $1,667

D) January $27,000; February $15,000

Answer: A

Explanation: A) January 5000 × $3 = $15,000; February 9000 × $ 3 = $ 27,000

Diff: 1

LO: 9-2

EOC: E9-16




18



19/98

62) Mockingbird Company expects to sell 5,200 bird perches in January and 9,500 in February for $3 each.

What will be the total sales revenue reflected in the sales budget for those months?

A) January $1,733; February $3,167

B) January $15,600; February $28,500

C) January $3,167; February $1,733

D) January $28,500; February $15,600Answer: B

Explanation: B) January 5,200 × $3 = $15,600; February 9,500 × $ 3 = $ 28,500

Diff: 1

LO: 9-2

EOC: E9-16




63) Hewitt Company expects cash sales for July of $15,000, and a 22% monthly increase during August

and September. Credit sales of $10,000 in July should be followed by 30% increases during August andSeptember. What are budgeted cash sales and budgeted credit sales for September respectively?

A) $19,500 and $12,200

B) $25,350 and $14,884

C) $22,326 and $16,900

D) $18,300 and $13,000

Answer: C

Explanation: C) Cash sales $ 15,000 × 1.22% = $ 18,300 × 1.22% = $ 22,326;

Credit sales $ 10,000 × 1.30% = $ 13,000 × 1.30 % = $ 16,900

Diff: 2

LO: 9-2

EOC: E9-16




64) Piatt Company expects cash sales for July of $15,000, and a 26% monthly increase during August and

September. Credit sales of $12,000 in July should be followed by 30% increases during August and

September. What are budgeted cash sales and budgeted credit sales for September respectively?

A) $19,500 and $15,120

B) $25,350 and $19,051

C) $18,900 and $15,600

D) $23,814 and $20,280

Answer: D

Explanation: D) Cash sales $ 15,000 × 1.26% = $ 18,900 × 1.26% = $ 23,814;

Credit sales $ 12,000 × 1.30% = $ 15,600 × 1.30 % = $ 20,280

Diff: 2

LO: 9-2

EOC: E9-16



19



20/98


65) CatNap Company has two products: Kittyz and Katz. A March sales forecast projects 20,000 units of

Kittyz and 15,000 units of Katz are going to be sold at prices of $15 and $12, respectively. The desired

ending inventory of Kittyz is 20% higher than the beginning inventory, which was 2,000 units. How much

are total March sales for Kittyz anticipated to be?A) $100,000

B) $180,000

C) $300,000

D) $240,000

Answer: C

Explanation: C) 20,000 × $ 15 = $ 300,000

Diff: 1

LO: 9-2

EOC: E9-16




66) DogDayz Company has two products: Doggyz and Pupz. A March sales forecast projects 22,000 units

of Doggyz and 15,000 units of Pupz are going to be sold at prices of $17.50 and $12.00, respectively. The

desired ending inventory of Doggyz is 20% higher than the beginning inventory, which was 2,000 units.

How much are total March sales for Doggyz anticipated to be?

A) $180,000

B) $385,000

C) $264,000

D) $110,000

Answer: B

Explanation: B) 22,000 × $ 17.50 = $ 385,000

Diff: 1

LO: 9-2

EOC: E9-16




20



21/98

67) Russell Company expects cash sales for July of $15,000, and a 22% monthly increase during August

and September. Credit sales of $6,000 in July should be followed by 15% decreases during August and

September. What are budgeted cash sales and budgeted credit sales for September?

A) $18,300 and $5,100

B) $22,326 and $4,335

C) $12,750 and $7,320D) $10,838 and $8,930

Answer: B

Explanation: B) Cash $15,000 × 1.22% = $ 8,300 × 1.22% = $22,326;

Credit $6,000 × 85% = $5,100 × 85 % = $4,335

Diff: 2

LO: 9-2

EOC: E9-16




68) Kotrick Company has beginning inventory of 15,000 units and expected sales of 23,000 units. If the

desired ending inventory is 18,000 units, how many units should be produced?

A) 20,000

B) 56,500

C) 10,000

D) 26,000

Answer: D

Explanation: D)

Sales 23,000

Less: BI 15,000

= Need to produce 8,000

+ desired EI 18,000

= Total Production 26,000

Diff: 2

LO: 9-2

EOC: E9-18




21



22/98

69) McCoy Company wants to have an ending inventory of 7,000 units. McCoy Company has beginning

inventory of 9,000 units and expects to sell 33,000 units. How many units should McCoy Company

produce?

