Chapter 9—Profit Planning TRUE/FALSE
1. A strategic plan identifies strategies strategies for future activities activities and operations, operations, generally generally covering at least five five years. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4. !udgets !udgets are financial financial plans plans for for t5e t5e futur future. e. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. . T5e aster aster udget udget is coposed coposed of operati operating ng udgets udgets and financi financial al udgets. udgets. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 6. )ontrol is is ac5ieved y coparing coparing actual results 3it5 3it5 udgeted udgeted results results on a periodic asis. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 7. Planning is loo8ing loo8ing a5ead to see 35at actions actions s5ould s5ould e ta8en to reali9e particular particular goals. goals. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. -. !udgets !udgets identify identify oectives oectives and t5e actions actions needed needed to ac5ieve t5e ecause ecause t5ey are foresig5 foresig5ted ted financial plans. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. ;. A fir fir s5ould s5ould develop develop a strateg strategic ic plan efore efore preparing preparing a udget udget.. ANS: T !": #: $%1
PTS: 1 DIF: Difficulty: Easy NAT: !&SP'(: Analytic
STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <. A fir ac=uir ac=uires es inforation inforation t5at t5at can e used to iprove iprove decisio decision n a8ing fro fro a udgetary syste. syste. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. $. )oparing actual actual results 3it5 udgeted udgeted results on a periodic periodic asis provides control control in a udgetary syste. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1>. A large difference difference et3een actual and planned results results is feedac8 t5at t5e syste is providing providing ade=uate control. ANS: F PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 11. 11. )ounica )ounication tion and and coordina coordination tion are are served served y udgets udgets.. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 14. T5e aster udget is typically a copre5ensive financial plan plan for t5e organi9ation for t5e past fiscal year. ANS: F PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1. A continuou continuouss udget udget is a oving oving 14%on 14%ont5 t5 udget. udget. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 16. T5e departent departent anager revie3s t5e t5e udget, provides policy policy guidelines guidelines and udgetary udgetary goals, and resolves differences t5at arise as t5e udget is prepared, approves t5e final udget, and onitors t5e actual perforance of t5e organi9ation as t5e year unfolds. ANS: F !": #: $%1
PTS: 1 DIF: Difficulty: Easy NAT: !&SP'(: Analytic
STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <. A fir ac=uir ac=uires es inforation inforation t5at t5at can e used to iprove iprove decisio decision n a8ing fro fro a udgetary syste. syste. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. $. )oparing actual actual results 3it5 udgeted udgeted results on a periodic periodic asis provides control control in a udgetary syste. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1>. A large difference difference et3een actual and planned results results is feedac8 t5at t5e syste is providing providing ade=uate control. ANS: F PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 11. 11. )ounica )ounication tion and and coordina coordination tion are are served served y udgets udgets.. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 14. T5e aster udget is typically a copre5ensive financial plan plan for t5e organi9ation for t5e past fiscal year. ANS: F PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1. A continuou continuouss udget udget is a oving oving 14%on 14%ont5 t5 udget. udget. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 16. T5e departent departent anager revie3s t5e t5e udget, provides policy policy guidelines guidelines and udgetary udgetary goals, and resolves differences t5at arise as t5e udget is prepared, approves t5e final udget, and onitors t5e actual perforance of t5e organi9ation as t5e year unfolds. ANS: F !": #: $%1
PTS: 1 DIF: Difficulty: Easy NAT: !&SP'(: Analytic
STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 17. T5e udget director is t5e person responsile for directing and coordinating coordinating t5e organi9ation2s organi9ation2s overall udgeting process. process. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1-. T5e first first udget udget to to e prepare prepared d is t5e t5e sales sales udget. udget. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1;. T5e product production ion udget udget is prepare prepared d in units units and in dollars. dollars. ANS: F T5e production udget is prepared in units only, not dollars. PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT NAT: !&SP'(: Analytic Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1<. T5e direct direct aterials aterials purc5a purc5ases ses udget udget is ased ased on t5e sales sales udget. udget. ANS: F T5e direct aterials purc5ases udget is ased on t5e production udget. PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT NAT: !&SP'(: Analytic Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1$. T5ere are are as any direct direct aterials aterials purc5as purc5ases es udgets udgets as t5ere t5ere are products. products. ANS: F PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4>. T5e direct laor udget udget includes: units to e produced, produced, direct laor laor tie needed per unit, and total direct laor cost for t5e period. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 41. T5e selling selling and adinist adinistrativ rativee e?penses e?penses udget udget is part of t5e operating operating udgets udgets..
ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 44. T5e sales udget is used directly in t5e developent of t5e production udget. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4. In preparing t5e direct laor udget, t5e average 3age rate is used to calculate total direct laor cost. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 46. T5e cas5 udget includes t5e eginning alance of cas5, cas5 receipts, cas5 disurseents, and t5e ending alance of cas5. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 47. If t5e initial cas5 udget indicates a cas5 deficiency, t5e copany ust go out of usiness. ANS: F PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4-. )as5 receipts ust e at least as uc5 as sales. ANS: F PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%*easureent + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4;. )as5 udgets are often prepared ont5ly or even 3ee8ly. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4<. T5e output of t5e cost of goods sold udget is entered into t5e pro fora alance s5eet. ANS: F T5e output of t5e cost of goods sold udget is entered into t5e pro fora incoe stateent.
PTS: 1 DIF: Difficulty: Easy !": #: $%4 + #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4$. Individual e5avior t5at is in asic conflict 3it5 t5e goals of t5e organi9ation is called goal congruence. ANS: F Individual e5avior t5at is in asic conflict 3it5 t5e goals of t5e organi9ation is called dysfunctional e5avior. PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. >. Pseudoparticipation is one of t5e potential proles 3it5 participative udgeting. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1. !udgets s5ould e ased on ideal standards to encourage everyone to reac5 for t5e 5ig5est level of perforance. ANS: F PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4. Ideally, anagers are 5eld accountale for controllale costs. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. . *yopic e5avior is one of t5e advantages of participative udgeting. ANS: F PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 6. *onetary incentives include salary increases, onuses, and prootions. ANS: T PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in.
MATCHING
Identify each item as a component of the production budget or the direct materials purchases budget. a. production udget . direct aterials purc5ases udget
1. 4. . 6.
eginning inventory of aterials sales in units units of ra3 aterials needed for eac5 unit of product ending inventory of product
1. ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. . ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 6. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. Identify each item as either part of the operating budget or the financial budget. a. perating !udget . Financial !udget
7. -. ;. <. $. 1>.
production udget sales udget cas5 udget ending finis5ed goods inventory udget udgeted alance s5eet udgeted capital e?penditures
7. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. -. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. ;. ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic
STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. $. ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1>. ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. Identify each item as an advantage or disadvantage of budgeting. a. advantage . disadvantage
11. 14. 1. 16. 17.
Pseudoparticipation forces anagers to plan iproves counication and coordination leads to udgetary slac8 provides standard for perforance evaluation
11. ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 14. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 16. ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 17. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. CMPLETIN
1. @@@@@@@@@@@@@@@@@@ is loo8ing a5ead to see 35at actions s5ould e ta8en to reali9e particular goals. ANS: Planning PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in.
4. T5e @@@@@@@@@@@@@@@@ plots a direction for an organi9ations future activities and operationsB it generally covers at least five years. ANS: strategic plan PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. . !udgets iprove @@@@@@@@@@@@@@@@@. ANS: decision a8ing PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 6. T5e @@@@@@@@@@@@@@@@@ is t5e copre5ensive financial plan for t5e organi9ation as a 35ole. ANS: aster udget PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 7. A @@@@@@@@@@@@@@@@@@ is a oving 14%ont5 udget. ANS: continuous udget PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. -. T5e controller of t5e copany usually serves as t5e @@@@@@@@@@@@@@@@@@. ANS: udget director PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. ;. T5e cas5 udget and udgeted alance s5eet are part of t5e @@@@@@@@@@@@@@@@. ANS: financial udget PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and
'esponsiility
/E0: !loo2s: /no3ledge
NT: 1 in.
