ACCT 202 Ch 22

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 Entry field with correct answer $90,000. $78,000. $72,000. $96,000.

$78,000.

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? Entry field with correct answer 2,200. 1,885. Amount cannot be determined due to insufficient information. 1,915.

1,915.

On January 1, Scarlett Company has a beginning cash balance of $21,000. During the year, the company expects cash disbursements of $170,000 and cash receipts of $145,000. If Scarlett requires an ending cash balance of $20,000, the Scarlett Company must borrow: A $24,000 B $46,000 C $16,000 D $20,000

A $24,000

James Company determines that 13,500 pounds of direct materials are needed for production in July. There are 800 pounds of direct materials on hand at July 1 and the desired ending inventory is 700 pounds. If the cost per pound of direct materials is $3, what is the budgeted total cost of direct materials purchases? A $40,200 B $40,800 C $41,400 D $39,600

A $40,200

The Eccleston Company has the following budgeted sales: January $40,000, February $60,000, and March $50,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% of the amount is collected in the month of sale, and 50% in the next month. The total expected cash receipts during March are A $53,000 B $52,500 C $50,000 D $56,000

A $53,000

The Burlington Company has 12,000 units in beginning finished goods. If sales are expected to be 60,000 units for the year and Burlington desires ending finished goods of 15,000 units, how many units must Burlington produce? A 63,000 B 75,000 C 60,000 D 57,000

A 63,000

which of the following represents the flow of budget data under participative budgeting? A Department Manager to Vice President of Production to Plant Manager B President to Plant Manager to Department Manager C Department Manager to Plant Manager to Vice President of Production D Vice President of Production to Plant Manager to Department Manager

C Department Manager to Plant Manager to Vice President of Production

Which of the following statements is correct? A The budgets of service companies are approved by voters. B The production budget is derived from the direct materials and direct labor budget. C In the budget process for not-for-profit organizations, the emphasis is on cash flow rather than on revenue and expenses. D Service companies prepare budget data using an expected input approach while manufacturers prepare budget data using an expected output approach.

C In the budget process for not-for-profit organizations, the emphasis is on cash flow rather than on revenue and expenses.

Katie's Cleaning Service has cleaning contracts for 15 apartments, 45 family homes, and 25 office buildings. She estimates that an apartment takes 4 hours to clean, a home takes 6 hours to clean, and an office building takes 10 hours to clean. Katie pays her cleaning staff $12.50/hour. If each location is cleaned once per week, how much does Katie need to budget for direct labor each month? Assume there are four weeks per month. A $7,250 B $7,083 C $29,000 D $28,333

C $29,000

Dobbins Resources pays sales commissions of $2 per unit and shipping costs of $0.75 per unit. If Dobbins expects to sell 12,000 units in the third quarter, what will their total variable expenses be? A $9,000 B $42,000 C $33,000 D $24,000

C $33,000

The Crawford Company has 3,000 units in beginning finished goods. The sales budget shows expected sales to be 12,000 units. If the production budget shows that 14,000 units are required for production, what was the desired ending finished goods? A 3,000 B 1,000 C 9,000 D 5,000

D 5,000

Which line items of the budgeted balance sheet are calculated based on operating budgets? A Finished goods inventory, raw materials inventory, buildings and equipment, and retained earnings. B Cash, accounts receivable, accounts payable, and buildings and equipment. C Accounts receivable, accounts payable, retained earnings, and accumulated depreciation. D Finished goods inventory, raw materials inventory, and retained earnings.

D Finished goods inventory, raw materials inventory, and retained earnings.

Which of the following is a characteristic of long-range planning? A More detail is presented than in a budget. B It focuses on achieving goals such as meeting annual profit objectives. C It is prepared for periods not exceeding one year. D It is used to review progress rather than as a basis for control.

D It is used to review progress rather than as a basis for control.

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.

b.longer time period.

The essentials of effective budgeting do not include Entry field with correct answer sound organizational structure. research and analysis. top-down budgeting. management acceptance.

top-down budgeting.

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

total required direct labor hours.