A) 31,000

B) 35,000

C) 49,000D) 40,000

Answer: A

Explanation: A)

Sales 33,000

Less: BI 9,000


+ desired EI 7,000


Diff: 2

LO: 9-2

EOC: E9-18AACSB: Analytical Thinking



70) Rubino Corporation desires a December 31 ending inventory of 900 units. Budgeted sales for

December are 2,650 units. The November 30 inventory was 850 units. What are budgeted purchases in

units?

A) 3,550

B) 2,600

C) 2,700

D) 4,400

Answer: C

Explanation: C)

Sales 2,650

Less: BI 850

= Need to produce1,800

+ desired EI 900


Diff: 2

LO: 9-2

EOC: E9-18




22



23/98

71) Bruner Stores wants to have 500 shovels in ending inventory on December 31. Budgeted sales for

December are 1,950 shovels. The November 30 inventory was 320 shovels. How many shovels should

Benson Stores purchase for December?

A) 2,770

B) 1,770

C) 2,450D) 2,130

Answer: D

Explanation: D)

Sales 1,950

Less: BI 320


+ desired EI 500


Diff: 2

LO: 9-2




72) Crafty Carpentry Company produces and sells a shelf for $25 each. The beginning inventory is 2,000

shelves, and the desired ending inventory is 2,200 shelves. If budgeted production is 12,500 shelves, what

is the forecasted sales revenue from the shelves?

A) $417,500

B) $307,500

C) $317,500

D) $207,500

Answer: B

Explanation: B)

Production 12,500

+ BI 2,000

Total Produced 14,500

Less: EI 2,200

Unit Sales 12,300 × $ 25 = $ 307,500

Diff: 2

LO: 9-2

EOC: E9-16




23



24/98

73) SportSupplies Corporation has budgeted purchases of inventory for December of $140,000. Expected

beginning inventory on December 1 and ending inventory on December 31 are $90,000 and $120,000,

respectively. If cost of goods sold averages 88% of sales, what are budgeted sales for December?

A) $125,000

B) $96,800

C) $193,182D) $397,727

Answer: A

Explanation: A)

BI $90,000

+ Purchases 140,000

= Goods Available 230,000

Less : EI 120,000

= Cost of Goods Sold $110,000

Now 88% × (Sales) = $ 110,000

Sales = $ 125,500

Diff: 2LO: 9-2

EOC: E9-18




74) Willard's Department Store has budgeted cost of goods sold of $42,000 for its men's shorts in March.

Management also wants to have $7,600 of men's shorts in inventory at the end of March to prepare for the

summer season. Beginning inventory of men's shorts for March is expected to be $5,500. What dollar

amount of men's shorts should be purchased in March?

A) $39,900

B) $44,100

C) $55,100

D) $29,900

Answer: B

Explanation: B)

Cost of Goods Sold $ 42,000

+ EI 7,600


Less BI 5,500

= Purchases 44,100

Diff: 2

LO: 9-2

EOC: E9-20




24



25/98

75) Goddard's Department Store has budgeted cost of goods sold of $44,000 for its men's shorts in March.

Management also wants to have $8,000 of men's shorts in inventory at the end of March to prepare for the

summer season. Beginning inventory of men's shorts for March is expected to be $5,500. What dollar

amount of men's shorts should be purchased in March?

A) $46,500

B) $41,500C) $57,500

D) $30,500

Answer: A

Explanation: A)

Cost of Goods Sold $ 44,000

+ EI 8,000


Less BI 5,500

= Purchases 46,500

Diff: 2

LO: 9-2EOC: E9-20




76) Thomas Corporation recorded sales of $200,000 during March. Management expects sales to increase

5% in April, another 2% in May, and another 10% in June. Cost of goods sold is expected to be 80% of

sales. What is the budgeted gross profit for June?

A) $47,124

B) $43,697

C) $235,620

D) $42,840

Answer: A

Explanation: A)

$ 200,000 × 1.05% = 210,000 × 1.02% = 214,200 × 1.10% = $ 235,620

Now Sales × 80% = Cost of Goods Sold - 188,496 = Gross Profit $ 47,124

Diff: 2

LO: 9-2

EOC: E9-16




25



26/98

77) Meers Corporation had beginning inventory of 21,000 units and expects sales of 76,500 units during

the year. Desired ending inventory is 19,500 units. How many units should Meers Corporation produce?

A) 78,000 units

B) 36,000 units

C) 75,000 units

D) 117,000 unitsAnswer: C

Explanation: C)

Sales $76,500

- BI 21,000

Total needed 55,500

+ EI 19,500

= Production 75,000

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical ThinkingLearning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that


78) Dallas Corporation had beginning inventory of 19,500 units and expects sales of 85,000 units during

the year. Desired ending inventory is 18,500 units. How many units should Dallas Corporation produce?