<. T5e @@@@@@@@@@@@@@@ tells 5o3 any units ust e produced to eet sales needs and to satisfy ending inventory re=uireents. ANS: production udget PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. $. T5e @@@@@@@@@@@@@@@@@@ s5o3s t5e e?pected cost of all production costs ot5er t5an direct aterials and direct laor. ANS: over5ead udget PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1>. Salaries e?pense, advertising e?pense and depreciation e?pense 3ould e included in t5e @@@@@@@@@@@@@@@@@@@@@@ udget. ANS: selling and adinistrative e?penses PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 11. T5e asic structure of a @@@@@@@@@@@@@@ includes cas5 receipts, cas5 disurseents, any e?cess or deficiency of cas5, and financing. ANS: cas5 udget PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 14. @@@@@@@@@@@@@@@@@ consists of eginning cas5 alance and t5e e?pected cas5 receipts. ANS: )as5 availale PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1. T5e alignent of anagerial and organi9ational goals is often referred to as @@@@@@@@@@@@@@@. ANS: goal congruence
PTS: 1 DIF: Difficulty: *oderate !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 16. @@@@@@@@@@@@@@@@@@@@ is individual e5avior t5at is in asic conflict 3it5 t5e goals of t5e organi9ation. ANS: Dysfunctional e5avior PTS: 1 DIF: Difficulty: *oderate !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 17. @@@@@@@@@@@@@@ are t5e eans an organi9ation uses to influence a anager to e?ert effort to ac5ieve an organi9ations goals. ANS: Incentives PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1-. E?aples of @@@@@@@@@@@@@@@@ include o enric5ent, increased responsiility and autonoy, and recognition progras. ANS: nononetary incentives PTS: 1 DIF: Difficulty: *oderate !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1;. @@@@@@@@@@@@@@@@@@@@@ allo3s suordinate anagers considerale say in 5o3 t5e udgets are estalis5ed. ANS: Participative udgeting PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1<. @@@@@@@@@@@@@@@@@@@ e?ists 35en a anager delierately underestiates revenues or overestiates cost in an effort to a8e t5e future period appear less attractive in t5e udget t5an t5ey t5in8 it 3ill e in reality. ANS: !udgetary slac8 PTS: 1 DIF: Difficulty: Easy NAT: !&SP'(: Analytic
!": #: $%6
STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1$. C5en top anageent assues total control of t5e udgeting process and only see8s superficial participation fro lo3er%level anagers t5is is 8no3n as @@@@@@@@@@@@@@@@. ANS: pseudoparticipation PTS: 1 DIF: Difficulty: *oderate !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4>. @@@@@@@@@@@@@@@@@ are used to ensure t5at udgeted costs can e realistically copared 3it5 costs for actual levels of activity. ANS: Fle?ile udgets PTS: 1 DIF: Difficulty: *oderate !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. MULTIPLE CHICE
1. C5ic5 of t5e follo3ing is an advantage of udgeting a. Forces anagers to plan. . Provides inforation useful for control. c. Provides inforation for iproved decision a8ing. d. Iproves counication. e. All of t5ese. ANS: E PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4. C5ic5 of t5e follo3ing is a use of udgets for control a. Plans can e ade for t5e future. . If conditions c5ange et3een t5e foration of t5e udget and t5e current tie, udgets can e =uic8ly adapted. c. !udgets set a standard against 35ic5 results can e copared. d. )ounication is iproved. e. All of t5ese. ANS: ) PTS: 1 DIF: Difficulty: *oderate !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. . C5ic5 of t5e follo3ing udgets can e used for control a. Production udget . )as5 udget c. !udgeted incoe stateent
d. Selling and adinistrative e?pense udget e. All of t5ese ANS: E PTS: 1 DIF: Difficulty: *oderate !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 6. In a n @@@@, as one ont5 e?pires, an additional ont5 in t5e future is added to t5e udget so t5at t5e copany al3ays 5as a 14%ont5 plan on 5and. a. continuous udget . financial udget c. operational udget d. yearly udget e. aster udget ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 7. T5e @@@@ is t5e person responsile for directing and coordinating t5e organi9ation2s overall udget process. a. udget aster . controller c. c5ief financial planner d. udget director e. c5ief accountant ANS: D PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. -. #oo8ing ac83ard to deterine 35at actually 5appened and coparing it 3it5 t5e previously planned outcoes is a. control. . counicating. c. decision a8ing. d. strategic planning. e. udgeting. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. ;. !udgets are a. 8ey coponents of planning. . financial plans for t5e future. c. an identifier of oectives and t5e actions needed to ac5ieve t5e. d. used for counication and coordination. e. all of t5ese. ANS: E
PTS: 1
DIF:
Difficulty: Easy
!": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <. T5e aster udget is a. t5e selective financial plan for t5e organi9ation as a 35ole. . typically for a 1%year period corresponding to t5e fiscal year of t5e copany. c. ro8en do3n into daily and 3ee8ly udgets. d. used for isinforation and coordination. e. all of t5ese. ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. $. C5ic5 of t5e follo3ing is not true a. T5e sales forecast is done efore t5e sales udget. . T5e aster udget is t5e copre5ensive plan for t5e organi9ation as a 35ole. c. T5e production udget is prepared in units and dollars. d. ne approac5 to forecasting sales is t5e otto%up approac5. e. In creating t5e sales forecast, outside factors suc5 as t5e state of t5e econoy, s5ould e considered. ANS: ) PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1>. T5e first step in creating t5e aster udget is t5e creation of t5e a. production udget. . direct laor udget. c. cas5 udget. d. sales udget. e. udgeted incoe stateent. ANS: D PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 11. T5e udget t5at descries 5o3 any units ust e produced in order to eet sales needs and ending inventory oectives is t5e a. production udget. . direct aterials purc5ases udget. c. cas5 udget. d. udgeted incoe stateent. e. none of t5ese. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 14. Direct aterials needed for production is calculated y
a. . c. d. e.
ultiplying units to e produced y direct aterials per unit. sutracting units to e produced fro direct aterials per unit. dividing units to e produced y direct aterials per unit. adding units to e produced to direct aterials per unit. sutracting direct aterials per unit fro units to e produced.
