Online Tutorial Quiz

Please answer all questions

1		The average time required for the cash invested in inventories to be converted into the cash ultimately collected on sales made to customers is called the operating cycle.
			A)	True
			B)	False
2		A budget is a comprehensive financial plan setting forth the expected route for achieving the financial and operational goals of an organization.
			A)	True
			B)	False
3		One of the benefits derived from budgeting is the assignment of decision-making responsibilities.
			A)	True
			B)	False
4		Of the two basic philosophies prevailing today that dictate the levels at which budgeted amounts should be set, the total quality management approach is the more widely used.
			A)	True
			B)	False
5		A budget that reflects an organization's commitment to the goal of completely eliminating inefficiency and non-value-added activities is based on the total quality approach to setting budgeted amounts.
			A)	True
			B)	False
6		Most operating and capital expenditures budgets cover a period of one fiscal year.
			A)	True
			B)	False
7		An advantage to using continuous budgeting is that it stabilizes the planning horizon at one year ahead.
			A)	True
			B)	False
8		The cash budget is an operating budget.
			A)	True
			B)	False
9		The portion of the budget relating to an individual responsibility center (cost center, profit center, or investment center) is called a responsibility budget.
			A)	True
			B)	False
10		The first step in preparing a master budget is the preparation of the cash budget.
			A)	True
			B)	False
11		Normally, the last budget prepared is the budgeted balance sheet.
			A)	True
			B)	False
12		Planned production for the period can be expressed as the budgeted sales units plus the desired ending inventory less the beginning inventory.
			A)	True
			B)	False
13		Quarterly manufacturing cost budgets may legitimately show widely varying manufacturing costs per unit.
			A)	True
			B)	False
14		The first financial budget prepared is the cash budget.
			A)	True
			B)	False
15		A flexible budget is a budget prepared for different levels of activity.
			A)	True
			B)	False
16		Which of the following is not a benefit of budgeting?
			A)	It enhances management responsibility
			B)	It assigns decision-making responsibilities
			C)	It prevents net losses from occurring
			D)	It coordinates activities among subunits of the organization
			E)	It provides a basis for evaluating performance
17		Which of the following budgets deals primarily with the acquisition of buildings and equipment?
			A)	Sales forecast
			B)	Cash budget
			C)	Operating expense budget
			D)	Manufacturing cost budget
			E)	None of the above
18		In which type of budgets is a budget period added as one budget period elapses?
			A)	Budgeted financial statements
			B)	Continuous budgets
			C)	Production schedules
			D)	Operating expense budgets
			E)	Flexible budgets
19		Which of the following is not one of the operating budgets?
			A)	Manufacturing cost budget
			B)	Operating expense budget
			C)	Budgeted income statement
			D)	Production schedule
			E)	Sales forecast

You are responsible for preparing the following budgets or schedules:
A. Sales forecast
B. Manufacturing cost budget
C. Cash budget
D. Production schedule
E. Operating expense budget
F. Budgeted balance sheet

20		In which order should you prepare these budgets and schedules?
			A)	A, C, D, E, B, F
			B)	A, D, C, E, B, F
			C)	C, A, B, F, D, E
			D)	C, F, A, B, D, B
			E)	A, D, B, E, C, F

21		Which of the following is not an operating budget?
			A)	Production schedule
			B)	Operating expense budget
			C)	Manufacturing cost budget
			D)	Cash budget
			E)	Cost of goods sold budget
22		With a March 1 inventory of 12,000 units, how many units must be produced to provide an ending inventory of 8,000 units if Acorn Supply expects March sales to be 36,000 units at $1 per unit?
			A)	20,000 units
			B)	48,000 units
			C)	32,000 units
			D)	56,000 units
			E)	None of the above

Projected Sales Forecast:
Time Periods 1 2 3 4
Sales in units 12,000 13,000 15,000 10,000

23		The desired ending inventory is 10% of the sales units of the subsequent period. How many units will be produced in the second time period?
			A)	13,100
			B)	13,300
			C)	11,900
			D)	Cannot be determined from the information provided
			E)	None of the above

Production Schedule for 2001
Quarter: 1st 2nd 3rd 4th
Expected sales units 7,000 5,000 8,000 6,000
Units produced 6,800 --to be determined--

24		The previous year's 4th quarter ending inventory of 700 units meets the minimum requirement for the subsequent quarter's beginning inventory. The expected production in the current 2nd Quarter will be which of the following?
			A)	5,300 units
			B)	6,800 units
			C)	4,500 units
			D)	5,200 units
			E)	None of the above

Sales Forecast:
Month October November December January
Credit Sales $40,000 $50,000 $60,000 $35,000

25		Expected cash collections of credit sales is 50% in month of sale, 30% in following month, and 15% in the second following month. Five percent of credit sales are uncollectible. What is the expected amount of collections for the month of December?
			A)	$35,000
			B)	$51,000
			C)	$54,000
			D)	$50,000
			E)	None of the above
26		Expected cash collections from credit sales is 50% in month of sale, 30% in following month, and 15% in the second following month. Five percent of the credit sales are uncollectible. The collections in November were $46,000. What was the amount of September sales?
			A)	$45,000
			B)	$63,000
			C)	$50,000
			D)	$52,000
			E)	None of the above

