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Exam 23: Master Budgets and Planning

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Question 31

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A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a:

A) Cash budget.
B) Capital expenditures budget.
C) Rolling budget.
D) Sales budget.
E) Production budget.

F) B) and D)
G) None of the above

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Question 32

Multiple Choice

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Which of the following accounts would appear on a budgeted balance sheet?

A) Income tax expense.
B) Accounts receivable.
C) Sales commissions.
D) Depreciation expense.
E) All of these.

F) B) and D)
G) B) and C)

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Question 33

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Guidance for preparing a master budget is usually the responsibility of:

Which of the following is not a result of following a well-designed budgeting process?

Activity-based budgeting is a budget system based on expected activities and their activity levels, which helps management plan for the resources required.

Fairway's April sales forecast projects that 6,000 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 purchases of units in April would be:

Peru, Inc. is preparing its master budget for the first quarter of its calendar year. The following forecasted data relate to the first quarter: Prepare a budgeted income statement for this first quarter.

Pantheon Company has prepared the following forecasts of monthly sales: Pantheon has decided that the number of units in its inventory at the end of each month should equal 25% of the next month's sales. The budgeted cost per unit is $30. (1) How many units should be in July's beginning inventory? (2) What amount should be budgeted for the cost of merchandise purchases in July? (3) How many units should be purchased in September?

Traditional budgeting is generally better than activity-based budgeting when attempting to reduce costs by eliminating nonvalue-added activities.

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

A plan that lists the types and amounts of operating expenses expected that are not included in the selling expenses budget is a:

Kyoto, Inc. predicts the following sales in units for the coming four months: Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n) :

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and replacing budgets for periods that have lapsed.

A comprehensive or overall formal plan for a business that includes specific plans for expected sales, the units of product to be produced, the merchandise or materials to be purchased, the expenses to be incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as well as a budgeted income statement and balance sheet, is called a:

In preparing a budgeted balance sheet, the amount for Accounts Receivable is primarily determined from:

The ______________________________ shows the budgeted costs for direct materials, direct labor, and overhead, based on the budgeted production volume from the production budget.

The most useful budget figures are developed:

What is a capital expenditures budget?

The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called: