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Exam 21: Budgeting

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Question 61

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The budgeted volume of production is based on the sum of 1) the expected sales volume and 2) the desired ending inventory, less 3) the estimated beginning inventory.

A) True
B) False

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Question 62

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Part of the cash budget is based on information drawn from the capital expenditures budget.

A) True
B) False

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Question 63

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Consulting the persons affected by a budget when it is prepared can provide an effective means of motivation and cooperation.

A process whereby the effect of fluctuations in the level of activity is built into the budgeting system is referred to as flexible budgeting.

A company is preparing its cash budget. Its cash balance on January 1 is $290,000 and it has a minimum cash requirement of $340,000. The following data has been provided: -What is the amount of cash excess or deficiency after considering the minimum cash balance required) for March?

Flexible budgeting requires all levels of management to start from zero and estimate sales, production, and other operating data as though operations were being started for the first time.

The sales budget is the starting point for preparation of the direct labor cost budget.

Which of the following budgets allow for adjustments in activity levels?

The budgeted direct materials purchases is normally computed as the sum of 1) the materials for production and 2) the desired ending inventory.

The process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as

Gilbert's expects its September sales to be 20% higher than its August sales of $150,000. Manufacturing costs were $100,000 in August and are expected to be $120,000 in September. All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month. Payments of manufacturing costs are as follows: 25% in the month of production and 75% in the following month. The beginning cash balance on September 1 is $7,500. The ending balance on September 30 would be

The first budget to be prepared is usually the cash budget.

Match each phrase that follows with the term a-f) it describes.. -an accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period

Production and sales estimates for June are as follows: The number of units expected to be manufactured in June is

Which of the following would not be used in preparing a cash budget for October?

What is a capital expenditures budget?

If Division Inc. expects to sell 200,000 units in the current year, desires ending inventory of 24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted volume of production for the year is 198,000 units.

Total budgeted sales of both products for the year would be

Match each phrase that follows with the term a-f) it describes.. -plans an important role for organizations in planning, directing, and controlling a company's future goals

A series of budgets for varying rates of activity is termed an)