16. Which of the following budgets are prepared
before the sales budget?
|
|
Budgeted
Income Statement
|
Direct
Labor Budget
|
|
A)
|
Yes
|
Yes
|
|
B)
|
Yes
|
No
|
|
C)
|
No
|
Yes
|
|
D)
|
No
|
No
|
Ans: D
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
17. The
usual starting point for a master budget is:
A) the
direct materials purchase budget.
B) the
budgeted income statement.
C) the
sales forecast or sales budget.
D) the
production budget.
Ans: C
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
18. Which
of the following budgets are prepared before the cash budget?
|
|
Selling
and Administrative Expense Budget
|
Production
Budget
|
|
A)
|
Yes
|
Yes
|
|
B)
|
Yes
|
No
|
|
C)
|
No
|
Yes
|
|
D)
|
No
|
No
|
Ans: A
AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium
19. Which
of the following benefits could an organization reasonably expect from an
effective budget program?
A) Better
control of the organization's costs.
B) Better
coordination of an organization's activities.
C) Better
communication of the organization's objectives.
D) All
of the above.
Ans: D
AACSB: Reflective Thinking
AICPA BB: Resource Management, Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
20. An
organization's budget program should not be used:
A) to
motivate employees.
B) to
assign blame to managers that do not meet budgetary goals.
C) to
help evaluate managers.
D) to
allocate resources to the various parts of an organization.
Ans: B
AACSB: Reflective Thinking
AICPA BB: Resource Management, Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
21. A
basic idea underlying __________________ is that a manager should be held
responsible only for those items that the manager can actually control to a
significant extent.
A) participative
budgeting
B) planning
and control
C) responsibility
accounting
D) the
master budget
Ans: C
AACSB: Reflective Thinking
AICPA BB: Resource Management, Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
22. When
preparing a merchandise purchases budget, the required purchases in units
equals:
A) budgeted
unit sales + beginning merchandise inventory + desired merchandise ending inventory.
B) budgeted
unit sales - beginning merchandise inventory + desired merchandise ending
inventory.
C) budgeted
unit sales - beginning merchandise inventory - desired merchandise ending
inventory.
D) budgeted
unit sales + beginning merchandise inventory - desired merchandise ending
inventory.
Ans: B
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy
23. When
preparing a direct materials budget, the required purchases of raw materials in
units equals:
A) raw
materials needed to meet the production schedule + desired ending inventory of
raw materials - beginning inventory of raw materials.
B) raw
materials needed to meet the production schedule - desired ending inventory of
raw materials - beginning inventory of raw materials.
C) raw
materials needed to meet the production schedule - desired ending inventory of
raw materials + beginning inventory of raw materials.
D) raw
materials needed to meet the production schedule + desired ending inventory of
raw materials + beginning inventory of raw materials.
Ans: A
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Easy
24. Which
of the following statements is NOT correct concerning the Manufacturing
Overhead Budget?
A) The
Manufacturing Overhead Budget provides a schedule of all costs of production
other than direct materials and labor costs.
B) The
Manufacturing Overhead Budget shows only the variable portion of manufacturing
overhead.
C) The
Manufacturing Overhead Budget shows the expected cash disbursements for
manufacturing overhead.
D) The
Manufacturing Overhead Budget is prepared after the Sales Budget.
Ans: B
AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
25. Which
of the following statements is NOT correct concerning the Cash Budget?
A) It
is not necessary to prepare any other budgets before preparing the Cash Budget.
B) The
Cash Budget should be prepared before the Budgeted Income Statement.
C) The
Cash Budget should be prepared before the Budgeted Balance Sheet.
D) The
Cash Budget builds on earlier budgets and schedules as well as additional data.
Ans: A AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
26. Pitkins
Company collects 20% of a month's sales in the month of sale, 70% in the month
following sale, and 6% in the second month following sale. The remainder is
uncollectible. Budgeted sales for the next four months are:
|
|
|
January
|
February
|
March
|
April
|
|
|
Budgeted sales.......
|
$200,000
|
$300,000
|
$350,000
|
$250,000
|
Cash collections in April are
budgeted to be:
A) $321,000
B) $313,000
C) $320,000
D) $292,000
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
Solution:
|
|
April sales ($250,000 × 20%).............
|
$ 50,000
|
|
|
March sales ($350,000 × 70%)...........
|
245,000
|
|
|
February sales ($300,000 × 6%).........
|
18,000
|
|
|
Total....................................................
|
$313,000
|
27. Sioux
Company is estimating the following sales for the first six months of next
year:
|
|
January......
|
$250,000
|
|
|
February....
|
$220,000
|
|
|
March........
|
$240,000
|
|
|
April..........
|
$300,000
|
|
|
May...........
|
$360,000
|
Sales at Sioux are normally
collected as 60% in the month of sale, 35% in the month following the sale, and
the remaining 5% being uncollectible. Based on this information, how much cash
should Sioux expect to collect during the month of April?
A) $250,800
B) $264,000
C) $290,700
D) $306,000
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium
Solution:
|
|
April sales ($300,000 × 60%).............
|
$180,000
|
|
|
March sales ($240,000 × 35%)...........
|
84,000
|
|
|
Total....................................................
|
$264,000
|
28. All
of Gaylord Company's sales are on account. Thirty-five percent of the credit
sales are collected in the month of sale, 45% in the month following sale, and
the rest are collected in the second month following sale. Bad debts are
negligible and should be ignored. The following are budgeted sales data for the
company:
|
|
|
January
|
February
|
March
|
April
|
|
|
Total sales..............
|
$50,000
|
$60,000
|
$40,000
|
$30,000
|
What is the amount of cash that
should be collected in March?
A) $39,000
B) $37,000
C) $27,500
D) $51,000
Ans: D AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
Solution:
|
|
March sales ($40,000 × 35%).............
|
$14,000
|
|
|
February sales ($60,000 × 45%).........
|
27,000
|
|
|
January sales ($50,000 × 20%*).........
|
10,000
|
|
|
Total....................................................
|
$51,000
|
*100% − 35% − 45% = 20%
29. On
January 1, Barnes Company has 8,000 units of Product A on hand. During the
year, the company plans to sell 30,000 units of Product A, and plans to have
6,500 units on hand at year end. How many units of Product A must be produced
during the year?
A) 28,500
B) 31,500
C) 30,000
D) 36,500
Ans: A AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy
Solution:
Units
produced = Ending inventory + Units sold − Beginning inventory
= 6,500 + 30,000 − 8,000
= 28,500
30. Betz
Company's sales budget shows the following projections for next year:
|
|
|
Sales
in units
|
|
|
First Quarter......................
|
60,000
|
|
|
Second Quarter..................
|
80,000
|
|
|
Third Quarter.....................
|
45,000
|
|
|
Fourth Quarter...................
|
55,000
|
Inventory at the beginning of the
year was 18,000 units. The finished goods inventory at the end of each quarter
is to equal 30% of the next quarter's budgeted unit sales. How many units
should be produced during the first quarter?
A) 24,000
B) 48,000
C) 66,000
D) 72,000
Ans: C AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium Source: CPA, adapted
Solution:
Units
produced = Ending inventory + Units sold + Beginning inventory
= (30% × 80,000) + 60,000 − 18,000
= 24,000 + 60,000 − 18,000 = 66,000
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