Accounting Chapter 8

(b)is the primary method of communicating agreed-upon objectives throughout an organization.

A budget: (a)is the responsibility of management accountants. (b)is the primary method of communicating agreed-upon objectives throughout an organization. (c)ignores past performance because it represents management's plans for a future time period. (d)may promote efficiency but has no role in evaluating performance.

696000

A company has budgeted direct materials purchases of $300,000 in July and $480,000 in August. Past experience indicates that the company pays for 70% of its purchases in the month of purchase and the remaining 30% in the next month. During August, the following items were budgeted: Wages Expense $150,000 Purchase of office equipment 72,000 Selling and Administrative Expenses 48,000 Depreciation Expense 36,000 The budgeted cash disbursements for August are Entry field with correct answer $648,000. $426,000. $696,000. $732,000.

interrelated financial budgets and operating budgets.

A master budget consists of Entry field with correct answer an interrelated long-term plan and operating budgets. financial budgets and a long-term plan. all the accounting journals and ledgers used by a company. interrelated financial budgets and operating budgets.

(b)management's best estimate of sales revenue for the year.

A sales budget is: (a)derived from the production budget. (b)management's best estimate of sales revenue for the year. (c)not the starting point for the master budget. (d)prepared only for credit sales.

has been developed in a top down fashion.

An unrealistic budget is more likely to result when it Entry field with correct answer has been developed in a top down fashion. has been developed by all levels of management. has been developed in a bottom up fashion. is developed with performance appraisal usages in mind.

907500

At the beginning of the year, Goldenrod had beginning inventory of 2,000 scooters. Goldenrod estimates it will sell 5,000 units during the first quarter of the current year, with a 10% increase in sales each quarter. It is Goldenrod's policy to maintain an ending inventory equal to 20% of the next quarter's budgeted sales. Each scooter costs $100 to produce and sold for $150. How much is the budgeted sales revenue for the third quarter of the current year? Estimated first quarter sales (5,000 units) + (5,000 units x 10%) = Estimated second quarter sales in units (5,500 units). Estimated second quarter sales (5,500 units) + (5,500 units x 10%) = Estimated third quarter sales in units (6,050 units) x selling price per unit ($150) = $825,000. $907,500. $605,000. $500,000.

(b)longer time period.

Compared to budgeting, long-range planning generally has the: (a)same amount of detail. (b)longer time period. (c)same emphasis. (d)same time period.

10700

Direct materials inventories are kept in pounds in Byrd Company, and the total pounds of direct materials needed for production is 9,500. If the beginning inventory is 1,000 pounds and the desired ending inventory is 2,200 pounds, the total pounds to be purchased is: Pounds to be purchased = Amount needed for production (9,500) + Desired ending inventory (2,200) − Beginning inventory (1,000) = (a)9,400. (b)9,500. (c)9,700. (d)10,700.

312000

Drew Enterprises reports all its sales on credit, and pays operating costs in the month incurred. Estimated amounts for the months of June through October are: June July August September October Budgeted sales $310,000 $330,000 $300,000 $280,000 $260,000 Budgeted purchases $144,000 $120,000 $128,000 $132,000 $90,000 Customer amounts on account are collected 60% in the month of sale and 40% in the following month. Cost of goods sold is 45% of sales. Drew purchases and pays for merchandise 30% in the month of acquisition and 70% in the following month. How much cash is budgeted to be received during August? Amounts collected during August include August sales plus amounts collected for July sales. Collection of August sales: $300,000 x 60% = $180,000; Collection of July sales: $330,000 x 40% = $132,000; Total = $180,000 + $132,000 = $312,000. $180,000. $291,000. $318,000.

(c)capital expenditure budget.

Each of the following budgets is used in preparing the budgeted income statement except the: (a)sales budget. (b)selling and administrative expense budget. (c)capital expenditure budget. (d)direct labor budget.

78000

Expected direct materials purchases in Read Company are $70,000 in the first quarter and $90,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are Budgeted cash payments for the second quarter = purchases for the first quarter, or $42,000 ($70,000 X 60%) + 40% of the purchases for the second quarter, or $36,000 ($90,000 X 40%). $96,000. $90,000. $78,000. $72,000.