ANS: A PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1. In preparing t5e over5ead udget, any copanies use a. activity%ased costing. . ultiple drivers for a siple udget. c. participative costing. d. a unit%ased driver suc5 as direct laor 5ours. e. none of t5ese. ANS: D PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 16. C5ic5 of t5e follo3ing stateents is true a. T5e over5ead udget is typically coposed of variale over5ead and fi?ed over5ead. . T5e direct laor udget uses an average 3age rate for direct laor. c. T5e production udget is not converted into dollars. d. T5e sales udget includes ot5 units and dollars. e. All of t5ese. ANS: E PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 17. T5e ending finis5ed goods inventory udget supplies inforation needed for t5e a. sales udget. . cas5 udget. c. udgeted incoe stateent. d. cost of goods sold udget. e. all of t5ese. ANS: D PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1-. C5ic5 of t5e follo3ing udgets are needed to calculate a udgeted unit cost a. Direct aterials purc5ases udget . Direct laor udget c. ver5ead udget d. Direct aterials purc5ases udget and over5ead udget e. Direct aterials purc5ases udget, direct laor udget, and over5ead udget ANS: E
PTS: 1
DIF:
Difficulty: Easy
!": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1;. T5e selling and adinistrative e?penses udget includes a. cost of goods sold. . over5ead. c. fi?ed production e?pense. d. variale cost of selling. e. all of t5ese. ANS: D PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1<. !udgeted operating incoe includes a. udgeted interest e?pense. . udgeted incoe ta?es. c. udgeted cost of goods sold. d. udgeted net incoe. e. none of t5ese. ANS: ) PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 1$. Depreciation e?pense on sales e=uipent appears in a separate line on 35ic5 of t5e follo3ing udgets a. )as5 udget . Selling and adinistrative e?penses udget c. Direct laor udget d. Production udget e. ver5ead udget ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4>. 'odri=ue9 )opany udgeted t5e follo3ing sales in units: "anuary Feruary *arc5
>,>>> 4>,>>> 6>,>>>
'odri=ue92s policy is to 5ave 4>G of t5e follo3ing ont52s sales in inventory. n "anuary 1, inventory e=ualed ;,7>> units. Feruary production in units is a. 4>,>>>. . 4<,>>>. c. 6>,>>>. d. 4-,7>>. e. 46,>>>. ANS: E
"anuary >,>>> 6,>>> 6,>>> ;,7>> 4-,7>>
Sales H Desired EI &nits needed − !eginning inventory Production
Feruary 4>,>>> <,>>> 4<,>>> 6,>>> 46,>>>
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. 41. A copany 5as 5ad stale sales and production for several years. Ne?t year, sales are e?pected to increase y at least 7>G. Assuing t5at t5e copany aintains its policy for desired ending inventories of finis5ed product and direct aterials purc5ases, 35at 3ill e t5e li8ely effect on t5e desired ending inventory of finis5ed product a. It 3ill increase . It 3ill decrease c. It 3ill stay t5e sae d. It 3ill e t3ice t5e si9e of t5e desired ending inventory of ra3 aterials e. None of t5ese ANS: A PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: )opre5ension NT: 1 in. 44. A copany e?pects t5e follo3ing sales for t5e coing year:
&nits Average selling price
1st uarter 6>,>>> J7
4nd uarter >,>>> J7
rd uarter ->,>>> J7
6t5 uarter <>,>>> J-
!udgeted sales revenue for t5e year is a. J1,>7>,>>> . J1,4->,>>> c. J1,177,>>> d. J1,1>,>>> e. it is ipossile to tell fro t5is inforation ANS: D !udgeted sales K 6>,>>> H >,>>> H ->,>>>J7 H <>,>>>J- K J1,1>,>>> PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 4. A copany provided t5e follo3ing inforation on sales for t5e coing year:
&nits Average selling price
1st uarter 6>,>>> J7
4nd uarter 6>,>>> J7
rd uarter >,>>> J7
6t5 uarter <>,>>> J-
Assuing t5at t5e eginning inventory is ,>>> units, and t5at t5e copany policy is to 5ave 47G of t5e ne?t =uarter2s sales in ending inventory, 35ic5 =uarter 3ill 5ave t5e lo3est production a. uarter 6 . uarter c. uarter 4 d. uarter 1 e. All =uarters 5ave t5e sae production ANS: ) Production udget: Sales H Desired ending inventory &nits needed − !eginning inventory Production
tr 1 6>,>>> 1>,>>> 7>,>>> − ,>>> 6;,>>>
tr 4 6>,>>> ;,7>> 6;,7>> − 1>,>>> ;,7>>
tr >,>>> 4>,>>> 7>,>>> − ;,7>> 64,7>>
tr 6 <>,>>>
Since uarter 6 ust 5ave production t5at is at least ->,>>> <>,>>> H soe level of desired ending inventory − 4>,>>>, uarter 4 is t5e lo3est. PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. 46. !elant )opany udgeted 4>>,>>> units of production for "une, 41>,>>> units for "uly and >>,>>> units for August. Eac5 unit re=uires >.47 direct laor 5ours. Lo3 any direct laor 5ours are udgeted for August a. 7>,>>> . 7,>>> c. ;7,>>> d. 74,7>> e. >>,>>> ANS: ) Direct laor 5ours K >.47 × >>,>>> K ;7,>>> PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 47. In udgeting direct laor 5ours for t5e coing year, it is iportant to a. ultiply production in units y t5e direct laor 5ours per unit. . divide production in units y t5e direct laor 5ours per unit. c. sutract production in units fro t5e direct laor 5ours per unit. d. sutract direct laor 5ours per unit fro production in units. e. ultiply production in units y t5e laor 3age rate. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in.
4-. (alvern )opany provided t5e follo3ing data for "uly: Direct aterials Direct laor ver5ead !eginning finis5ed goods Ending finis5ed goods Production in units
J7>,>>> J47,>>> J$>,>>> J17,>>> J6,>>> 1>,>>>
C5at is t5e cost of goods sold a. J1-7,>>> . J16-,>>> c. J416,>>> d. J1<6,>>> e. J;7,>>> ANS: ! )ost of goods anufactured K J7>,>>> H J47,>>> H J$>,>>> K J1-7,>>> )ost of goods sold K J1-7,>>> H J17,>>> − J6,>>> K J16-,>>> PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. 4;. A production udget is ost iportant for 35ic5 of t5e follo3ing a. retail stores . anufacturing firs c. not%for%profit agencies d. local governent agencies e. all of t5ese ANS: ! PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4<. A copany re=uires 4>> pounds of plastic to eet t5e production needs of a product. It currently 5as 4> pounds of plastic inventory. T5e desired ending inventory of plastic is -> pounds. Lo3 any pounds of plastic s5ould e udgeted for purc5asing during t5e coing period a. 4>> pounds . 46> pounds c. 4-> pounds d. 4<> pounds e. 1-> pounds ANS: ! Pounds of plastic to purc5ase K 4>> H -> − 4> K 46> PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in.
4$. A copany plans on selling 6>> units. T5e selling price per unit is J7. T5ere are 6> units in eginning inventory, and t5e copany 3ould li8e to 5ave ;7 units in ending inventory. Lo3 any units s5ould e produced for t5e coing period a. 67 . 6>> c. -7 d. 4,>>> e. 4,>7 ANS: A &nits to produce K 6>> H ;7 − 6> K 67 PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. >. A copany 5as provided a sales udget for t5e ne?t four ont5s. It ases its production udget on t5e sales udget, and 5as a policy t5at eac5 ont52s ending inventory of finis5ed product ust e e=ual to 47G of t5e follo3ing ont52s sales needs. T5e direct aterials purc5ases udget is ased on t5e production udget. T5e copany2s policy for eac5 ont52s ending inventory of ra3 aterials is t5at t5ey ust e e=ual to 1>G of t5e follo3ing ont52s production needs for ra3 aterials. (iven t5is inforation, t5e copany can prepare direct aterials purc5ases udgets for 5o3 any ont5s a. ne . T3o c. T5ree d. Four e. Five ANS: ! Four ont5s of sales udgets allo3s t5e calculation of t5ree ont5s of production udgets. T5e fourt5 ont5 is ipossile 3it5out t5e fift5 ont5 of sales to figure t5e desired ending inventory for ont5 four. Siilarly, t5ree ont5s of production udgets allo3s calculation for t3o ont5s 3ort5 of direct aterials purc5ases udgets. T5e t5ird ont5 is ipossile 3it5out t5e fourt5 ont5 of production to figure t5e desired ending inventory for ont5 t5ree. PTS: 1 DIF: Difficulty: )5allenging !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: )opre5ension NT: 1 in. 1. C5ic5 of t5e follo3ing is t5e ost coon starting point in t5e inforation gat5ering process for udgeting a. T5e personnel forecast . T5e sales forecast c. T5e production forecast d. T5e proected incoe stateent ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 4. C5ic5 of t5e follo3ing is an operating udget a. !udgeted stateent of cas5 flo3s
. )apital e?penditures udget c. !udgeted incoe stateent d. )as5 udget ANS: ) PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. . C5at is t5e forula used to copute t5e units to e produced a. &nits produced K &nits sold . &nits produced K &nits sold H &nits in eginning inventory H &nits in ending inventory c. &nits produced K &nits sold H &nits in eginning inventory − &nits in ending inventory d. &nits Produced K &nits sold − &nits in eginning inventory H &nits in ending inventory ANS: D PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 6. )andace )opany produces and sells pillo3s. It e?pects to sell 1>,>>> pillo3s in t5e year 4>17 and 5ad 1,>>> pillo3s in finis5ed goods inventory at t5e end of 4>16. )andace 3ould li8e to coplete operations in t5e year 4>17 3it5 at least 1,47> copleted pillo3s in inventory. T5ere is no ending 3or8%in%process inventory. T5e pillo3s sell for J7 eac5. Lo3 any pillo3s 3ould e produced in t5e year 4>17 a. 1>,>>> pillo3s . 11,>>> pillo3s c. 11,47> pillo3s d. 1>,47> pillo3s ANS: D S&PP'TIN( )A#)&#ATINS: 1>,>>> H 1,47> − 1,>>> K 1>,47> pillo3s PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 7. !rig5t #ap )opany anufactures laps. T5e estiated nuer of lap sales for t5e last t5ree ont5s of 4>16 are as follo3s: *ont5 ctoer Noveer Deceer
Sales 1>,>>> 16,>>> 1,>>>
Finis5ed goods inventory at t5e end of Septeer 3as ,>>> units. Ending finis5ed goods inventory is udgeted to e=ual 47G of t5e ne?t ont52s sales. !rig5t #ap e?pects to sell t5e laps for J47 eac5. "anuary 4>17 sales are proected at 1-,>>> laps. Lo3 any laps s5ould e produced in Noveer a. 11,>>> laps . 1>,7>> laps c. 16,>>> laps d. 1,;7> laps
ANS: D S&PP'TIN( )A#)&#ATINS: 1,>>> × .47 H 16,>>> − 16,>>> × .47 K 1,;7> laps PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. -. In going fro t5e sales udget to t5e production udget, adustents to t5e sales udget need to e ade for a. finis5ed goods inventories. . cas5 receipts. c. factory over5ead costs. d. selling e?penses. ANS: A PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. ;. Catson )orporation anufactures o?es. T5e estiated nuers of o?es sold for t5e first t5ree ont5s of 4>16 are as follo3s: *ont5 "anuary Feruary *arc5
Sales ,>>> 6,4>> ,$>>
Finis5ed goods inventory at t5e end of Deceer 3as ->> units. Ending finis5ed goods inventory is e=ual to 4>G of t5e ne?t ont52s sales. Catson )orporation e?pects to sell t5e o?es for J7 eac5. April 4>16 sales are proected at 6,7>> o?es. Lo3 any o?es s5ould e produced in Feruary a. 6,16> o?es . 6,4>> o?es c. 6,4-> o?es d. ,$>> o?es ANS: A S&PP'TIN( )A#)&#ATINS: 6,4>> H >.4> × ,$>> − >.4> × 6,4>> K 6,16> o?es PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. Fig!re 9"#$ Sap5ire )opany udgeted t5e follo3ing production in units for t5e second =uarter of t5e year:
April *ay "une
67,>>> <,>>> 64,>>>
Eac5 unit re=uires four pounds of ra3 aterial. Sap5ire2s policy is to 5ave >G of t5e follo3ing ont52s production needs for aterials in inventory. T5is policy 3as et in *arc5. <. 'efer to Figure $%1. 'a3 aterials purc5ases udgeted for *ay in pounds e=ual: a. 17-,<>> . 4>4,6>> c. 67,->> d. 1;1,->> e. 447,->> ANS: A Production ? aterials per unit 'a3 aterials for production Desired ending inventory 'a3 aterials needed #ess: eginning inventory Purc5ases
April 67,>>> ?6 1<>,>>> 67,->> 447,->> 76,>>>
*ay <,>>> ?6 174,>>> 7>,6>> 4>4,6>> 67,->>
1;1,->>
17-,<>>
"une 64,>>> ?6 1-<,>>>
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. $. 'efer to Figure $%1. Desired ending inventory for April in pounds e=uals: a. 67,->> . 11,6>> c. 1>.7>> d. <,>> e. 76,>>> ANS: A Production ? aterials per unit 'a3 aterials for production Desired ending inventory 'a3 aterials needed #ess: eginning inventory Purc5ases
April 67,>>> ?6 1<>,>>> 67,->> 447,->> 76,>>>
*ay <,>>> ?6 174,>>> 7>,6>> 4>4,6>> 67,->>
1;1,->>
17-,<>>
"une 64,>>> ?6 1-<,>>>
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. Fig!re 9"%$ /enner )opany produces t3o products: S'4>> and TM7>>. !udgeted sales for four ont5s are as follo3s:
S'4>> <,>>> 1,>>> 11,>>> 1<,>>>
*ay "une "uly August
TM7>> 4>,>>> 4,>>> $,>>> 6-,>>>
/enner2s ending inventory policy is t5at S'4>> s5ould 5ave 17G of ne?t ont52s sales in ending inventory and TM7>> s5ould 5ave 6>G of ne?t ont52s sales in ending inventory. n *ay 1, t5ere 3ere 1,4>> units of S'4>> and $,>>> units of TM7>>. TM7>> re=uires - units of coponent A. S'4>> does not use coponent A. T5ere 3ere >,>>> units of coponent A in inventory on *ay 1. /enner 3ants to 5ave 4>G of t5e follo3ing ont52s production needs in inventory for )oponent A. 6>. 'efer to Figure $%4. Lo3 any units of TM7>> are udgeted for production in "une a. 6;,->> . 6,<>> c. 4,>>> d. 67,>>> e. 14,<>> ANS: ! Sales Desired ending inventory &nits needed #ess: eginning inventory Production
*ay 4>,>>> 14,<>> 4,<>> $,>>>
"une 4,>>> 17,->> 6;,->> 14,<>>
4,<>>
6,<>>
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. 61. 'efer to Figure $%4. C5at is t5e udgeted production of S'4>> for *ay in units a. <,;7> . $,$7> c. <,>>> d. 1,4>> e. 1>,7>> ANS: A Sales Desired ending inventory &nits needed #ess: eginning inventory Production
*ay <,>>> 1,$7> $,$7> 1,4>> <,;7>
"une 1,>>> 1,-7> 16,-7> 1,$7> 14,;>>
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and
'esponsiility
/E0: !loo2s: Application
NT: 4 in.
64. 'efer to Figure Figure $%4. C5at C5at is t5e udgeted udgeted aount aount of coponent coponent A to e purc5ased purc5ased in *ay *ay a. 61,;-> . 164,<>> c. 176,7-> d. 1-6,->> e. --,->> ANS: ) Production ? units of coponent A )oponent A needed for production Desired ending inventory &nits needed #ess: eginning inventory Production
*ay 4,<>> ?164,<>> 61,;-> 1<6,7-> >,>>> 176,7->
"une 6,<>> ?4><,<>>
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT NAT: !&SP'(: Analytic Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. 6. 'efer to Figure Figure $%4. C5at C5at is t5e desired desired ending ending inventory inventory of coponen coponentt A for for *ay a. <-,>>> . 1<>,>>> c. 7<,7>> d. 61,;-> e. >,>>> ANS: D
Production ? units of coponent A )oponent A needed for production Desired ending inventory &nits needed #ess: eginning inventory Production
*ay 4,<>> ?164,<>> 61,;-> 1<6,7-> >,>>> 176,7->
"une 6,<>> ?4><,<>>
4><,<>> ? 4>G K 61,;-> PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT NAT: !&SP'(: Analytic Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. Fig!re 9"&$ Oion )opany anufactures snea8ers. Production of t5eir ne3 snea8er for t5e co ing t5ree ont5s is udgeted as follo3s: follo3s:
August Septeer ctoer
4-,>>> 6<,>>> 1,>>>
Eac5 snea8er re=uires 1.7 5ours of direct laor tie. Direct laor 3ages average J1 per 5our. *ont5ly over5ead averages J< per direct laor 5our plus fi?ed over5ead of J6,>>. 66. 'efer to Figure Figure $%. $%. C5at is t5e t5e direct direct laor cost cost udgeted udgeted for Septe Septeer er a. J<4>,>>> . J;7>,>>> c. J16>,>>> d. J$-,>>> e. J-47,>>> ANS: D Septeer direct laor cost K 6<,>>>1.7J1 K J$-,>>> PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT NAT: !&SP'(: Analytic Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 67. 'efer to Figure Figure $%. $%. C5at is t5e t5e total over5e over5ead ad udgeted udgeted for for t5e ont5 ont5 of Septeer Septeer a. J-<>,>>> . J7<>,>> c. J164,1>> d. J6->,>>> e. J-4,1>> ANS: ! !udgeted over5ead K J<6<,>>>1.7 H J6,>> K J7<>,>> PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT NAT: !&SP'(: Analytic Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. Fig!re 9"'$ !ic8ford )opany plans to sell 17,>>> units in Noveer and 1<>,>>> units in Deceer. !ic8ford2s policy is t5at 1>G of of t5e follo3ing ont52s ont52s sales ust e in ending ending inventory. inventory. n Noveer 1, t5ere 3ere 16,>>> units in inventory.