In the Progressa Company required production for June is 44,000 units. To make one unit of finished product, three pounds of direct material Z are required. Actual beginning and desired ending inventories of direct material Z are 100,000 and 110,000 pounds, respectively. How many pounds of direct material Z must be purchased? A 132,000 B 142,000 C 126,000 D 136,000

B 142,000

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

Production budget.

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

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.

a.the end-product of the operating budgets.

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

a.top-down budgeting.

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.

a.total required direct labor hours.

The format of a cash budget is: a.Beginning cash balance + Cash receipts + Cash from financing − Cash disbursements = Ending cash balance. b.Beginning cash balance + Cash receipts − Cash disbursements +/− Financing = Ending cash balance. c.Beginning cash balance + Net income − Cash dividends = Ending cash balance. d.Beginning cash balance + Cash revenues − Cash expenses = Ending cash balance.

b.Beginning cash balance + Cash receipts − Cash disbursements +/− Financing = Ending cash balance.

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.

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

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.

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

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

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

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: a.$96,000. b.$90,000. c.$78,000. d.$72,000.

c.$78,000

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.

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

In most cases, not-for-profit entities: a.prepare budgets using the same steps as those used by profitoriented 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.

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

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.

c.capital expenditure budget.

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: a.9,400. b.9,500. c.9,700. d.10,700.

d.10,700.

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.

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

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.

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

Which of the following are correct statements about a budget? Entry field with incorrect answer 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.

All of these options are correct statements.

City Mission is a not-for-profit organization that provides hot meals, living quarters, and showers for homeless people. Based on their yearly budget, they expect to spend $450,000 on food expenses, $350,000 on housing expenses, $280,000 on staff salaries, $90,000 on utilities, and $118,000 on other expenses. How much will City Mission need to raise in donations? A at least $1,288,000 B more than $1,562,000 C at least $1,253,000 D less than $1,225,000

A at least $1,288,000

Coordinating the preparation of the budget is the responsibility assigned to the A budget committee. B accounting department. C lower levels of management. D top management.

A budget committee.

A purchases budget is used instead of a production budget by A merchandising companies. B service enterprises. C manufacturing companies. D not-for-profit organizations.

A merchandising companies.

The Brenneman Company's direct materials budget shows total cost of direct materials purchases for January $125,000, February $150,000 and March $175,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are A $130,000. B $165,000. C $160,000. D $150,000.

B $165,000.

Rose Company is preparing its direct labor budget for May. Projections for the month are that 8,350 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $9, what is the total budgeted direct labor cost for May? A $243,000 B $225,450 C $217,350 D $221,400

B $225,450

In order to assure better management acceptance, the flow of input data for budgeting should begin with the A top management. B lower levels of management. C accounting department. D budget committee.

B lower levels of management.

Toledo Manufacturing has the following variable overhead costs: Indirect materials: $2.18/hour Indirect labor: $3.26/hour Utilities: $0.90/hour Maintenance: $0.33/hour Direct labor hours: 14,500 If Toledo decides that they need to increase their indirect materials to $2.25 per hour, how much will this increase their total variable costs? A $1,150 B $730 C $1,015 D $980

C $1,015

When they made their master budget, Vann Enterprises had direct material per unit costs of $12.43, direct labor per unit costs of $8.46, and manufacturing overhead per unit costs of $14.29. They planned to sell 16,000 units in the first quarter. However, in the first week of the first quarter, the direct material per unit costs rose to $16.12, which increased the selling price of the finished product. Therefore, Vann Enterprises only sold 15,500 units. What would the difference in cost of goods sold be between the budgeted income statement and the actual income statement? A $59,040 decrease B $59,040 increase C $39,605 increase D $39,605 decrease

C $39,605 increase

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? Entry field with correct answer $312,000. $318,000. $180,000. $291,000.

$312,000.

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? Entry field with correct answer $85,850. $57,100. $30,850. $83,750.

$85,850.

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? Entry field with correct answer $907,500. $500,000. $825,000. $605,000.

$907,500.