Question 1

Which element of a master budget would normally be prepared last?

Accepted Answer

A)  A cash budget.
B)  A budgeted balance sheet.
C)  A budgeted income statement.
D)  A production budget.

Question 2

Budgeted debt service costs
On April 1,Fisher Corporation borrowed $400,000 from its bank by signing a 9%,5-year note payable.The note calls for 60 monthly payments of $6,150,which includes both interest and principal components.
(a)Interest expense budgeted for April amounts to: $_______________
(b)The carrying value of the note to be reported in the company's budgeted balance sheet as of April 30 is: $_______________
(c)Interest expense budgeted for May amounts to (round to nearest whole dollar): $_______________
(d)The carrying value of the note to be reported in the company's budgeted balance sheet as of May 31 is (round to nearest whole dollar): $_______________

Accepted Answer

(a)3,000 (...

Question 3

If the volume of output of a factory for the month of June is 50,000 units,while the budgeted output was 40,000 units:

Accepted Answer

A)  Comparison of budgeted results and actual results will be misleading unless the company uses a flexible budget.
B)  Actual fixed costs per unit may be expected to exceed budgeted levels.
C)  Actual cost per unit will be higher than standard cost per unit.
D)  Both total production costs and unit production costs should be approximately 25% above budgeted levels. A

Question 4

A budget provides a comprehensive plan enabling multiple departments to work together in a coordinated manner.

Accepted Answer

A) True 
 B)False

Question 5

Discuss the benefits that a company may derive from a formal budgeting process.

Accepted Answer

The benefits of budgeting are the benefi...

Question 6

Costs that rise and fall proportionately with the volume of output are often

Accepted Answer

A)  Variable costs.
B)  Flexible costs.
C)  Idle capacity costs.
D)  Uncontrollable costs.

Question 7

In preparing a master budget,budgeted levels for production,manufacturing costs,and operating expenses normally are determined after preparing the sales forecast.

Accepted Answer

A) True 
 B)False

Question 8

In a master budget,the sales forecast would be dependent upon the budgeted production figures.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a major component of a master budget?

Accepted Answer

A)  A production throughput schedule.
B)  A machinery maintenance schedule.
C)  A cash budget.
D)  An employee training budget.

Question 10

In a flexible budget for a profit center,which of the following items would not be expected to vary with the level of activity?

Accepted Answer

A)  Revenue.
B)  Fixed manufacturing overhead.
C)  Direct materials cost.
D)  Variable manufacturing overhead. B

Question 11

Flexible budgets can be prepared for sales budgets but not for productions budgets.

Accepted Answer

A) True 
 B)False

Question 12

A budget that adds a new month when the current month ends is called a:

Accepted Answer

A)  Capital budget.
B)  Master budget.
C)  Rolling budget.
D)  There is no such budget.

Question 13

A company's operating cycle is the time between purchases of direct materials and conversion of these materials back into cash.

Accepted Answer

A) True 
 B)False

Question 14

The production schedule in units:

Accepted Answer

A)  Cannot be prepared until the budgeted income statement is completed.
B)  Is dependent upon the sales forecast for the period.
C)  Is based upon the manufacturing cost budget,that is,upon the level of funds available for manufacturing costs.
D)  Is the starting point in the preparation of the master budget. B

Question 15

Flexible budgeting
What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance?

Accepted Answer

A flexible budget is one which may be ge...

Question 16

The master budget may be comprised of:

Accepted Answer

A)  The production budget.
B)  The current period income statement.
C)  The current period balance sheet.
D)  The current period statement of cash flows.

Question 17

When budgeted amounts are set at reasonable and achievable levels:

Accepted Answer

A)  They reflect a "total quality management" philosophy of management.
B)  A highly efficient department should fall slightly short of budget standards.
C)  Meeting the budgeted amounts ensures a maximum level of profitability.
D)  Failure to stay within the budget is viewed as an unacceptable level of performance.

Question 18

The most widely used budgeting philosophy is the:

Accepted Answer

A)  Operational approach.
B)  Behavioral approach.
C)  Strategic approach.
D)  Tactical approach.

Question 19

Harding Company expected sales to be 50,000 units in February,45,000 in March,and 55,000 units in April.Each unit sells for $18.00 each.The following costs pertain to each unit:  Harding is considering an advertising campaign which will cost $15,000 per month from January to March and is expected to increase sales by 8% a month.At the same time Harding will reduce sales prices to $17.00 per unit while keeping costs steady.
Required:
(A.)What will operating income be in each of the three months before the advertising campaign?
(B.)If Harding goes ahead with the advertising campaign,how much would operating income increase or decrease each month? Would you advise them to go ahead with the campaign?

