Chapter 8 Video questions

Companies prepare direct labor budgets to ________. a. avoid labor shortages b. determine the direct labor-hours per unit c. ensure timely supply of raw materials d. reduce inventories

A

For a production budget, the ______ is the beginning inventory for the year. a. beginning inventory for the 1st quarter b. beginning inventory for the last quarter c. ending inventory for the last quarter d. sum of beginning inventories for the four quarters

A

The value of the ending inventory is calculated by multiplying the number of units in ending inventory by the ________. a. unit product cost b. variable overhead cost per unit c. total overhead cost per unit d. the sum of the direct materials and direct labor cost per unit

A

What is the amount of budgeted sales revenue for the fourth quarter? a. $32,500 b. $33,750 c. $35,000 d. $37,500

A

Which of the following is a major factor that should be taken into consideration while planning the desired level of inventories? a. Costs of carrying inventory b. General administrative policy of the company c. Selling price of the finished product d. Statutory requirements

A

Which of the following is not one of the reasons that organizations use budgets? a. The budgeting process enables managers to uncover bottlenecks as they occur. b. Budgets communicate financial goals throughout the organization. c. Budgets evaluate and reward employees.

A

How much cash will the company need to borrow? a. $15,000 b. $25,000 c. $30,000 d. $40,000

B

In a direct materials budget, the desired ending raw materials inventory for the year is equal to the ________. a. beginning balance of accounts payable b. desired ending raw materials inventory for the last period c. total merchandise purchased during the year d. Value of raw material used during the year

B

Perry, Inc. desires to maintain the ending inventory of raw materials at 40 percent of the next quarter's raw material needs. What is the cost of raw materials to be purchased in the first quarter? a. $300,000 b. $320,000 c. $380,000 d. $400,000

B

Which of the following is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget? a. Advertising expense b. Depreciation expense c. Selling commissions d. Utilities expense

B

The purpose of preparing a direct materials budget is to ________. a. allocate the cost of raw materials to production departments b. estimate the manufacturing overhead c. estimate the quantity of raw materials to be purchased d. estimate the unit cost of direct materials to be purchased

C

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What are the production needs for the first quarter? a. 160,000 bottles b. 175,000 bottles c. 195,000 bottles d. 215,000 bottles

C

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What is the desired ending inventory for the second quarter? a. 15,000 bottles b. 20,000 bottles c. 25,000 bottles d. 40,000 bottles

C

What is the amount of cash that is expected to be collected during the second quarter as a result of sales made during the first quarter? a. $8,125 b. $8,750 c. $9,375 d. $28,125

C

What is the total amount of expected cash collections for the third quarter? a. $33,125 b. $33,750 c. $34,375 d. $38,125

C

Which of the following explains why operating budgets generally span a period of one year? a. Accounting regulations mandate that all operating budgets be prepared for one year. b. Operating budgets, by definition, are prepared for one-year periods. c. Companies choose a span of one year to correspond to their fiscal years. d. Operating budgets need to correspond with the calendar year.

C

Which of the following is not a benefit of self-imposed budgets? a. A manager who is not able to meet a budget that has been imposed from above can always say that the budget was unrealistic and impossible to meet. b. Budget estimates prepared by front-line managers are often more accurate and reliable. c. Lower-level managers are encouraged to create budgetary slack since they are more knowledgeable of day-to-day operations. d. Motivation is generally higher.

C

William Corporation has a contract with the labor union which guarantees its workers pay for at least 40,000 hours every quarter. Based on its direct labor budget for the current year, the company estimated it will need 39,000 direct labor-hours during the fourth quarter to produce 13,000 units of finished goods. Each unit requires 3 direct labor-hours (DLHs) and the cost of direct labor per hour is $12 per hour. What is the total direct labor cost for the fourth quarter? a. $432,000 b. $468,000 c. $480,000 d. $540,000

C

A company determines that the number of units sold is the cost driver for its variable selling and administrative expense budget. The product of its variable selling and administrative rate and budgeted unit sales will be ________. a. budgeted sales revenue b. total budgeted cash disbursements for selling and administrative expenses c. total budgeted fixed selling and administrative expenses d. total budgeted variable selling and administrative expenses

D

Pro Clean Company, a manufacturer of hand sanitizers, intends to produce 40,000 units in the third quarter and 35,000 units in the fourth quarter. Each unit requires 0.50 direct labor-hours (DLHs) and the cost of direct labor per hour is $18. What would be the total direct labor cost for the fourth quarter? a. $355,000 b. $360,000 c. $300,000 d. $315,000

D

The budgeting process begins with the preparation of the ______ budget. a. cash b. direct materials c. production d. sales

D

What is the budgeted variable manufacturing overhead for the year? a. $200,000 b. $260,000 c. $280,000 d. $400,000

D

What is the predetermined overhead rate? a. $2 per machine hour b. $4 per machine hour c. $5 per machine hour d. $6 per machine hour

D