Reference no: EM132359864
Question
1. Which one of the following is not a benefit of budgeting?
A.It provides assurance that the company will achieve its objectives.
B.It provides definite objectives for evaluating performance.
C.It requires all levels of management to plan ahead on a recurring basis.
D.It facilitates the coordination of activities.
2. Budgeting is usually most closely associated with which management function?
A.Motivating
B.Planning
C.Directing
D.Controlling
3. Mapleview, Inc. has the following budgeted sales: July $200,000, August $300,000, and September $250,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during September are
A.$265,000.
B.$250,000.
C.$262,500.
D.$280,000.
4. Why are budgets useful in the planning process?
A.They help communicate goals and provide a basis for evaluation.
B.They guarantee the company will be profitable if it meets its objectives.
C.They provide management with information about the company's past performance.
D.They enable the budget committee to earn their paycheck.
5. An overly optimistic sales budget may result in
A.insufficient inventories.
B.increases in selling prices late in the year.
C.increased sales during the year.
D.excessive inventories.
6. The budget committee has the responsibility for coordinating the preparation of the budget.
True
False
7. Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory.
What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?
A.37,680
B.38,880
C.40,200
D.38,280
8. Which is true of budgets?
A.They are voted on and approved by stockholders.
B.They are used in performance evaluation.
C.They are used in the planning, but not in the control, process.
D.There is a standard form and structure for budgets.
9. On January 1, Witt Company has a beginning cash balance of $126,000. During the year, the company expects cash disbursements of $1,020,000 and cash receipts of $870,000. If Witt requires an ending cash balance of $120,000, Witt Company must borrow
A.$96,000.
B.$276,000.
C.$120,000.
D.$144,000.
10. Burr, Inc.'s direct materials budget shows total cost of direct materials purchases for April $400,000, May $480,000 and June $560,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for June are
A.$512,000.
B.$528,000.
C.$480,000.
D.$416,000.
11. The budgeted balance sheet is prepared entirely from the budgets for the current year.
True
False
12. Which of the following statements about a budgeted income statement is not true?
A.The budgeted income statement is prepared after the financial budgets are prepared.
B.The budgeted income statement can be prepared in a multiple-step format.
C.The budgeted income statement is prepared using the individual operating budgets.
D.The budgeted income statement is prepared on the accrual basis of accounting.
13. If a company has adopted continuous budgeting, the budget will show plans for
A.at least five years.
B.a full year ahead.
C.the current year and the next year.
D.every day.
14. Which one of the following is a problem resulting from a service company being overstaffed?
A.Labor costs will be disproportionately low.
B.Revenue may be lost.
C.Profits will be higher because of the additional salaries.
D.Staff turnover may increase.
15. Of the following items, which one is not obtained from an individual operating budget?
A.Cost of goods sold
B.Sales
C.Selling and administrative expenses
D.Accounts receivable
16. Financial budgets must be completed before the operating budgets can be prepared.
True
False
17. A sales forecast
A.shows a forecast for the industry only.
B.plays a minor role in the development of the master budget.
C.shows forecasts for the industry and for the firm.
D.shows a forecast for the firm only.
18. At January 1, 2019, Deer Corp. has beginning inventory of 2,000 surfboards. Deer estimates it will sell 10,000 units during the first quarter of 2019 with a 12% increase in sales each quarter. Deer's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2019?
A.$450,000
B.$1,950,000
C.$1,881,600
D.$12,544