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Total operating income for th...

Question 20

As the volume of output decrease:

Accepted Answer

A)  Fixed costs per unit will increase.
B)  Fixed costs per unit will decrease.
C)  Fixed costs per unit will not change.
D)  Fixed costs in total will decrease.

Exam 23: Operational Budgeting

Which element of a master budget would normally be prepared last?

Correct Answer
verified

Correct Answer
verified
(a)3,000 (...
View Answer

If the volume of output of a factory for the month of June is 50,000 units,while the budgeted output was 40,000 units:

Correct Answer
verified
A

A budget provides a comprehensive plan enabling multiple departments to work together in a coordinated manner.

Correct Answer
verified

Discuss the benefits that a company may derive from a formal budgeting process.

Correct Answer
verified
The benefits of budgeting are the benefi...
View Answer

Costs that rise and fall proportionately with the volume of output are often

Correct Answer
verified

In preparing a master budget,budgeted levels for production,manufacturing costs,and operating expenses normally are determined after preparing the sales forecast.

Correct Answer
verified

In a master budget,the sales forecast would be dependent upon the budgeted production figures.

Correct Answer
verified

Which of the following is a major component of a master budget?

Correct Answer
verified

In a flexible budget for a profit center,which of the following items would not be expected to vary with the level of activity?

Correct Answer
verified
B

Flexible budgets can be prepared for sales budgets but not for productions budgets.

Correct Answer
verified

A budget that adds a new month when the current month ends is called a:

Correct Answer
verified

A company's operating cycle is the time between purchases of direct materials and conversion of these materials back into cash.

Correct Answer
verified

The production schedule in units:

Correct Answer
verified
B

Flexible budgeting What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance?

Correct Answer
verified
A flexible budget is one which may be ge...
View Answer

The master budget may be comprised of:

Correct Answer
verified

When budgeted amounts are set at reasonable and achievable levels:

Correct Answer
verified

The most widely used budgeting philosophy is the:

Correct Answer
verified

Correct Answer
verified
Total operating income for th...
View Answer

As the volume of output decrease:

Correct Answer
verified

Exam 23: Operational Budgeting

Which element of a master budget would normally be prepared last?

Correct AnswerverifiedShow Answer

Correct Answerverified(a)3,000 (...View AnswerShow Answer

If the volume of output of a factory for the month of June is 50,000 units,while the budgeted output was 40,000 units:

Correct AnswerverifiedA

A budget provides a comprehensive plan enabling multiple departments to work together in a coordinated manner.

Correct AnswerverifiedShow Answer

Discuss the benefits that a company may derive from a formal budgeting process.

Correct AnswerverifiedThe benefits of budgeting are the benefi...View AnswerShow Answer

Costs that rise and fall proportionately with the volume of output are often

Correct AnswerverifiedShow Answer

In preparing a master budget,budgeted levels for production,manufacturing costs,and operating expenses normally are determined after preparing the sales forecast.

Correct AnswerverifiedShow Answer

In a master budget,the sales forecast would be dependent upon the budgeted production figures.

Correct AnswerverifiedShow Answer

Which of the following is a major component of a master budget?

Correct AnswerverifiedShow Answer

In a flexible budget for a profit center,which of the following items would not be expected to vary with the level of activity?

Correct AnswerverifiedB

Flexible budgets can be prepared for sales budgets but not for productions budgets.

Correct AnswerverifiedShow Answer

A budget that adds a new month when the current month ends is called a:

Correct AnswerverifiedShow Answer

A company's operating cycle is the time between purchases of direct materials and conversion of these materials back into cash.

Correct AnswerverifiedShow Answer

The production schedule in units:

Correct AnswerverifiedB

Flexible budgeting What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance?

Correct AnswerverifiedA flexible budget is one which may be ge...View AnswerShow Answer

The master budget may be comprised of:

Correct AnswerverifiedShow Answer

When budgeted amounts are set at reasonable and achievable levels:

Correct AnswerverifiedShow Answer

The most widely used budgeting philosophy is the:

Correct AnswerverifiedShow Answer

Correct Answerverified Total operating income for th...View AnswerShow Answer

As the volume of output decrease:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
(a)3,000 (...
View Answer

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified
The benefits of budgeting are the benefi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified
A flexible budget is one which may be ge...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Total operating income for th...
View Answer

Correct Answer
verified