(c)$78,000

Expected direct materials purchases in Read Company are $70,000 in the first quarter and $90,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. The budgeted cash payments for purchases in the second quarter are: Budgeted cash payments for the second quarter = Purchases for the first quarter ($42,000; $70,000 × 60%) + 40% of the purchases for the second quarter ($36,000; $90,000 × 40%) = (a)$96,000. (b)$90,000. (c)$78,000. (d)$72,000.

stockholders' approval of the budget.

If budgets are to be effective, all of the following must be present except Entry field with correct answer stockholders' approval of the budget. sound organizational structure. research and analysis in setting realistic goals. acceptance at all levels of management.

a budget committee.

In many companies, responsibility for coordinating the preparation of the budget is assigned to Entry field with correct answer the company's internal auditors. the company's independent certified public accountants. the company's board of directors. a budget committee.

(c)begin the budgeting process by budgeting expenditures rather than receipts.

In most cases, not-for-profit entities: (a)prepare budgets using the same steps as those used by profit-oriented businesses. (b)know budgeted cash receipts at the beginning of a time period, so they budget only for expenditures. (c)begin the budgeting process by budgeting expenditures rather than receipts. (d)can ignore budgets because they are not expected to generate net income.

budgeted cost of goods sold and desired ending merchandise inventory together and deducting beginning merchandise inventory

In the merchandise purchases budget, required merchandise purchases are computed by adding budgeted cost of goods sold and desired ending merchandise inventory together and deducting beginning merchandise inventory. budgeted cost of goods sold and desired ending merchandise inventory together. budgeted sales and desired ending merchandise inventory together and deducting beginning merchandise inventory. budgeted sales and desired ending merchandise inventory together.

120000

Kam Department Store reported the following information for 2016: October November December Budgeted sales $1,240,000 $1,160,000 $1,440,000 All sales are on credit. Customer amounts on account are collected 50% in the month of sale and 50% in the following month. How much cash will Kam receive in November? Entry field with correct answer $580,000 $1,300,000 $1,200,000 $1,160,000

1915

Microtech plans to sell 2,000 computers in April; 1,900 in May; and 2,000 in June. The company keeps 15% of the next month's sales as ending inventory. How many units should Microtech produce in May? 1,915. 2,200. 1,885. Amount cannot be determined due to insufficient information. Budgeted Sales Units-May (1,900) + Desired Ending Inventory-May (.15 x 2,000) - Beginning Inventory-May (.15 x 1,900) = Required Production Units (Note: Beginning Inventory- May = Ending Inventory-April = .15 x 1,900).

(d)Both (a) and (b) above.

The budget for a merchandiser differs from a budget for a manufacturer because: (a)a merchandise purchases budget replaces the production budget. (b)the manufacturing budgets are not applicable. (c)None of the above. (d)Both (a) and (b) above.

sales forecast

The budget is formed within the framework of a

(a)developed from the budgeted balance sheet for the preceding year and the budgets for the current year.

The budgeted balance sheet is: (a)developed from the budgeted balance sheet for the preceding year and the budgets for the current year. (b)the last operating budget prepared. (c)used to prepare the cash budget. (d)All of the above.

(a)the end-product of the operating budgets.

The budgeted income statement is: (a)the end-product of the operating budgets. (b)the end-product of the financial budgets. (c)the starting point of the master budget. (d)dependent on cash receipts and cash disbursements.

21000 lbs

The direct materials budget shows: Desired ending direct materials 48,000 pounds Total materials required 69,000 pounds Direct materials purchases 63,200 pounds The total direct materials needed for production is Entry field with correct answer 5,800 pounds. 132,200 pounds. 15,200 pounds. 21,000 pounds.

(a)top-down budgeting.

The essentials of effective budgeting do not include: (a)top-down budgeting. (b)management acceptance. (c)research and analysis. (d)sound organizational structure.

cash budget and the budgeted balance sheet.

The financial budgets include the Entry field with correct answer budgeted balance sheet and the budgeted income statement. cash budget and the production budget. cash budget and the budgeted balance sheet. cash budget and the selling and administrative expense budget.

management's minimum required balance.

The financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than Entry field with correct answer the industry average. management's minimum required balance. the amount needed to avoid a service charge at the bank. the prior years.