A) 84,000 units

B) 47,000 units

C) 86,000 units

D) 123,000 units

Answer: A

Explanation: A)

Sales $85,000

- BI 19,500

Total needed 65,500

+ EI 18,500

= Production 84,000

Diff: 2

LO: 9-2

EOC: E9-18




26



27/98

79) Sam's Toys budgeted sales of $300,000 for the month of November and cost of goods sold equal to 80%

of sales. Beginning inventory for November was $50,000 and ending inventory for November is estimated

at $55,000. How much are the budgeted purchases for November?

A) $245,000

B) $65,000

C) $235,000D) $135,000

Answer: A

Explanation: A)

80 % x $ 300,000 = $240,000 Cost of Goods Sold

Less BI 50,000

= 190,000

+ EI 55,000

= Purchases $ 245,000

Diff: 3

LO: 9-2




80) Fosnight Enterprises prepared the following sales budget:

Month Budgeted Sales

March $6,000

April $13,000

May $12,000

June $14,000

The expected gross profit rate is 30% and the inventory at the end of February was $10,000. Desired

inventory levels at the end of the month are 20% of the next month's cost of goods sold.

What is the desired beginning inventory on June 1?

A) $840

B) $1,680

C) $1,960

D) $9,800

Answer: C

Explanation: C)Sales = 100% - 30% Gross Profit = 70% Cost of Goods Sold (CGS)

Now: June Sales $14,000 × 70% = 9,800 (CGS) × 20% = $ 1,960

Diff: 2

LO: 9-2

EOC: E9-20A




27



28/98



March $6,000

April $13,000May $12,000

June $14,000



What is the desired ending inventory on May 31?

A) $840

B) $9,800

C) $1,680

D) $1,960Answer: D

Explanation: D)

Sales = 100% - 30% Gross Profit = 70% Cost of Goods Sold (CGS)


Diff: 2

LO: 9-2

EOC: E9-20A




28



29/98



March $6,000

April $13,000

May $12,000 June $14,000



What is the budgeted cost of goods sold for May?

A) $3,600

B) $4,200

C) $2,400

D) $8,400

Answer: DExplanation: D) $ 12.000 × 70% = $ 8,400

Diff: 2

LO: 9-2

EOC: E9-18




29



30/98



March $6,000

April $13,000

May $12,000 June $14,000



What are the total purchases budgeted for April?

A) $8,680

B) $10,920

C) $8,960

D) $9,240

Answer: CExplanation: C)

Cost of Goods Sold = $ 13,000 × 70% = $ 9,100

Ending Inventory = $12,000 × 70% = 8,400 × 20% = $ 1,680

Beginning Inventory = $ 13,000 × 70% = 9,100 × 20% = $ 1,820

Now: CGS $ 9,100 + EI 1,680 - BI 1,820 = Purchases $ 8,960

Diff: 3

LO: 9-2

EOC: E9-18




30



31/98



March $6,000

April $13,000

May $12,000 June $14,000



What are the total purchases budgeted for May?

A) $8,120

B) $8,960

C) $8,680

D) $10,080


May Beginning Inventory = $ 12,000 × 70% = 8,400 × 20% = $ 1,680May Ending Inventory = $ 14,000 × 70%

= 9,800 × 20% = $ 1,960

May Cost of Goods Sold = $ 12,000 × 70% = $ 8,400

Now $ 8,400 + 1,960 - 1,680 = $ 8,680

Diff: 3

LO: 9-2

EOC: E9-18




31



32/98

85) Sander Enterprises prepared the following sales budget:


March $8,000

April $13,000

May $12,000 June $14,000



What is the desired beginning inventory on June 1?

A) $1,440

B) $1,680

C) $1,120

D) $8,400

Answer: BExplanation: B)


Now: June Sales $ 14,000 × 60% = 8,400 (CGS) × 20% = $ 1,680

Diff: 2

LO: 9-2

EOC: E9-20A




32



33/98



March $8,000

April $13,000

May $12,000 June $14,000



What is the desired ending inventory on May 31?

A) $1,120

B) $1,440

C) $1,680

D) $8,400




Diff: 2

LO: 9-2

EOC: E9-20A




33



34/98



March $8,000

April $13,000

May $12,000 June $14,000



What is the budgeted cost of goods sold for May?

A) $7,200

B) $4,800

C) $2,400

D) $8,400

Answer: AExplanation: A) $ 12,000 × 60% = $ 7,200

Diff: 2

LO: 9-2

EOC: E9-18




34



35/98



March $8,000

April $13,000

May $12,000 June $14,000



What are the total purchases budgeted for April?

