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Exam 22: Master Budgets and Planning

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Question 51

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The task of preparing a budget should be the sole task of the most important department in an organization.

A) True
B) False

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Question 52

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In preparing a budget for the last three months of the current year,Urban Company is planning the units of merchandise it must order each month.The company's policy is to have 15% of the next month's sales in its inventory at the end of each month.Projected sales for October,November,and December are 27,000 units,29,500 units,and 32,500 units,respectively.How many units must be ordered in November?

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Question 53

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What is activity-based budgeting?

Operating budgets include all the following budgets except the:

Which of the following is a benefit derived from budgeting?

What is a capital expenditures budget?

The process of evaluating performance can be improved by using budgets.

The sales budget is derived from the production budget.

The manufacturing budget shows only the direct materials needed for production.

The budgets within the master budget must be prepared in a definite sequence as dictated by GAAP.

A company's history indicates that 20% of its sales are for cash and the rest are on credit.Collections on credit sales are 20% in the month of the sale,50% in the next month,25% the following month,and 5% is uncollectible.Projected sales for December,January,and February are $60,000,$85,000 and $95,000,respectively.The February expected cash receipts from all current and prior credit sales is:

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a:

The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.

Financial budgets are normally completed after preparation of operating and capital expenditure budgets.

The sales budget for Carmel shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12,respectively.The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units.The beginning inventory of Product B is 2,500 units.The desired ending inventory of B is 3,000 units.Budgeted purchases of Product A for the year would be:

Which of the following accounts would appear on a budgeted balance sheet?

Slim Corp.requires a minimum $8,000 cash balance.If necessary,loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly).Loans are repaid at month's end from any excess cash.The cash balance on July 1 is $8,400.Cash receipts other than for loans received for July,August,and September are forecasted as $24,000,$32,000,and $40,000,respectively.Payments other than for loan or interest payments for the same period are planned at $28,000,$30,000,and $32,000,respectively at July 1,there are no outstanding loans. Required: Prepare a cash budget for July,August,and September.

To determine the production budget for an accounting period,consideration is given to all of the following except:

The production budget for Sergei Company revealed the following production volume for the months of July - September.Each unit produced requires 2 hours of direct labor.The direct labor rate is currently $16 per hour but is predicted to be $16.75 per hour in September.Prepare a direct labor budget for Sergei Company for July - September.

Consulting the persons affected by a budget when it is prepared can provide an effective means of motivation and cooperation.