Direct Materials Budget:
Budget quarters 1st 2nd 3rd 4th
Credit purchases of materials $54,000 $60,000 $70,000 $56,000

27		Payments for credit purchases are made as follows: 50% are paid in the quarter of purchase (a 2% discount is earned on one-half of this amount) and 50% are paid in the following quarter. What was the amount of the cash disbursement for credit purchases of direct materials in the 2nd quarter?
			A)	$56,700
			B)	$57,000
			C)	$56,400
			D)	$84,000
			E)	None of the above

28		The payment schedule of current payables related to purchases of direct materials is: 60% in the time period of purchase, 30% in the following time period, and 10% in the subsequent time period. Total credit purchases in the month of June were $100,000, and total payments on credit purchases were $140,000. What were the credit purchases in the month of April?
			A)	$200,000
			B)	$100,000
			C)	Different than for May
			D)	Cannot be determined from the information
			E)	None of the above

Production schedule:
Quarter 1st 2nd 3rd 4th
Production units 20,000 30,000 50,000 10,000^

29		Direct labor of 1/2 hour per unit is required. Direct labor is paid at $5 per hour. What is the amount of direct labor cost planned for the 3rd quarter?
			A)	$ 25,000
			B)	$ 62,500
			C)	$ 12,500
			D)	$125,000
			E)	None of the above

Production Schedule:
Quarter 1st 2nd 3rd
Beginning inventory 5,000 4,000 12,000
Budgeted unit sales 50,000 40,000 120,000
Desired ending finished goods 4,000 12,000 15,000

30		Direct labor completes 2 units per hour at $8 per hour. Which of the following statements is false?
			A)	Desired ending inventory is 10% of the next quarter's sales units
			B)	Direct labor cost for the 4th quarter cannot be determined
			C)	Direct labor cost for the 2nd quarter will be $192,000
			D)	Sales units of 150,000 are projected for the 4th quarter
			E)	Direct labor hours for the 3rd quarter will be 66,000

Data taken from the sales forecast, the manufacturing cost budget, and the schedules of cash payment:
Quarter First Second
Planned production units: 7,000 7,500
Budgeted variable overhead costs: $15,000 $18,750
Budgeted fixed manufacturing overhead: unknown unknown
Budgeted depreciation included in total overhead: $ 3,000 $ 3,000
Budgeted cash payments for total overhead: $20,000 $23,750

31		All budgeted overhead costs, except for budgeted fixed manufacturing overhead, are shown. What is the amount of budgeted fixed manufacturing overhead?
			A)	$2,000
			B)	$6,000
			C)	$9,000
			D)	$3,000
			E)	None of the above

Quarters First Second Third Fourth
Budgeted direct-labor hours 60,000 80,000 75,000 70,000
Variable overhead rate/hour $3.00 $3.00 $3.00 $3.00
Fixed manufacturing overhead $80,000 $80,000 $80,000 $80,000
The fixed manufacturing overhead includes depreciation of $35,000 per quarter.

32		Ninety percent of the cash payments for manufacturing overhead for each quarter are made during the quarter, and the remaining 10% is made the following quarter. How much are 2nd quarter cash payments for overhead?
			A)	$274,500
			B)	$279,000
			C)	$349,000
			D)	$314,000
			E)	None of the above

The following events and balances have been projected:
(1) Cash sales totaling $380,000
(2) A $30,000 beginning cash balance
(3) Expenses of $420,000, which include $20,000 of depreciation and $12,000 of interest
(4) End-of-period accrued liabilities of $20,000 for unpaid expenses
(5) Borrowing $50,000 cash by issuing a note payable

33		What is the expected ending cash balance?
			A)	$80,000
			B)	$40,000
			C)	$52,000
			D)	$60,000
			E)	None of the above

34		Which of the following statements is true?
			A)	Budgeted balance sheets are not dependent upon budgeted income statements
			B)	Budgeted income statements include depreciation expenses
			C)	Cash budgets include depreciation expenses
			D)	A production schedule shows the cost of the direct material to be purchased
			E)	Sales budgets are prepared after cash budgets
35		Which of the following budgets is prepared last?
			A)	Budgeted income statement
			B)	Capital expenditures budget
			C)	Manufacturing cost budget
			D)	Budgeted balance sheet
			E)	Cost of goods sold budget

Amounts budgeted for 10,000 units of planned production:
Direct materials $ 80,000
Direct labor 120,000
Variable manufacturing overhead costs 100,000
Fixed manufacturing overhead costs 50,000

36		Twelve thousand units were produced, which is a level below full capacity. The direct materials cost for the period were $96,450. How much was the actual cost of direct materials over or under budget?
			A)	$450 over budget
			B)	$450 under budget
			C)	$16,000 over budget
			D)	$16,450 over budget
			E)	$15,550 under budget
37		What is the total budgeted manufacturing cost at a level of 11,000 units, which is below full capacity?
			A)	$385,000
			B)	$380,000
			C)	$370,000
			D)	$330,000
			E)	$358,000