A) $9,360

B) $7,440

C) $7,680

D) $7,920


Cost of Goods Sold = $ 13,000 × 60% = $ 7,800

Ending Inventory = $ 12,000 × 60% = 7,200 x 20% = $ 1,440

Beginning Inventory = $ 13,000 × 60% = 7,800 × 20% = $ 1,560

Now: CGS $ 7,800 + EI 1,440 - BI 1,560 = Purchases $ 7,680

Diff: 3

LO: 9-2

EOC: E9-18




35



36/98



March $8,000

April $13,000

May $12,000 June $14,000



What are the total purchases budgeted for May?

A) $8,640

B) $7,680

C) $6,960

D) $7,440

Answer: DExplanation: D)

May Beginning Inventory = $ 12,000 × 60% = 7,200 × 20% = $ 1,440

May Ending Inventory = $ 14,000 × 60% = 8,400 × 20% = $ 1,680

May Cost of Goods Sold = $ 12,000 × 60% = $ 7,200

Now $ 7,200 + 1,680 - 1,440 = $ 7,440

Diff: 3

LO: 9-2

EOC: E9-18




90) A lamp store purchased $3,800 of lamps in September. The store had $1,600 of lamps on hand at the

beginning of September, and expected to have $1,300 of lamps at the end of September to cover part of

anticipated October sales. What is the budgeted cost of goods sold for September?

A) $5,400

B) $4,100

C) $6,700

D) $3,500

Answer: B

Explanation: B) BI $ 1,600

+ Purchases 3,800= Goods Available 5,400

Less : EI 1,300

= Cost of Goods Sold $4,100

Diff: 2

LO: 9-2

EOC: E9-18



36



37/98


91) Warshaw Company budgets payroll at $3,600 per month plus a percentage of monthly sales. The June

operating expense budget includes total payroll of $13,200 with budgeted sales of $160,000. Sales for July

are budgeted at $180,000 while purchases of inventory for July are budgeted at $95,000. Depreciation and

insurance for July are estimated at $1,000 and $600, respectively. Office and administrative expensesrelated to purchasing inventory are budgeted at 10% of purchases for the month. The purchase of $2,500

in equipment and $1,500 in furniture is expected in July.

The July payroll should be budgeted at

A) $14,400.

B) $13,200.

C) $22,500.

D) $15,300.

Answer: A

Explanation: A)

Total Payroll $ 13,200

- fixed payroll - 3,600

= variable payroll =$ 9,600 divided by Sales = 6% (payroll as a % of Sales)

Now: $ 180,000 × 6% = $ 10,800 Variable Payroll

+ 3,600 Fixed

= $ 14,400 Total Payroll

Diff: 3

LO: 9-2

EOC: E9-21




37



38/98




insurance for July are estimated at $1,000 and $600, respectively. Office and administrative expenses

related to purchasing inventory are budgeted at 10% of purchases for the month. The purchase of $2,500


The total operating expenses budgeted for July are

A) $23,900.

B) $14,800.

C) $25,500.

D) $14,400.

Answer: C

Explanation: C)

Inventory $ 95,000 10% = $9,500 Office and Adm. Expense

Total Payroll $13,200- fixed payroll -3,600

= variable payroll = $ 9,600 divided by Sales = 6% (payroll as a % of Sales)

Now: $ 180,000 × 6% = $ 10,800 Variable Payroll

+ 3,600 Fixed

= $ 14,400 Total Payroll

Finally Payroll $ 14,400

+ Office and Adm. expense 9,500

+ Depreciation 1,000

+ Insurance 600

= Total Operating Expense $ 25,500

Diff: 3

LO: 9-2

EOC: E9-23




38



39/98




insurance for July are estimated at $1,000 and $600, respectively. Office and administrative expenses

related to purchasing inventory are budgeted at 10% of purchases for the month. The purchase of $2,500


If the percentage of monthly sales used in budgeting payroll increases 25%, what would the total payroll

budgeted for July be?

A) $20,025

B) $17,100

C) $13,500

D) $14,400

Answer: B

Explanation: B)

June expense budget total payroll $ 13,200

Fixed payroll budget $ (3,600)

June variable payroll budget $ 9,600

Divide by

June budgeted sales $ 160,000

Old variable payroll budget (% of month's sales) 6%

Increase in variable payroll expense 25%

Add 1

125%

Old variable payroll budget (% of month's sales) 6%

New variable payroll budget (% of month'ssales) 8%

July budgeted sales $ 180,000

New variable payroll budget (% of month's

sales) 8%

July variable payroll budget $ 13,500

Fixed payroll budget $ 3,600

July payroll $ 17,100

Diff: 3

LO: 9-2EOC: E9-21




39



40/98

94) At the beginning of the year, Patio Living Corporation has 550 planters in inventory. The company

plans to sell 5,200 planters during the year and wants to have 1,200 planters in inventory at the end of the

year. How many planters must Patio Living Corporation produce during the year?

