CHAPTER 9 BUDGETARY PLANNING SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY. True-False Statements. Multiple Choice Questions

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1 HTER 9 BUDGETARY PLANNING SUMMARY OF QUESTIONS BY STUDY OBJETIVES AND BLOOM S TAXONOMY Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT. 4. sg. sg st 147. sg 148. st 149. sg 10. st 11. sg 1. st 1. sg 14. st 1. sg 16. sg 17. sg True-False Statements sg 1. sg. sg sg Multiple hoie Questions AN Brief Exerises sg This question also appears in the Study Guide.

2 9- st Test Bank for Managerial Aounting, Fifth Edition This question also appears in a self-test at the student ompanion website. SUMMARY OF QUESTIONS BY STUDY OBJETIVES AND BLOOM S TAXONOMY Exerises , ,6 6 6 ompletion Statements Mathing Short-Answer Essay SUMMARY OF STUDY OBJETIVES BY QUESTION TYPE Item Type Item Type Item Type Item Type Item Study Objetive Study Objetive Study Objetive Type Item Type Item Type Ma 09. SA BE BE BE BE Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex SA SA SA

3 Budgetary Planning Note: = True-False = Multiple hoie SA = Short-Answer Essay Study Objetive Ex Ex 18. Ex Study Objetive Study Objetive BE BE BE BE BE BE Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex 194. Ex Ex BE = Brief Exerise Ex = Exerise = ompletion Ma = Mathing HTER STUDY OBJETIVES 1. Identify the benefits of budgeting. The primary advantages of budgeting are that it (a) requires management to plan ahead, (b) provides definite objetives for evaluating performane, () reates an early warning system for potential problems, (d) failitates oordination of ativities, (e) results in greater management awareness, and (f) motivates personnel to meet planned objetives.. State the essentials of effetive budgeting. The essentials of effetive budgeting are (a) sound organizational struture, (b) researh and analysis, and () aeptane by all levels of management.. Identify the budgets that omprise the master budget. The master budget onsists of the following budgets: (a) sales, (b) prodution, () diret materials, (d) diret labor, (e) manufaturing overhead, (f) selling and administrative expense, (g) budgeted inome statement, (h) apital expenditure budget, (i) ash budget, and (j) budgeted balane sheet. 4. Desribe the soures for preparing the budgeted inome statement. The budgeted inome statement is prepared from (a) the sales budget, (b) the budgets for diret materials, diret labor, and manufaturing overhead, and () the selling and administrative expense budget.. Explain the prinipal setions of a ash budget. The ash budget has three setions (reeipts, disbursements, and finaning) and the beginning and ending ash balanes. 6. Indiate the appliability of budgeting in nonmanufaturing ompanies. Budgeting may be used by merhandisers for development of a merhandise purhases budget. In servie enterprises budgeting is a ritial fator in oordinating staff needs with antiipated servies. In not-for-profit organizations, the starting point in budgeting is usually expenditures, not reeipts.

4 9-4 Test Bank for Managerial Aounting, Fifth Edition TRUE-FALSE STATEMENTS 1. Budgets are statements of management's plans stated in finanial terms. Ans: T, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem Solving, IMA: Business Eonomis. A benefit of budgeting is that it provides definite objetives for evaluating performane. Ans: T, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem Solving, IMA: Business Eonomis. A budget an be a means of ommuniating a ompany's objetives to external parties. Ans: F, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem Solving, IMA: Business Eonomis 4. A budget an be used as a basis for evaluating performane. Ans: T, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem Solving, IMA: Business Eonomis. A well-developed budget an operate and enfore itself. Ans: F, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem Solving, IMA: Business Eonomis 6. The budget itself and the administration of the budget are the responsibility of the aounting department. Ans: F, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem Solving, IMA: Business Eonomis 7. Effetive budgeting requires learly defined lines of authority and responsibility. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem Solving, IMA: Business Eonomis 8. The flow of input data for budgeting should be from the highest levels of responsibility to the lowest. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem 9. Budgets an have a positive or negative effet on human behavior depending on the manner in whih the budget is developed and administered. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Risk Management, AIPA P: Interation, IMA: Performane Measurement 10. A budget an failitate the oordination of ativities among the segments of a large ompany. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem 11. The longer the budget period, the more reliable the estimates of future outomes. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem 1. The budget ommittee has the responsibility for oordinating the preparation of the budget. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation 1. The budget is developed within the framework of a sales foreast. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P:

