MA Chapter 9 quiz questions

d. is a short-term financial plan.

A budget a. covers at least 2 years. b. is used primarily in manufacturing businesses as a tool for controlling costs. c. is only a control tool. d. is a short-term financial plan. e. is a long-term plan.

e. None of these choices are correct.

A company plans to sell 220 units. The selling price per unit is $24. There are 50 units in beginning inventory, and the company would like to have 20 units in ending inventory. How many units should be produced for the coming period? a. 250 b. 200 c. 230 d. 220 e. None of these choices are correct.

d. 110 pounds

A company requires 90 pounds of plastic to meet the production needs of a small toy. It currently has 10 pounds of plastic inventory. The desired ending inventory of plastic is 30 pounds. How many pounds of plastic should be budgeted for purchasing during the coming period? a. 70 pounds b. 120 pounds c. 100 pounds d. 110 pounds e. None of these choices are correct.

d. a continuous budget.

A moving, 12-month budget that is updated monthly is a. not used by manufacturing firms. b. a waste of time and effort. c. a master budget. d. a continuous budget. e. always used by firms that prepare a master budget.

b. encourages goal-congruent behavior.

An ideal budgetary system is one that a. encourages dysfunctional behavior. b. encourages goal-congruent behavior. c. encourages myopic behavior. d. encourages subversion of an organization's goals. e. None of these choices are correct.

a. $140,000.

Assume that a company has the following accounts receivable collection pattern: Month of sale 40% Month following sale 60% All sales are on credit. If credit sales for January and February are $100,000 and $200,000, respectively, the cash collections for February are a. $140,000. b. $300,000. c. $120,000. d. $160,000. e. $80,000.

e. All of these choices are correct

Before a direct materials purchases budget can be prepared, you should first a. prepare a sales budget. b. prepare a production budget. c. decide on the desired ending inventory of materials. d. obtain the expected price of each type of material. e. All of these choices are correct.

b. Cash budget

Select the one budget below that is not an operating budget. a. Cost of goods sold budget b. Cash budget c. Production budget d. Overhead budget e. All of these choices are operating budgets.

e. All of these choices are correct

Some key budgetary features that tend to promote positive managerial behavior are a. frequent feedback on performance. b. participative budgeting. c. realistic standards. d. well-designed monetary and nonmonetary incentives. e. All of these choices are correct.

e. All of these choices are correct.

The budget committee a. reviews the budget. b. resolves differences that arise as the budget is prepared. c. approves the final budget. d. is directed (typically) by the controller. e. All of these choices are correct.

d. Provides information about the ability to repay loans.

The cash budget serves which of the following purposes? a. Documents the need for liberal inventory policies. b. Reveals the amount of depreciation expense. c. Reveals the amount lost due to uncollectible accounts. d. Provides information about the ability to repay loans. e. None of these choices are correct.

c. prepare a sales forecast.

The first step in preparing the sales budget is to a. estimate marketing expenses. b. estimate sales commissions. c. prepare a sales forecast. d. increase sales beyond the forecast level. e. talk with past customers.

a. no cash is received from an account that defaults.

The percentage of accounts receivable that are uncollectible can be ignored for cash budgeting because a. no cash is received from an account that defaults. b. it is included in cash sales. c. it appears on the budgeted income statement. d. for most companies, it is not a material amount. e. None of these choices are correct.

b. Budgeted selling and administrative expenses

Which of the following is needed to prepare a budgeted income statement? a. The production budget b. Budgeted selling and administrative expenses c. The budgeted balance sheet d. The capital expenditures budget e. Last year's income statement

b. Expected unit sales

Which of the following is needed to prepare the production budget? a. Production manager's salary expense b. Expected unit sales c. Direct materials needed for production d. Direct labor needed for production e. None of these choices are correct.

c. It guarantees an improvement in organizational efficiency.

Which of the following is not an advantage of budgeting? a. It forces managers to plan. b. It provides information for decision making. c. It guarantees an improvement in organizational efficiency. d. It provides a standard for performance evaluation. e. It improves communication and coordination.

a. It encourages budgetary slack.

Which of the following is not an advantage of participative budgeting? a. It encourages budgetary slack. b. It tends to lead to a higher level of performance. c. It fosters a sense of responsibility. d. It encourages greater goal congruence. e. It fosters a sense of creativity in managers.

d. The capital budget

Which of the following is not part of the operating budget? a. The direct materials purchases budget b. The selling and administrative expenses budget c. The sales budget d. The capital budget e. The facilities budget

e. All of these choices are correct.

Which of the following is part of the control process? a. Monitoring of actual activity b. Comparison of actual with planned activity c. Investigating d. Taking corrective action e. All of these choices are correct.

e. All of these choices are correct.

Which of the following items is a possible example of myopic behavior? a. Failure to promote deserving employees b. Reducing expenditures on preventive maintenance c. Cutting back on new product development d. Buying cheaper, lower-quality materials so that the company does not exceed the materials purchases budget e. All of these choices are correct.