A) 5,850

B) 6,400

C) 3,450D) 6,950

Answer: A

Explanation: A)

Sales $ 5,200

BI - 550

EI + 1,200

Production $ 5,850

Diff: 1

LO: 9-2

EOC: E9-18

AACSB: Analytical ThinkingLearning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that


95) At the beginning of the year, Lakeview Corporation has 660 life vests in inventory. The company wants

to have 2,100 vests in inventory at the end of the year and plans to sell 6,400 life vests during the year.

How many life vests must Lakeview Corporation produce during the year?

A) 8,500

B) 3,640

C) 7,840

D) 9,160

Answer: C

Explanation: C)

Sales $ 6,400

BI - 660

EI + 2,100

Production $ 7,840

Diff: 1

LO: 9-2

EOC: E9-18




40



41/98

96) Totz Company produces jump ropes. Totz Company has the following sales projections for the

upcoming year:

First quarter budgeted jump rope sales in units 21,000

Second quarter budgeted jump rope sales in units 35,000

Third quarter budgeted jump rope sales in units 22,000Fourth quarter budgeted jump rope sales in units 30,000

Inventory at the beginning of the year was 4,200 jump ropes. Totz Company wants to have 20% of the next

quarter's sales in units on hand at the end of each quarter. How many jump ropes should Totz Company

produce during the first quarter?

A) 16,800

B) 21,000

C) 23,800

D) 32,200

Answer: C

Explanation: C) Unit Sales 2nd Qtr 35,000 × 20% = 7,000 EISales $ 21,000

BI - 4,200

EI + 7,000

Production $ 23,800

Diff: 2

LO: 9-2

EOC: E9-18




41



42/98

97) Jolly Company produces hula hoops. Jolly Company has the following sales projections for the

upcoming year:

First quarter budgeted hula hoop sales in units 22,100

Second quarter budgeted hula hoop sales in

units 28,000Third quarter budgeted hula hoop sales in units 22,000

Fourth quarter budgeted hula hoop sales in

units 30,000

Jolly Company wants to have 25% of the next quarter's sales in units on hand at the end of each quarter.

Inventory at the beginning of the year was 5,525 hula hoops. How many hula hoops should Jolly

Company produce during the first quarter?

A) 34,625

B) 23,575

C) 16,575

D) 22,100Answer: B

Explanation: B) Unit Sales 2nd Qtr 28,000 × 25% = 7,000 EI

Sales $ 22,100

BI - 5,525

EI + 7,000

Production $ 23,575

Diff: 2

LO: 9-2

EOC: E9-18



42



43/98

98) Daisy Company manufactures dog collars. The following selected data relates to Daisy Company's

budgeted sales and inventory levels of the dog collars for the upcoming quarter:

October expected unit sales 2,000

November expected unit sales 2,600

December expected unit sales 2,200October desired ending unit finished goods inventory 850

November desired ending unit finished goods inventory 720

December desired ending unit finished goods inventory 520

How many dog collars should Daisy Company produce in November?

A) 2,870

B) 3,320

C) 4,170

D) 2,470

Answer: D

Explanation: D)Sales $ 2,600

BI - 850

EI + 720

Production 2,470

Diff: 2

LO: 9-2

EOC: E9-18




43



44/98

99) Victoria Corporation manufactures quality vases. Budgeted sales and production data for the vases

are as follows:

Month 1 budgeted unit sales 2,000

Month 2 budgeted unit sales 2,500

Month 3 budgeted unit sales 3,200Month 1 budgeted unit production 2,400

Month 2 budgeted unit production 2,700

Month 3 budgeted unit production 3,400

Raw material required for each finished unit (in pounds) 1

The ending inventory for each month should be equal to 20% of the next month's production needs. Each

vase requires one pound of clay in its manufacture. Victoria Corporation has a policy that the inventory of

clay at the end of each month needs to be equal to 20% of the production needs for the following month.

At the beginning of January, 480 pounds of clay were in inventory. How many pounds of clay would

Victoria Corporation need to purchase in February?