5 Budgetary Planning Budgeting and long-range planning are two terms that desribe the same proess. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Deision Modeling, AIPA P: 1. Long-range plans are used more as a review of progress toward long-term goals rather than an evaluation of speifi results to be ahieved. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 16. The master budget reflets management's long-term plans enompassing five years or more. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 17. The master budget onsists of operating and finanial budgets. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 18. Finanial budgets must be ompleted before the operating budgets an be prepared. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem 19. The diret materials budget must be ompleted before the prodution budget beause the quantity of materials available for prodution must be known. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem 0. The number of diret labor hours needed for prodution is obtained from the prodution budget. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem 1. A manufaturing overhead budget is not needed if the ompany develops a predetermined overhead rate to apply overhead. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem. The manufaturing overhead budget generally has separate setions for variable, mixed, and fixed osts. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem. A prodution budget should be prepared before the sales budget. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem 4. The diret materials budget ontains both quantity and ost data. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem. The budgeted inome statement indiates the expeted profitability of operations for the next year. Ans: T, SO: 4, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P:

6 Test Bank for Managerial Aounting, Fifth Edition If a monthly ash budget is prepared properly, there will never be a ash defiieny at the end of any month. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 7. The budgeted balane sheet is prepared entirely from the budgets for the urrent year. Ans: F, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem 8. The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first. Ans: T, SO: 6, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 9. A merhandiser has a merhandise purhases budget rather than a prodution budget. Ans: T, SO: 6, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Deision Modeling, AIPA P: 0. A ritial fator in budgeting for a servie firm is to determine the amount of produts to purhase. Ans: F, SO: 6, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Deision Modeling, AIPA P: 1. The budget itself and the administration of the budget are entirely aounting responsibilities. Ans: F, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Deision Modeling, AIPA P:. Finanial planning models and statistial and mathematial tehniques may be used in foreasting sales. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P:. The diret materials budget is derived from the diret materials units required for prodution plus desired ending diret materials units less beginning diret materials units. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem 4. The manufaturing overhead budget shows the expeted manufaturing overhead osts. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem. In order to develop a budgeted balane sheet, the previous year's balane sheet is needed. Ans: T, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem 6. In servie enterprises, the ritial fator in budgeting is oordinating materials and equipment with antiipated servies. Ans: F, SO: 6, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Deision Modeling, AIPA P:

7 Budgetary Planning 9-7 Answers to True-False Statements Item Ans. T T F T F F Item Ans. T F T T F T Item Ans. T F T F T F Item Ans. F T F F F T Item Ans. Item T F F T T F Ans. F T T T T F MULTIPLE HOIE QUESTIONS 7. Why are budgets useful in the planning proess? a. They provide management with information about the ompany's past performane. b. They help ommuniate goals and provide a basis for evaluation.. They guarantee the ompany will be profitable if it meets its objetives. d. They enable the budget ommittee to earn their payhek. Ans: B, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 8. A budget a. is a substitute for management. b. is an aid to management.. an operate or enfore itself. d. is the responsibility of the aounting department. Ans: B, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 9. Aounting generally has the responsibility for a. setting ompany goals. b. expressing the budget in finanial terms.. enforing the budget. d. administration of the budget. Ans: B, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Problem Solving, IMA: Business Eonomis 40. Whih one of the following is not a benefit of budgeting? a. It failitates the oordination of ativities. b. It provides definite objetives for evaluating performane.. It provides assurane that the ompany will ahieve its objetives. d. It requires all levels of management to plan ahead on a reurring basis. Ans:, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 41. Budgeting is usually most losely assoiated with whih management funtion? a. Planning b. Direting. Motivating d. ontrolling Ans: A, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P:

8 Test Bank for Managerial Aounting, Fifth Edition Whih of the following items does not follow from the adoption of a budget? a. Promote effiieny b. Deterrent to waste. Basis for performane evaluation d. Guarantee of aomplishing the profit objetive Ans: D, SO: 1, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 4. Whih is true of budgets? a. They are voted on and approved by stokholders. b. They are used in the planning, but not in the ontrol, proess.. There is a standard form and struture for budgets. d. They are used in performane evaluation. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 44. A ommon starting point in the budgeting proess is a. expeted future net inome. b. past performane.. to motivate the sales fore. d. a lean slate, with no expetations. Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 4. If budgets are to be effetive, all of the following must be present exept a. aeptane at all levels of management. b. researh and analysis in setting realisti goals.. stokholders' approval of the budget. d. sound organizational struture. Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation 46. If budgets are to be effetive, there must be a. a history of suessful operations. b. independent verifiation of budget goals.. an organizational struture with learly defined lines of authority and responsibility. d. exess plant apaity. Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation 47. It is important that budgets be aepted by a. division managers. b. department heads.. supervisors. d. all of these. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation

9 Budgetary Planning Whih of the following statements about budget aeptane in an organization is true? a. The most widely aepted budget by the organization is the one prepared by top management. b. The most widely aepted budget by the organization is the one prepared by the department heads.. Budgets are hardly ever aepted by anyone exept top management. d. Budgets have a greater hane of aeptane if all levels of management have provided input into the budgeting proess. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation 49. Top management noties a variation from budget and an investigation of the differene reveals that the department manager ould not be expeted to have ontrolled the variation. Whih of the following statements is appliable? a. Department managers should be held aountable for all varianes from budgets for their departments. b. Department managers should only be held aountable for ontrollable varianes for their departments.. Department managers should be redited for favorable varianes even if they are beyond their ontrol. d. Department managers' performanes should not be evaluated based on atual results to budgeted results. Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Professional Demeanor, IMA: Business Eonomis 0. An unrealisti budget is more likely to result when it a. has been developed in a top down fashion. b. has been developed in a bottom up fashion.. has been developed by all levels of management. d. is developed with performane appraisal usages in mind. Ans: A, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Business Eonomis 1. A budget is most likely to be effetive if a. it is used to assess blame when things do not our aording to plans. b. it is not used to evaluate a manager's performane.. employees and managers at the lower levels do not get involved in the budgeting proess. d. it has top management support. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation. In many ompanies, responsibility for oordinating the preparation of the budget is assigned to a. the ompany's independent ertified publi aountants. b. the ompany's internal auditors.. the ompany's board of diretors. d. a budget ommittee. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation

10 9-10. Test Bank for Managerial Aounting, Fifth Edition A budget period should be a. monthly. b. for a year or more.. long-term. d. long enough to provide an obtainable goal under normal business onditions. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 4. If a ompany has adopted ontinuous budgeting, the budget will show plans for a. every day. b. a full year ahead.. the urrent year and the next year. d. at least five years. Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P:. The most ommon budget period is a. one month. b. three months.. six months. d. one year. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 6. Budget development for the oming year usually starts a. a year in advane. b. the first month of the year to be budgeted.. several months before the end of the urrent year. d. the last month of the previous year. Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation 7. The budget ommittee would not normally inlude the a. researh diretor. b. treasurer.. sales manager. d. external auditor. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation 8. The budget ommittee in a ompany is often headed by the a. president. b. ontroller.. treasurer. d. budget diretor. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: Leadership, IMA: Budget Preparation 9. Long-range planning a. generally presents more detailed information than an annual budget. b. generally enompasses a longer period of time than an annual budget.. is usually more aurate than an annual budget. d. is prepared on a quarterly basis if the budget is prepared on a quarterly basis. Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P:

