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Exam 10: Budgetary Planning and Control

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Question 81

True/False

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Generally, it is best to evaluate managers against a static budget since the volume used on a static budget is used to generate expected results for the period.

A) True
B) False

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Question 82

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Bandaloon Foods expects to make the following inventory purchases during the last three months of the year: $\begin{array} { l l } \text { Month } & \text { Purchases } \\\text { October } & \$ 80,000 \\\text { November } & 100,000 \\\text { December } & 160,000\end{array}$ During September, Bandaloon purchased $72,000 of inventory. The restaurant typically pays for 25% of the inventory purchases within the month of the purchase and 75% in the following month. How much are estimated cash disbursements in November for inventory purchases?

A) $95,000
B) $100,000
C) $85,000
D) $115,000

E) B) and C)
F) A) and D)

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Question 83

Multiple Choice

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Each unit produced by Terra Electronics requires 4 pounds of raw materials. The raw materials inventory must be equal to 10% of the next month's production. Each pound of raw materials costs $2.00. Budgeted production information follows. $\begin{array}{ll}\text { April } & 28,000 \text { units } \\\text { May } & 30,000 \text { units } \\\text { June } & 25,000 \text { units }\end{array}$ How much are budgeted purchases of raw materials for May?

If the number of units produced equals the number of units sold, the number of units in ending inventory will equal the number of units in beginning inventory on the production budget.

Winslow Inc. determined it had sold products during the month but not collected all of the amounts owed. Where will this amount owed be reflected in the master budget for the month?

KirbyCor's budgeted income statement for 2014 follows: $\begin{array}{lr}\text { Sales (80,000 units) }&&\$400,000\\\text { Less: }\\\text { Direct materials } & \$ 120,000 \\\text { Direct labor } & 80,000 \\\text { Variable overhead } & 40,000 \\\text { Fixed costs } & 80,000 &320,000\\\text { Income before taxes }&&\$80,000\end{array}$ How much would be reported for total variable costs on a flexible budget at 75,000 units?

Who is responsible for the approval of the master budget?

The budgeted balance sheet is also called a pro-forma balance sheet.