ACCT Ch. 8
Which of the following is NOT an objective of the budgeting process? A. To ensure that the company continues to grow. B. To uncover potential bottlenecks before they occur. C. To communicate management's plans throughout the entire organization. D. To provide a means of allocating resources to those parts of the organization where they can be used most effectively.
A
The budget method that maintains a constant twelve-month planning horizon by adding a new month on the end as the current month is completed is called
A continuous budget
Trumbull Corporation budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Experience indicates that none of the sales on account will be collected in the month of the sale, 60% will be collected the month after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September would be: A. $194,760 B. $169,800 C. $197,880 D. $147,960
B
Vandel Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 6,600 units are planned to be sold in April. The variable selling and administrative expense is $9.70 per unit. The budgeted fixed selling and administrative expense is $127,380 per month, which includes depreciation of $8,580 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be A. $64,020 B. $182,820 C. $118,800 D. $191,400
B
All the following are considered to be benefits of participative budgeting, except for: A. Individuals at all organizational levels are recognized as being part of a team; this results in greater support for the organization. B. The budget estimates are prepared by those in directly involved in activities. C. When managers set their own targets for the budget, top management need not be concerned with the overall profitability of operations. D. Managers are held responsible for reaching their goals and cannot easily shift responsibility by blaming unrealistic goals set by others
C
Laurey Inc. is working on its cash budget for May. The budgeted beginning cash balance is $45,000. Budgeted cash receipts total $129,000 and budgeted cash disbursements total $124,000. The desired ending cash balance is $60,000. To attain its desired ending cash balance for May, the company needs to borrow: A. $0 B. $110,000 C. $60,000 D. $10,000
D
Starg Corporation, a retailer, plans to sell 25,000 units of Product X during the month of August. If the company has 9,000 units on hand at the start of the month, and plans to have 7,000 units on hand at the end of the month, how many units of Product X must be purchased from the supplier during the month? A. 32,000 B. 25,000 C. 27,000 D. 23,000
D
Which of the following represents the normal sequence in which the below budgets are prepared? A. Budgeted Balance Sheet, Sales Budget, Budgeted Income Statement B. Budgeted Income Statement, Sales Budget, Budgeted Balance Sheet C. Sales Budget, Budgeted Balance Sheet, Budgeted Income Statement D. Sales Budget, Budgeted Income Statement, Budgeted Balance Sheet
D
A benefit of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack
false
A continuous or perpetual budget is a budget that almost never needs to be revised
false
Planning involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change.
false
The basic idea underlying responsibility accounting is that each manager should be held responsible for the overall profit of the company to ensure that all managers are acting together.
false
The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and administrative expense per unit.
false
The first budget a company prepares in a master budget is the production budget
false
The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory
false
Budget is a useful tool for the organizational communication
true
Budgets are used to plan and to control operations.
true
