Budgets Planning Quiz
Can you correctly give the answer how to planning budgets? Let's find out now how much do you know by taking this quiz!
- 1.Why are budgets useful in the planning process?
- A.
They help communicate goals and provide a basis for evaluation.
- B.
They enable the budget committee to earn their paycheck.
- C.
They guarantee the company will be profitable if it meets its objectives.
- D.
They provide management with information about the company's past performance.
- 2.Which of the following items does not follow from the adoption of a budget?
- A.
Deterrent to waste
- B.
Basis for performance evaluation
- C.
Guarantee of accomplishing the profit objective
- D.
Promote efficiency
- 3.Which of the following statements about budget acceptance in an organization is true?
- A.
Budgets are hardly ever accepted by anyone except top management.
- B.
The most widely accepted budget by the organization is the one prepared by top management.
- C.
Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process.
- D.
The most widely accepted budget by the organization is the one prepared by the department heads.
- 4.An unrealistic budget is more likely to result when it
- A.
Has been developed in a top down fashion.
- B.
Has been developed by all levels of management.
- C.
Has been developed in a bottom up fashion.
- D.
Is developed with performance appraisal usages in mind.
- 5.In many companies, responsibility for coordinating the preparation of the budget is assigned to
- A.
The company's independent certified public accountants.
- B.
The company's internal auditors.
- C.
A budget committee.
- D.
The company's board of directors.
- 6.If a company has adopted continuous budgeting, the budget will show plans for
- A.
The current year and the next year.
- B.
A full year ahead.
- C.
At least five years.
- D.
Every day.
- 7.Which is the last step in developing the master budget?
- A.
Preparing the budgeted income statement
- B.
Preparing the cash budget
- C.
Preparing the budgeted balance sheet
- D.
Preparing the cost of goods manufactured budget
- 8.The following information is taken from the production budget for the first quarter: Beginning inventory in units1,200Sales budgeted for the quarter426,000Capacity in units of production facility472,000How many finished goods units should be produced during the quarter if the company desires 3,200 units available to start the next quarter?
- A.
474,000
- B.
424,000
- C.
429,200
- D.
428,0000
- 9.Desired ending direct materials48,000 poundsTotal materials required69,000 poundsDirect materials purchases63,200 poundsThe total direct materials needed for production is
- A.
15,200 pounds
- B.
132,200 pounds
- C.
5,800 pounds
- D.
21,000 pounds
- 10.A master budget consists of
- A.
An interrelated long-term plan and operating budgets.
- B.
Financial budgets and a long-term plan.
- C.
Interrelated financial budgets and operating budgets.
- D.
All the accounting journals and ledgers used by a company.
- 11.The starting point in preparing a master budget is the preparation of the
- A.
Personnel budget.
- B.
Production budget
- C.
Sales budget
- D.
Purchasing budget
- 12.Doe Manufacturing plans to sell 6,000 purple lawn chairs during May, 5,700 in June, and 6,000 during July. The company keeps 15% of the next month’s sales as ending inventory. How many units should Doe produce during June?
- A.
5,655
- B.
Not enough info
- C.
5,745
- D.
6,600
- 13.Comma Co. makes and sells widgets. The company is in the process of preparing its selling and administrative expense budget for the month. The following budget data are available: ItemVariable Cost Per Unit Sold Monthly Fixed CostSales commissions$1 $10,000Shipping$3 Advertising$4 Executive salaries $120,000Depreciation on office equipment $4,000Other$2 $6,000Expenses are paid in the month incurred. If the company has budgeted to sell 80,000 widgets in October, how much is the total budgeted selling and administrative expenses for October?
- A.
800,000
- B.
140,000
- C.
940,000
- D.
930,000
- 14.Pell Manufacturing is preparing its direct labor budget for May. Projections for the month are that 33,400 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $12, what is the total budgeted direct labor cost for May?
- A.
1,180,800
- B.
1,296,000
- C.
1,159,200
- D.
1,202,400
- 15.Astor Manufacturing has the following budgeted sales: January $120,000, February $180,000, and March $150,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during March are:
- A.
150,000
- B.
168,000
- C.
157,500
- D.
159,000
- 16.Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?
- A.
135,000
- B.
202,500
- C.
210,000
- D.
157,500
- 17.What is the proper preparation sequencing of the following budgets?1. Budgeted Balance Sheet2. Sales Budget3. Selling and Administrative Budget4. Budgeted Income Statement
- A.
2,3,4,1
- B.
2,4,1,3
- C.
1,2,3,4,
- D.
2,3,1,4
- 18.Which of the following does not appear as a separate section on the cash budget?
- A.
Cash disbursements
- B.
Capital expenditures
- C.
Financing
- D.
Cash receipts
- 19.The following information was taken from Southgate Industry’s cash budget for the month of July: Beginning cash balance$480,000Cash receipts304,000Cash disbursements544,000If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company would have to borrow is
- A.
80,000
- B.
240,000
- C.
160,000
- D.
96,000
- 20.Which one of the following items would never appear on a cash budget?
- A.
Travel expense
- B.
Office salaries expense
- C.
Interest expense
- D.
Depreciation expense
- 21.Petal Co. reported the following information for 2016: OctoberNovemberDecemberBudgeted sales$930,000$870,000$1,080,000
- All sales are on credit.
- Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
- A.
435,000
- B.
900,000
- C.
465,000
- D.
540,000
- 22.A company has budgeted direct materials purchases of $300,000 in July and $480,000 in August. Past experience indicates that the company pays for 70% of its purchases in the month of purchase and the remaining 30% in the next month. During August, the following items were budgeted: Wages Expense$150,000Purchase of office equipment72,000Selling and Administrative Expenses48,000Depreciation Expense36,000The budgeted cash disbursements for August are
- A.
426,000
- B.
648,000
- C.
696,000
- D.
732,000
- 23.Each of the following budgets is used in preparing the budgeted income statement except the
- A.
Direct labor budget
- B.
Selling and administrative budget
- C.
Sales budget
- D.
Capital expenditure budget
- 24.Which of the following does not appear as a separate section on the cash budget?
- A.
Cash disbursements
- B.
Cash expenditures
- C.
Financing
- D.
Cash receipts
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