11 Budgetary Planning Long-range planning usually enompasses a period of at least a. six months. b. 1 year.. years. d. 10 years. Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 61. Whih of the following is not a proper math-up? a. Long range planning Strategies b. Budgeting Short-term goals. Long-range planning years d. Budgeting Long-term goals Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 6. Whih is the last step in developing the master budget? a. Preparing the budgeted balane sheet b. Preparing the ost of goods manufatured budget. Preparing the budgeted inome statement d. Preparing the ash budget Ans: A, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 6. If there were 60,000 pounds of raw materials on hand on January 1, 10,000 pounds are desired for inventory at January 1, and 60,000 pounds are required for January prodution, how many pounds of raw materials should be purhased in January? a. 00,000 pounds b. 480,000 pounds. 40,000 pounds d. 40,000 pounds Ans: D, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: None, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 64. The total diret labor hours required in preparing a diret labor budget are alulated using the a. sales foreast. b. prodution budget.. diret materials budget. d. sales budget. Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem 6. The diret materials and diret labor budgets provide information for preparing the a. sales budget. b. prodution budget.. manufaturing overhead budget. d. ash budget. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem

12 Test Bank for Managerial Aounting, Fifth Edition A sales foreast a. shows a foreast for the firm only. b. shows a foreast for the industry only.. shows foreasts for the industry and for the firm. d. plays a minor role in the development of the master budget. Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem 67. Whih of the following is not an operating budget? a. Diret labor budget b. Sales budget. Prodution budget d. ash budget Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 68. Whih of the following is not a finanial budget? a. apital expenditure budget b. ash budget. Manufaturing overhead budget d. Budgeted balane sheet Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem 69. Whih of the following is done to improve the reliability of the sales foreast? a. Employ finanial planning models b. Lengthen the planning horizon to more than a year. Rely solely on outside onsultants d. Use the sales foreasts from the previous year Ans: A, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 70. The finanial budgets inlude the a. ash budget and the selling and administrative expense budget. b. ash budget and the budgeted balane sheet.. budgeted balane sheet and the budgeted inome statement. d. ash budget and the prodution budget. Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem 71. The ulmination of preparing operating budgets is the a. budgeted balane sheet. b. prodution budget.. ash budget. d. budgeted inome statement. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Deision Modeling, AIPA P: Problem

13 Budgetary Planning The following information is taken from the prodution budget for the first quarter: Beginning inventory in units Sales budgeted for the quarter apaity in units of prodution faility 1,00 46,000 47,000 How many finished goods units should be produed during the quarter if the ompany desires,00 units available to start the next quarter? a. 48,000 b. 44, ,000 d. 49,00 Ans: A, SO:, Bloom: AN, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 7. An overly optimisti sales budget may result in a. inreases in selling pries late in the year. b. insuffiient inventories.. inreased sales during the year. d. exessive inventories. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Deision Modeling, AIPA P: 74. In a prodution budget, total required prodution units are the budgeted sales units plus a. beginning finished goods units. b. desired ending finished goods units.. desired ending finished goods units plus beginning finished goods units. d. desired ending finished goods units minus beginning finished goods units. Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Strategi/ritial Thinking, AIPA FN: Measurement, AIPA P: Problem 7. The diret materials budget details 1. the quantity of diret materials to be purhased.. the ost of diret materials to be purhased. a. 1 b.. both 1 and d. neither 1 nor Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 76. The prodution budget shows expeted unit sales of,000. Beginning finished goods units are,600. Required prodution units are,600. What are the desired ending finished goods units? a. 4,000 b.,600. 6,400 d. 7,00 Ans: D, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P:

14 Test Bank for Managerial Aounting, Fifth Edition The prodution budget shows expeted unit sales are 0,000. The required prodution units are,000. What are the beginning and desired ending finished goods units, respetively? a. b.. d. Beginning Units,000,000,000,000 Ending Units,000,000,000,000 Ans: B, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 78. The prodution budget shows that expeted unit sales are 48,000. The total required units are 4,000. What are the required prodution units? a. 6,000 b. 9,000. 1,000 d. annot be determined from the data provided. Ans: D, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 79. The diret materials budget shows: Units to be produed Total pounds needed for prodution Total materials required,000 1,000 1,00 What are the diret materials per unit? a..44 pounds b. 4.0 pounds. 4.4 pounds d. annot be determined from the data provided. Ans: B, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 80. The diret materials budget shows: Desired ending diret materials Total materials required Diret materials purhases 48,000 pounds 7,000 pounds 6,00 pounds The total diret materials needed for prodution is a. 4,000 pounds. b. 8,800 pounds.. 1,00 pounds. d. 1,00 pounds. Ans: A, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P:

15 Budgetary Planning If the required diret materials purhases are 18,000 pounds, the diret materials required for prodution is three times the diret materials purhases, and the beginning diret materials are three and a half times the diret materials purhases, what are the desired ending diret materials in pounds? a. 4,000 b. 9,000. 7,000 d. 18,000 Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 8. romwell ompany makes and sells umbrellas. The ompany is in the proess of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable ost Per Unit Sold Monthly Fixed ost Sales ommissions $0.60 $,000 Shipping 1.0 Advertising 0.0 Exeutive salaries 0,000 Depreiation on offie equipment 4,000 Other 0. 14,000 Expenses are paid in the month inurred. If the ompany has budgeted to sell 6,000 umbrellas in Otober, how muh is the total budgeted variable selling and administrative expenses for Otober? a. $1,600 b. $1,800. $76,00 d. $14,700 Ans: D, SO:, Bloom:, Diffiulty: Hard, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 8. Whih of the following expenses would not appear on a selling and administrative expense budget? a. Sales ommissions b. Depreiation. Property taxes d. Indiret labor Ans: D, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 84. Whih of the following would not appear as a fixed expense on a selling and administrative expense budget? a. Freight-out b. Offie salaries. Property taxes d. Depreiation Ans: A, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem

16 Test Bank for Managerial Aounting, Fifth Edition A master budget onsists of a. an interrelated long-term plan and operating budgets. b. finanial budgets and a long-term plan.. interrelated finanial budgets and operating budgets. d. all the aounting journals and ledgers used by a ompany. Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 86. The starting point in preparing a master budget is the preparation of the a. prodution budget. b. sales budget.. purhasing budget. d. personnel budget. Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 87. Whih one of the following is not needed in preparing a prodution budget? a. Budgeted unit sales b. Budgeted raw materials. Beginning finished goods units d. Ending finished goods units Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 88. A ompany budgeted unit sales of 16,000 units for January, 011 and 160,000 units for February, 011. The ompany has a poliy of having an inventory of units on hand at the end of eah month equal to 0% of next month's budgeted unit sales. If there were 40,800 units of inventory on hand on Deember 1, 010, how many units should be produed in January, 011 in order for the ompany to meet its goals? a. 14,00 units b. 16,000 units. 18,800 units d. 184,000 units Ans: A, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 89. At January 1, 011, Estrada, In. has beginning inventory of,000 surfboards. Estrada estimates it will sell,000 units during the first quarter of 011 with a 1% inrease in sales eah quarter. Estrada s poliy is to maintain an ending inventory equal to % of the next quarter s sales. Eah surfboard osts $100 and is sold for $10. How muh is budgeted sales revenue for the third quarter of 011? a. $,000 b. $97,000. $940,800 d. $6,7 Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P:

17 Budgetary Planning Grayson.om plans to sell 4,000 purple lawn hairs during May,,800 in June, and 4,000 during July. The ompany keeps 1% of the next month s sales as ending inventory. How many units should Grayson.om produe during June? a.,80 b. 4,400.,770 d. Not enough information to determine. Ans: A, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 91. Jaobsen, In. is planning to sell 00 bukets and produe 190 bukets during Marh. Eah buket requires 00 grams of plasti and one-half hour of diret labor. Plasti osts $10 per 00 grams and employees of the ompany are paid $1.00 per hour. Manufaturing overhead is applied at a rate of 110% of diret labor osts. Jaobsen has 00 kilos of plasti in beginning inventory and wants to have 00 kilos in ending inventory. How muh is the total amount of budgeted diret labor for Marh? a. $1,00 b. $,000. $1,4 d. $,80 Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 9. Lester Prodution is planning to sell 600 boxes of erami tile, with prodution estimated at 80 boxes during May. Eah box of tile requires 44 pounds of lay mix and a quarter hour of diret labor. lay mix osts $0.40 per pound and employees of the ompany are paid $1.00 per hour. Manufaturing overhead is applied at a rate of 110% of diret labor osts. Lester has,600 pounds of lay mix in beginning inventory and wants to have,000 pounds in ending inventory. What is the total amount to be budgeted for manufaturing overhead for the month? a. $1,914 b. $1,980. $7,66 d. $7,90 Ans: A, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 9. Lester Prodution is planning to sell 600 boxes of erami tile, with prodution estimated at 80 boxes during May. Eah box of tile requires 44 pounds of lay mix and a quarter hour of diret labor. lay mix osts $0.40 per pound and employees of the ompany are paid $1.00 per hour. Manufaturing overhead is applied at a rate of 110% of diret labor osts. Lester has,600 pounds of lay mix in beginning inventory and wants to have,000 pounds in ending inventory. What is the total amount to be budgeted for diret labor for the month? a. $1,740 b. $6,960. $1,800 d. $7,840 Ans: A, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P:

18 Test Bank for Managerial Aounting, Fifth Edition Lester Prodution is planning to sell 600 boxes of erami tile, with prodution estimated at 80 boxes during May. Eah box of tile requires 44 pounds of lay mix and a quarter hour of diret labor. lay mix osts $0.40 per pound and employees of the ompany are paid $1.00 per hour. Manufaturing overhead is applied at a rate of 110% of diret labor osts. Lester has,600 pounds of lay mix in beginning inventory and wants to have,000 pounds in ending inventory. What is the total amount to be budgeted in pounds for diret materials to be purhased for the month? a.,0 b.,10.,90 d. 6,800 Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 9. Davies Nursery plans to sell 160 potted plants during April and 10 units in May. Davies Nursery keeps 1% of the next month s sales as ending inventory. How many units should Davies Nursery produe during April? a. 14 b d. 178 Ans: A, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 96. Neufeld ompany makes and sells widgets. The ompany is in the proess of preparing its Selling and Administrative Expense Budget for the month. The following budget data are available: Item Variable ost Per Unit Sold Sales ommissions $1 Shipping $ Advertising $4 Exeutive salaries Depreiation on offie equipment Other $ Monthly Fixed ost $7,00 $90,000 $,000 $4,00 Expenses are paid in the month inurred. If the ompany has budgeted to sell 60,000 widgets in Otober, how muh is the total budgeted selling and administrative expenses for Otober? a. $70,000 b. $10,000. $697,00 d. $600,000 Ans: A, SO:, Bloom:, Diffiulty: Hard, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem

19 Budgetary Planning DeVito Exports, In. budgets on an annual basis for its fisal year. The following beginning and ending inventory levels are planned for the fisal year of July 1, 010 to June 0, 011: June 0, 011 June 0, 010 Raw Materials,000 kilos,000 kilos Three kilos of raw materials are needed to produe eah unit of finished produt. If DeVito Exports plans to produe 80,000 units during the fisal year, how many kilos of materials will the ompany need to purhase for its prodution during the year? a. 841,000 b. 84, ,000 d. 89,000 Ans: A, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 98. The following information is taken from the prodution budget for the first quarter: Beginning inventory in units Sales budgeted for the quarter Prodution apaity in units 900 4,000 4,000 How many finished goods units should be produed during the quarter if the ompany desires,400 units available to start the next quarter? a. 4,00 b. 40,00.,00 d. 44,400 Ans: A, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 99. Sandler ompany has 6,000 units in beginning finished goods. The sales budget shows expeted sales to be 4,000 units. If the prodution budget shows that 8,000 units are required for prodution, what was the desired ending finished goods? a.,000. b. 6, ,000. d. 18,000. Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 100. Andersen ompany required prodution for June is 66,000 units. To make one unit of finished produt, three pounds of diret material Z are required. Atual beginning and desired ending inventories of diret material Z are 10,000 and 16,000 pounds, respetively. How many pounds of diret material Z must be purhased? a. 189,000. b. 198, ,000. d. 1,000. Ans: D, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P:

20 Test Bank for Managerial Aounting, Fifth Edition Walton ompany determines that 7,000 pounds of diret materials are needed for prodution in July. There are 1,600 pounds of diret materials on hand at July 1 and the desired ending inventory is 1,400 pounds. If the ost per unit of diret materials is $, what is the budgeted total ost of diret materials purhases? a. 79,00. b. 80, ,600. d. 8,800. Ans: B, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 10. Giles ompany is preparing its diret labor budget for May. Projetions for the month are that 16,700 units are to be produed and that diret labor time is three hours per unit. If the labor ost per hour is $1, what is the total budgeted diret labor ost for May? a. 79,600. b. 90, ,00. d. 648,000. Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 10. Flint ompany estimates its sales at 10,000 units in the first quarter and that sales will inrease by 1,000 units eah quarter over the year. They have, and desire, a % ending inventory of finished goods. Eah unit sells for $. 40% of the sales are for ash. 70% of the redit ustomers pay within the quarter. The remainder is reeived in the quarter following sale. Prodution in units for the third quarter should be budgeted at a. 147,000. b. 18, ,000. d. 144,000. Ans: A, SO:, Bloom:, Diffiulty: Hard, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 104. Flint ompany estimates its sales at 10,000 units in the first quarter and that sales will inrease by 1,000 units eah quarter over the year. They have, and desire, a % ending inventory of finished goods. Eah unit sells for $. 40% of the sales are for ash. 70% of the redit ustomers pay within the quarter. The remainder is reeived in the quarter following sale. ash olletions for the third quarter are budgeted at a. $,04,000. b. $,9,000.. $,46,000. d. $4,104,000. Ans:, SO:, Bloom:, Diffiulty: Hard, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem

21 Budgetary Planning Haley ompany estimates its sales at 100,000 units in the first quarter and that sales will inrease by 10,000 units eah quarter over the year. They have, and desire, a % ending inventory of finished goods. Eah unit sells for $. 40% of the sales are for ash. 70% of the redit ustomers pay within the quarter. The remainder is reeived in the quarter following sale. Prodution in units for the third quarter should be budgeted at a. 1,00. b. 11, ,00. d. 10,000. Ans: A, SO:, Bloom:, Diffiulty: Hard, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 106. Haley ompany estimates its sales at 100,000 units in the first quarter and that sales will inrease by 10,000 units eah quarter over the year. They have, and desire, a % ending inventory of finished goods. Eah unit sells for $. 40% of the sales are for ash. 70% of the redit ustomers pay within the quarter. The remainder is reeived in the quarter following sale. ash olletions for the third quarter are budgeted at a. $,7,000. b. $,444,000.. $4,17,000. d. $4,788,000. Ans:, SO:, Bloom:, Diffiulty: Hard, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 107. A ompany determined that the budgeted ost of produing a produt is $0 per unit. On June 1, there were 60,000 units on hand, the sales department budgeted sales of,000 units in June, and the ompany desires to have 90,000 units on hand on June 0. The budgeted ost of goods manufatured for June would be a. $,80,000. b. $8,0,000.. $6,70,000. d. $7,60,000. Ans: D, SO: 4, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 108. Of the following items, whih one is not obtained from an individual operating budget? a. Selling and administrative expenses b. Aounts reeivable. ost of goods sold d. Sales Ans: B, SO: 4, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem 109. Whih of the following statements about a budgeted inome statement is not true? a. The budgeted inome statement is prepared after the finanial budgets are prepared. b. The budgeted inome statement is prepared on the arual basis of aounting.. The budgeted inome statement an be prepared in a multiple-step format. d. The budgeted inome statement is prepared using the individual operating budgets. Ans: A, SO: 4, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem

22 Test Bank for Managerial Aounting, Fifth Edition A ompany has budgeted diret materials purhases of $00,000 in Marh and $0,000 in April. Past experiene indiates that the ompany pays for 70% of its purhases in the month of purhase and the remaining 0% in the next month. During April, the following items were budgeted: Wages Expense Purhase of offie equipment Selling and Administrative Expenses Depreiation Expense $100,000 48,000,000 4,000 The budgeted ash disbursements for April are a. $4,000. b. $84,000.. $464,000. d. $488,000. Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 111. Morrison ompany has the following budgeted sales: January $80,000, February $10,000, and Marh $100, % of the sales are for ash and 60% are on redit. For the redit sales, 0% are olleted in the month of sale, and 0% the next month. The total expeted ash reeipts during Marh are: a. $11,000. b. $106,000.. $10,000. d. $100,000. Ans: B, SO:, Bloom:, Diffiulty: Hard, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: Problem 11. Neal Merhandising ompany expets to purhase $90,000 of materials in July and $10,000 of materials in August. Three-quarters of all purhases are paid for in the month of purhase, and the other one-fourth are paid for in the month following the month of purhase. How muh will August's ash disbursements for materials purhases be? a. $67,00 b. $78,70. $101,0 d. $10,000 Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: Analyti, AIPA BB: Resoure Management, AIPA FN: Measurement, AIPA P: 11. The single most important output in preparing finanial budgets is the a. sales foreast. b. determination of the unit ost of the produt.. ash budget. d. budgeted inome statement. Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem 114. Whih of the following does not appear as a separate setion on the ash budget? a. ash reeipts b. ash disbursements. apital expenditures d. Finaning Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem

23 Budgetary Planning The finaning setion of a ash budget is needed if there is a ash defiieny or if the ending ash balane is less than a. the prior years. b. management's minimum required balane.. the amount needed to avoid a servie harge at the bank. d. the industry average. Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem 116. Beginning ash balane plus total reeipts a. equals ending ash balane. b. must equal total disbursements.. equals total available ash. d. is the exess of available ash over disbursements. Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem 117. The projetion of finanial position at the end of the budget period is found on the a. budgeted inome statement. b. ash budget.. budgeted balane sheet. d. sales budget. Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem 118. What is the proper preparation sequening of the following budgets? 1. Budgeted Balane Sheet. Sales Budget. Selling and Administrative Budget 4. Budgeted Inome Statement a. 1,,, 4 b.,, 1, 4.,, 4, 1 d., 4, 1, Ans:, SO:, Bloom:, Diffiulty: Easy, Min:, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem 119. Munson ompany reported the following information for 011: Budgeted sales Otober $90,000 November $870,000 Deember $1,080,000 All sales are on redit. ustomer amounts on aount are olleted 0% in the month of sale and 0% in the following month. How muh ash will Munson reeive in November? a. $4,000 b. $97,000. $900,000 d. $870,000 Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P:

24 Test Bank for Managerial Aounting, Fifth Edition The following information was taken from Noble ompany s ash budget for the month of July: Beginning ash balane $00,000 ash reeipts 190,000 ash disbursements 40,000 If the ompany has a poliy of maintaining a minimum end of the month ash balane of $0,000, the amount the ompany would have to borrow is a. $100,000. b. $0,000.. $10,000. d. $60,000. Ans: A, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: 11. The ash budget reflets a. all revenues and all expenses for a period. b. expeted ash reeipts and ash disbursements from all soures.. all the items that appear on a budgeted inome statement. d. all the items that appear on a budgeted balane sheet. Ans: B, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem 1. The following redit sales are budgeted by Pekman ompany: January February Marh April $16,000 00,000 80,000 40,000 The ompany's past experiene indiates that 70% of the aounts reeivable are olleted in the month of sale, 0% in the month following the sale, and 8% in the seond month following the sale. The antiipated ash inflow for the month of April is a. $46,880. b. $4,000.. $40,000. d. $,00. Ans:, SO:, Bloom:, Diffiulty: Medium, Min:, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: 1. Owens ompany's ash budget showed total available ash less ash disbursements. What does this amount equal? a. Ending ash balane b. Total ash reeipts. The exess of available ash over ash disbursements d. The amount of finaning required Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem 14. Whih one of the following setions would not appear on a ash budget? a. ash reeipts b. Finaning. Investing d. ash disbursements Ans:, SO:, Bloom:, Diffiulty: Easy, Min: 1, AASB: None, AIPA BB: Industry/Setor Perspetive, AIPA FN: Measurement, AIPA P: Problem