428000

The following information is taken from the production budget for the first quarter: Beginning inventory in units 1,200 Sales budgeted for the quarter 426,000 Capacity in units of production facility 472,000 How many finished goods units should be produced during the quarter if the company desires 3,200 units available to start the next quarter? Entry field with correct answer 428,000 474,000 429,200 424,000

160000

The following information was taken from Southgate Industry's cash budget for the month of July: Beginning cash balance $480,000 Cash receipts 304,000 Cash disbursements 544,000 If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company would have to borrow is Entry field with correct answer $80,000. $240,000. $96,000. $160,000.

total required direct labor hours

The formula for computing the direct labor budget is to multiply the direct labor cost per hour by the total required direct labor hours. physical units to be produced. equivalent units to be produced. no correct answer is given.

(a)total required direct labor hours.

The formula for computing the direct labor budget is to multiply the direct labor cost per hour by the: (a)total required direct labor hours. (b)physical units to be produced. (c)equivalent units to be produced. (d)No correct answer is given.

(d)desired ending finished goods units less beginning finished goods units.

The formula for the production budget is budgeted sales in units plus: (a)desired ending merchandise inventory less beginning merchandise inventory. (b)beginning finished goods units less desired ending finished goods units. (c)desired ending direct materials units less beginning direct materials units. (d)desired ending finished goods units less beginning finished goods units.

6000 10000

The production budget shows expected unit sales are 100,000. The required production units are 104,000. What are the beginning and desired ending finished goods units, respectively? Beginning Units Ending Units Entry field with correct answer 6,000 10,000 10,000 6,000 10,000 4,000 4,000 10,000

sales budget

The starting point in preparing a master budget is the preparation of the Entry field with correct answer sales budget. production budget. purchasing budget. personnel budget.

2341

What is the proper preparation sequencing of the following budgets? 1. Budgeted Balance Sheet 2. Sales Budget 3. Selling and Administrative Budget 4. Budgeted Income Statement Entry field with correct answer 2, 4, 1, 3 1, 2, 3, 4 2, 3, 1, 4 2, 3, 4, 1

Preparing the budgeted balance sheet

Which is the last step in developing the master budget? Entry field with correct answer Preparing the budgeted balance sheet Preparing the cost of goods manufactured budget Preparing the cash budget Preparing the budgeted income statement

All of these options are correct statements.

Which of the following are correct statements about a budget? It is a formal written statement of management's plans for a specified future time period. It becomes an important basis for evaluating performance. It promotes efficiency and serves as a deterrent to waste and inefficiency. All of these options are correct statements.

Capital expenditures

Which of the following does not appear as a separate section on the cash budget? Entry field with correct answer Cash receipts Capital expenditures Cash disbursements Financing

(c)It enables disciplinary action to be taken at every level of responsibility.

Which of the following is not a benefit of budgeting? (a)Management can plan ahead. (b)An early warning system is provided for potential problems. (c)It enables disciplinary action to be taken at every level of responsibility. (d)The coordination of activities is facilitated.

Cash budget

Which of the following is not an operating budget? Entry field with correct answer Sales budget Production budget Cash budget Direct labor budget

production budget

Which one of the following budgets would not be prepared for a merchandising company? Production budget. Capital expenditures budget. Cash budget. Merchandise purchases budget.

It provides assurance that the company will achieve its objectives.

Which one of the following is not a benefit of budgeting? Entry field with correct answer It provides definite objectives for evaluating performance. It facilitates the coordination of activities. It requires all levels of management to plan ahead on a recurring basis. It provides assurance that the company will achieve its objectives.

They help communicate goals and provide a basis for evaluation.

Why are budgets useful in the planning process? Entry field with correct answer They enable the budget committee to earn their paycheck. They help communicate goals and provide a basis for evaluation. They provide management with information about the company's past performance. They guarantee the company will be profitable if it meets its objectives.

85850

Windathon, Inc. expects sales volume totaling $500,000 for June. Data for the month follows: Sales commissions 4% of sales Sales manager's salary $30,000 per month Advertising expense $25,000 per month Shipping expense. 1% of sales Miscellaneous selling expenses $2,100 per month plus 3/4% of sales How much is Windathon's selling expense budget for June? $30,850. $83,750. $57,100. $85,850.

long range plans

contain considerably less detail than budgets.

operating budgets

establish goals for the company's sales and production personnel.

top down budgeting

he essentials of effective budgeting do not include top-down budgeting. management acceptance. research and analysis. sound organizational structure.

financial budgets

include the cash budget and the budgeted balance sheet

master budget

is a set of interrelated budgets that constitutes a plan of action for a specified time period.

participative budget

reduces the risk of having unrealistic budgets.