A) 2,660B) 2,940

C) 3,620

D) 2,840

Answer: D

Explanation: D)

Production Month 2 2,700

Less BI (2,700 × 20%) - 540

Plus EI (3,400 × 20%) +680

Equals Purchases 2,840

Diff: 2

LO: 9-2EOC: E9-19




44



45/98

100) Terrific Toys Company manufactures and sells children's skateboards. Each skateboard requires four

bearings. For September, Terrific Toys Company has budgeted skateboard sales of 530 skateboards, while

570 skateboards are scheduled to be produced. Terrific Toys Company will begin September with 220

bearings in its beginning inventory. How many bearings should Terrific Toys Company purchase for

September?

A) 310B) 2,280

C) 2,500

D) 2,060

Answer: D

Explanation: D)

Production 570 × 4 = 2,280 - 220 (BI) = 2,060

Diff: 2

LO: 9-2

EOC: E9-19



101) Beloved Baby Company manufactures and sells children's strollers. Each stroller requires eight

screws. For September, Beloved Baby Company will begin September with 380 screws in its beginning

inventory. Beloved Baby Company has budgeted stroller sales of 530 strollers, while 570 strollers are

scheduled to be produced. How many screws should Beloved Baby Company purchase for September?

A) 150

B) 4,180

C) 4,940

D) 4,560

Answer: B

Explanation: B) Production 570 × 8 = 4,560 - 380 (BI) = 4,180

Diff: 2

LO: 9-2

EOC: E9-19




45



46/98

102) The Porch Cushion Company manufactures foam cushions. The number of cushions to be produced

in the upcoming three months follows:

Number of foam cushions to be produced in July 12,000

Number of foam cushions to be produced in August 15,000

Number of foam cushions to be produced in September 10,000Each cushion requires 2 pounds of the foam used as stuffing. The company has a policy that the ending

inventory of foam each month must be equal to 25% of the following month's expected production needs.

How many pounds of foam does The Porch Cushion Company need to purchase in August?

A) 27,500

B) 20,000

C) 22,500

D) 42,500

Answer: A

Explanation: A)

August Production 15,000 × 25% = 3,750

September Production 10,000 × 25% = 2,500

Now Production August15,000

Less BI - 3,750

Plus EI + 2,500

Equals Purchases 13,750 × 2 pounds = 27,500

Diff: 2

LO: 9-2

EOC: E9-19




103) Mighty Corporation manufactures end tables. Each end table requires .50 direct labor hours in its

production. Mighty Corporation has a direct labor rate of $15 per direct labor hour. The production

budget shows that Mighty Corporation plans to produce 1,000 end tables in March and 1,100 end tables

in April. What is the total combined direct labor cost that should be budgeted for March and April?

A) 8,250

B) 7,500

C) 15,750

D) 31,500

Answer: C

Explanation: C)

March production 1,000

+ April production1,100

Total 2,100 × .5 = 1,050 hours × $ 15 = $ 15,750

Diff: 2

LO: 9-2

EOC: E9-21



46



47/98


104) Forty Winks Corporation manufactures night stands. The production budget shows that Forty Winks

Corporation plans to produce 1,200 night stands in March and 1,050 night stands in April. Each night

stand requires .50 direct labor hours in its production. Forty Winks Corporation has a direct labor rate of

$12 per direct labor hour. What is the total combined direct labor cost that should be budgeted for Marchand April?

A) 6,300

B) 7,200

C) 27,000

D) 13,500

Answer: D

Explanation: D)

March production 1,200

+ April production1,050

Total 2,250 × .5 = 1,125 hours × $ 12 = $ 13,500

Diff: 2

LO: 9-2

EOC: E9-21




47



48/98

105) List the operating budgets. Describe the purpose of each of the budgets listed and the order in which

they are prepared. Describe how the budgets are interrelated.

Answer: The operating budgets are as follows:

1. Sales budget — shows the number of units to be sold and the total sales revenue.

2. Production budget — shows the number of units to be produced to support the sales to be made.3. Direct materials budget — shows the amount and dollar amount of direct materials to be purchased to

support the production budget.

4. Direct labor budget — shows the number of direct labor hours required to support the number of

products to be purchased from the production budget.

5. Manufacturing overhead budget — shows the budgeted manufacturing overhead to be incurred to

support the number of units being produced as denoted on the production budget.

6. Operating expenses budget — all research and development, design, marketing, distribution, and

customer service costs will be shown on the operating expenses budget.

7. Budgeted income statement — is constructed after preparing all of the above budgets.

The operating budgets are the budgets needed to run the daily operations of the company. The operating

budgets culminate in a budgeted income statement. The starting point of the operating budgets is thesales budget, because it affects most other components of the master budget. After estimating sales,

manufacturers prepare the production budget, which determines how many units need to be produced.

Once production volume is established, managers prepare the budgets determining the amounts of direct

materials, direct labor, and manufacturing overhead that will be needed to meet production. Next,

managers prepare the operating expenses budget. After all of these budgets are prepared, management

will be able to prepare the budgeted income statement.

Diff: 2

LO: 9-2

EOC: E9-23




48



49/98

106) Carlton Cookie Company produces a hand-processed gourmet cookie that is made with organic

sugar. Five (5) pounds of organic sugar are required per batch of gourmet cookies. The organic sugar costs

$2.40 per pound. The company needs to have 20% of the following month's production needs of organic

sugar in ending inventory so it is on hand to start each month. A total of 120 pounds of organic sugar are

expected to be on hand on April 1.

1. Budgeted production of the gourmet cookies for the first four months of the upcoming year is as

follows:

Number of batches of cookies to be produced in January 600

Number of batches of cookies to be produced in February 750

Number of batches of cookies to be produced in March 800

Number of batches of cookies to be produced in April 700

Required:

Prepare a direct materials budget for organic sugar for each of the months in the second quarter and forthe second quarter in total. Include both the quantity of sugar to be purchased and the cost of the

purchases in each month.

Answer:

Diff: 3

LO: 9-2

EOC: E9-21




49



50/98

107) Frisbee Enterprises produces frisbees. Frisbee Enterprises has the following sales projections for the

upcoming year:

First quarter budgeted frisbee sales in units 20,000

Second quarter budgeted frisbee sales in units 35,000

Third quarter budgeted frisbee sales in units 22,000Fourth quarter budgeted frisbee sales in units 30,000

Inventory at the beginning of the year was 6,000 frisbees. Frisbee Enterprises wants to have 30% of the

next quarter's sales in units on hand at the end of each quarter. How many frisbees should Frisbee

Enterprises produce during the first quarter? Show your calculations.

Answer:

Finished goods inventory at end of each quarter, as

percent of next quarter's budgeted unit sales 30%

Second quarter budgeted frisbee sales in units 35,000

First quarter ending inventory 10,500

First quarter ending inventory 10,500

First quarter budgeted frisbee sales in units 20,000

Beginning frisbee inventory in units (6,000)

Units to produce 24,500

Diff: 2

LO: 9-2

EOC: E9-18




50



51/98

108) Birch Company manufactures coffee makers. The following selected data relates to Birch Company's

budgeted sales and inventory levels of the coffee makers for the upcoming quarter. How many coffee

makers should Birch Company produce in November? Show your calculations.

October expected unit sales 1,000

November expected unit sales 1,500December expected unit sales 3,300

October desired ending unit finished goods inventory 800


December desired ending unit finished goods inventory 600

Answer:


November expected unit sales 1,500

October desired ending unit finished goods inventory (800)

Units to produce 1,650

Diff: 2

LO: 9-2

EOC: E9-18




109) Sally Scooters manufactures and sells scooters. Each scooter requires two rear view mirrors. For

September, Sally Scooters has budgeted sales of 415 scooters, while 450 scooters are scheduled to be

produced. Sally Scooters will begin September with 220 rear view mirrors in its beginning inventory. How

many rear view wheels should Sally Scooters purchase for September?Answer: 680

Budgeted number of scooters to be produced 450

Rear view mirrors per scooter 2

Mirrors to be used 900

Number of mirrors in beginning inventory (220)

Rear view mirrors to purchase 680

Diff: 2

LO: 9-2

EOC: E9-18




51



52/98

110) Pristine Yards Manufacturing produces weed whackers. On March 31, Pristine Yards Manufacturing

had 144 weed whackers in inventory. The company has a policy that the ending inventory in any month

must be 12% of the following month's expected sales. Pristine Yards Manufacturing expects to sell the

following number of weed whackers in each of the next four months:

Required:

Prepare a production budget for the second quarter, with a column for each month and for the quarter.

Answer:

Diff: 2

LO: 9-2

EOC: E9-18




52



53/98

111) Flawless Lawns Manufacturing produces lawn edgers. The company has a policy that the ending

inventory in any month must be 10% of the following month's expected sales. On March 31, Flawless

Lawns Manufacturing had 140 lawn edgers in inventory. Flawless Lawns Manufacturing expects to sell

the following number of lawn edgers in each of the next four months:

Required:

Prepare a production budget for the second quarter, with a column for each month and for the quarter.

