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Exam 21: Budgeting

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Question 61

True/False

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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) True
B) False

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Question 62

Multiple Choice

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The total direct materials purchases (assuming no beginning or ending inventory of material) of Materials A and B required for August production is

A) $1,080,000 for A; $1,296,000 for B
B) $1,080,000 for A; $648,000 for B
C) $1,125,000 for A; $675,000 for B
D) $1,170,000 for A; $702,000 for B

E) None of the above
F) B) and C)

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Question 63

Multiple Choice

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When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company,the manager is experiencing

The capital expenditures budget details future plans for acquisition of fixed assets.

Employees view budgeting more positively when goals are established for them by senior management.

Production and sales estimates for April are as follows: ​ The budgeted total sales for April is

The number of pounds of Materials A and B required for August production is

As of January 1 of the current year,the Gunner Company had accounts receivables of $50,000.The sales for January,February,and March were as follows: $120,000,$140,000,and $150,000,respectively.Of each month's sales,20% are for cash.Of the remaining 80% (the credit sales) ,60% are collected in the month of sale,with the remaining 40% collected in the following month.What is the accounts receivable balance as of March 31?

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

Which of the following budgets is not directly associated with the production budget?

Willow Valley's April sales forecast projects that 7,000 units will sell at a price of $10.50 per unit.The desired ending inventory is 30% higher than the beginning inventory,which was 1,000 units.Budgeted production in April would be

What is the budgeted units of production for February?

To meet projected annual sales,Bluegill Manufacturers,Inc.needs to produce 75,000 machines for the year.The estimated January 1 inventory is 7,000 units,and the desired December 31 inventory is 12,000 units.What are projected sales units for the year?

A budget can be an effective means of communicating management's plans to the owners of a business.

After the sales budget is prepared,the production budget is normally prepared next.

In preparing flexible budgets,the first step is to identify the fixed and variable components of the various costs and expenses being budgeted.

Once a static budget has been determined,it is changed regularly as the underlying activity changes.

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 202,000 units.

The cash payments expected for Finch Company in the month of May are

Future Technologies projected sales of 35,000 computers for this year.The estimated January 1 inventory is 3,000 units,and the desired December 31 inventory is 9,000 units.What is the budgeted production (in units)for the year?