Cost Ch8 Exam

T/F: The cash budget is the starting point in preparing the master budget.

False

Which of the following statements is NOT correct concerning the Cash Budget? Multiple Choice A. It is not necessary to prepare any other budgets before preparing the Cash Budget. B. The Cash Budget should be prepared before the Budgeted Income Statement. C. The Cash Budget should be prepared before the Budgeted Balance Sheet. D. The Cash Budget builds on earlier budgets and schedules as well as additional data.

A. It is not necessary to prepare any other budgets before preparing the Cash Budget.

Which of the following statements is false with respect to a budgeted income statement? Multiple Choice A. Its net income should equal the net cash flows from the cash budget. B. Its net income will impact the ending retained earnings balance shown on the balance sheet. C. Its interest expense flows from the financing section of the cash budget. D. Its selling and administrative expenses may include depreciation expense.

A. Its net income should equal the net cash flows from the cash budget.

Which of the following estimates is not used in preparing a sales budget including a schedule of expected cash collections? Multiple Choice A. The number of units produced B. The selling price per unit C. The number of units sold D. The credit sales collection pattern

A. The number of units produced

When preparing a direct materials budget, the required purchases of raw materials in units equals: Multiple Choice A. raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials. B. raw materials needed to meet the production schedule − desired ending inventory of raw materials − beginning inventory of raw materials. C. raw materials needed to meet the production schedule − desired ending inventory of raw materials + beginning inventory of raw materials. D. raw materials needed to meet the production schedule + desired ending inventory of raw materials + beginning inventory of raw materials.

A. raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials.

Which of the following equations is used to prepare a production budget? Multiple Choice A. Budgeted unit sales − Desired units of ending finished goods inventory + Units of beginning finished goods inventory = Required production in units B. Budgeted unit sales + Desired units of ending finished goods inventory − Units of beginning finished goods inventory = Required production in units C. Budgeted unit sales + Desired units of beginning finished goods inventory − Units of ending finished goods inventory = Required production in units D. Budgeted unit sales − Desired units of beginning finished goods inventory + Units of ending finished goods inventory = Required production in units

B. Budgeted unit sales + Desired units of ending finished goods inventory − Units of beginning finished goods inventory = Required production in units

Which of the following statements is true with respect to a budgeted income statement? Multiple Choice A. Its net income should equal the net cash flows from the cash budget. B. Its net income will impact the ending retained earnings balance shown on the balance sheet. C. Its cost of goods sold is derived from the corresponding dollar amount shown in the production budget. D. Its selling and administrative expenses exclude depreciation expense because it is a product cost.

B. Its net income will impact the ending retained earnings balance shown on the balance sheet.

Which of the following is not one of the sections within a cash budget? Multiple Choice A. The financing section B. The investing section C. The cash receipts section D. The cash disbursements section

B. The investing section

Which of the following statements is false with respect to a budgeted income statement? Multiple Choice A. Its interest expense flows from the financing section of the cash budget. B. Its net income will impact the ending retained earnings balance shown on the balance sheet. C. Its cost of goods sold is derived from the corresponding dollar amount shown in the production budget. D. Its selling and administrative expenses may include depreciation expense even though it is not a cash flow.

C. Its cost of goods sold is derived from the corresponding dollar amount shown in the production budget.

The usual starting point for a master budget is: Multiple Choice A. the direct materials purchase budget. B. the budgeted income statement. C. the sales forecast or sales budget. D. the production budget.

C. the sales forecast or sales budget.

Which of the following statements is true with respect to a budgeted balance sheet? Multiple Choice A. The accounts receivable balance includes the uncollected credit sales from the most recently completed month plus the expected cash collections from credit sales that were made two months ago. B. The ending cash balance on the balance sheet equals the net income on the income statement. C. The accounts payable balance includes the expected cash payments for material purchases that were made during the most recently completed month. D. The ending cash balance on the balance sheet equals the ending cash balance on the cash budget.

D. The ending cash balance on the balance sheet equals the ending cash balance on the cash budget.

T/F: One disadvantage of budgeting is that budgeting makes it more difficult to coordinate the plans and activities of departmental managers.

False

T/F: One of the weaknesses of budgets is that they are of little value in uncovering potential bottlenecks.

False

T/F: Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period.

True

T/F: In the manufacturing overhead budget, the non-cash charges (such as depreciation) are deducted from the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead.

True

T/F: The budgeted income statement is typically prepared before the budgeted balance sheet.

True

T/F: The direct labor budget shows the direct labor-hours required to satisfy the production budget.

True

T/F: The master budget consists of a number of separate but interdependent budgets.

True

T/F: The production budget is typically prepared before the direct materials budget.

True

T/F: The selling and administrative budget is typically prepared before the cash budget.

True