Answer:

Diff: 2

LO: 9-2

EOC: E9-18




53



54/98

112) Timber Run Company has prepared the following forecasts of monthly sales:

January February March April

Sales (in units) 3,400 4,790 3,570 3,210

Timber Run Company has decided that the number of units in its inventory at the end of each monthshould equal 80% of next month's sales. The budgeted cost per unit is $10.

How many units should be in January's beginning inventory?

Answer:

January unit sales 3,400

Ending inventory (% next month's sales) 80%

January unit beginning inventory 2,720

Diff: 2

LO: 9-2

EOC: E9-18AACSB: Reflective Thinking



113) A cash collections budget is focused on the timing of cash receipts.

Answer: TRUE

Diff: 1

LO: 9-3

EOC: E9-31



114) A company's plan for purchases of property, plant, equipment, and other long-term assets is part of

the budgeted balance sheet.

Answer: TRUE

Diff: 1

LO: 9-3

EOC: E9-31




54



55/98

115) The budgeted cash collections from credit customers generally only reflect sales made in the current

month.

Answer: FALSE

Diff: 1

LO: 9-3

EOC: E9-26AACSB: Reflective Thinking



116) The cash budget is prepared before the operating budget.

Answer: FALSE

Diff: 1

LO: 9-3

EOC: E9-26



117) The cash budget is prepared before the budgeted balance sheet is prepared.

Answer: TRUE

Diff: 1

LO: 9-3

EOC: E9-26




118) The cash budget helps managers determine whether or not the company will need financing in a

given month.

Answer: TRUE

Diff: 1

LO: 9-3

EOC: E9-28




119) Budget committee is a what-if technique that asks what a result will be if a predicted amount is not

achieved or if an underlying assumption changes.

Answer: FALSE

Diff: 1

LO: 9-3

EOC: E9-26




55



56/98

120) A company sells goods and offers credit terms of "net 30 days." What does this mean for the

company that sold the goods?

A) It does not have to ship the goods for 30 days

B) It cannot recognize the sales credit for 30 days

C) It offers a 30% discount for customers that use credit cards.D) The customer has up to 30 days to pay back the seller for the goods purchased without penalty.

Answer: D

Diff: 1

LO: 9-3

EOC: E9-26




121) Which of the following items would be shown on a cash payments budget?

A) Bad debt expenseB) Depreciation expense

C) Cash dividends

D) Gains on sales of equipment

Answer: C

Diff: 1

LO: 9-3

EOC: E9-26




122) Which of the following types of cash outlays has its own budget?

A) Capital expenditures

B) Dividends

C) Income taxes

D) All of the above

Answer: A

Diff: 1

LO: 9-3

EOC: E9-31




56



57/98

123) All of the following are shown on the combined cash budgetexcept

A) projected cash balance at the end of the month.

B) projected cash collections and cash payments.

C) projected borrowings and repayments.

D) All of the above are shown on the combined cash budget

Answer: DDiff: 1

LO: 9-3

EOC: E9-28




124) A company should ________ when projecting cash receipts for a given month.

A) include only cash collections from sales made in that month

B) only list COD sales made in that month

C) only list credit sales made in that monthD) include cash to be collected in that month regardless of when the sale was made

Answer: D

Diff: 1

LO: 9-3

EOC: E9-28




125) "Financial budget" is best described by which of the following?

A) A company's plan for purchases of property, plant and equipment, and other long-term assets

B) A budget that projects cash inflows and outflows and the end of period budgeted balance sheet

C) A budget that shows projected sales, purchases and operating expenses

D) A system for evaluating the performance of each responsibility center and its manager

Answer: B

Diff: 1

LO: 9-3

EOC: E9-30




57



58/98

126) "Capital expenditures budget" is best described by which of the following?

A) Details as to how the company expects to go from the beginning cash balance to the desired ending

cash balance

B) A system for evaluating the performance of each responsibility center and its manager

C) A company's plan for purchases of property, plant and equipment, and other long-term assets

D) A budget that projects cash inflows and outflows and the end of period budgeted balance sheetAnswer: C

Diff: 1

LO: 9-3

EOC: E9-33




127) The ________ technique asks what a result will be if a predicted amount is not achieved or if an

underlying assumption changes.

A) sensitivity analysisB) ratio analysis

C) risk analysis

D) strategic analysis

Answer: A

Diff: 1

LO: 9-3

EOC: S9-2




128) "Cash budget" is best defined by which of the following?

A) A company's plan for purchases of property, plant and equipment, and other long-term assets

B) Details as to how the company expects to go from the beginning cash balance to the desired ending

cash balance

C) A system for evaluating the performance of each responsibility center an

Documents

233289982 Chapter 9 Quiz Info