It ta8es > inutes of direct laor tie to a8e one unit. Direct laor 3ages average J1; per 5our. ariale ariale over5ead is applied at t5e rate of J7 per direct laor 5our. Fi?ed over5ead is udgeted at J7-,7>> per ont5. 6-. 'efer to Figure Figure $%6. $%6. C5at is t5e t5e direct direct laor cost cost udgeted udgeted for Nove Noveer er a. J1,1<1,7>> . J$7>,->> c. J;>;,->> d. J4,17 ,174,>> ,>>> e. J-44,<>> ANS: A
Noveer production K 17,>>> H >.1>1<>,>>> >.1>1<>,>>> − 16,>>> K 1$,>>> units Direct laor 5ours K >.7> 5ours per unit ? 1$,>>> K -$,7>> 5ours Direct laor cost K J1; ? -$,7>> K J1,1<1,7>> PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT NAT: !&SP'(: Analytic Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 6;. 'efer to Figure Figure $%6. $%6. C5at is t5e t5e udgeted udgeted product production ion in units units for Nove Noveer er a. 1>>,>>> . 16>,>>> c. 141,>>> d. 147,->> e. 1$,>>> ANS: E Noveer production K 17,>>> H >.1>1<>,>>> >.1>1<>,>>> − 16,>>> K 1$,>>> units PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT NAT: !&SP'(: Analytic Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 6<. 'efer to Figure Figure $%6. C5at C5at is t5e t5e udgeted udgeted over5e over5ead ad for Nove Noveer er a. J666,7>> . J4<>,;>> c. J6>6,>>> d. J6<,64> e. J1$4,$4> ANS: ) Noveer production K 17,>>> H >.1>1<>,>>> >.1>1<>,>>> − 16,>>> K 1$,>>> units Direct laor 5ours K >.7> 5ours per unit ? 1$,>>> K -$,7>> 5ours !udgeted over5ead for Noveer K J7 ? -$,7>> H 7-,7>> K J6>6,>>> PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT NAT: !&SP'(: Analytic Analytic STA: STA: AI)PA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. Fig!re 9"($ Sully )opany provided t5e follo3ing inforation for last ont5.
Production in units Direct aterials cost Direct laor cost ver5ead cost Sales coission per unit sold Price per unit sold
,>>> J;,>>> J1>,>>> J$,->> J 6 J4$
Fi?ed selling and adinistrative e?pense
J;,>>>
T5ere 3ere no eginning and ending inventories. 6$. 'efer to Figure $%7. C5at is Sully2s cost of goods sold per unit a. J14.-> . J<.<; c. J1>.>> d. J14.7> e. J1-.-> ANS: ! Direct aterials cost Direct laor cost ver5ead cost Total anufacturing costs units produced )ost of goods sold per unit
J;,>>> J1>,>>> J$,->> J4-,->> ,>>> J<.<;
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 7>. 'efer to Figure $%7. C5at is gross argin for Sully )opany last ont5 a. J76,>>> . J-6,->> c. J4,6>> d. J6;,6>> e. J->,6>> ANS: E Sales J4$ ? ,>>> )ost of goods sold J;,>>> H 1>,>>> H $,->> (ross argin #ess: coission J6 ? ,>>> #ess: fi?ed selling and adin. e?pense
J<;,>>> 4-,->> J->,6>> 14,>>> ;,>>>
perating incoe
J61,6>>
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 71. 'efer to Figure $%7. C5at is operating incoe for Sully )opany for last ont5 a. J46,>>> . J6,->> c. J6$,6>> d. J4;,6>> e. J61,6>> ANS: E
Sales J4$ ? ,>>> )ost of goods sold J;,>>> H 1>,>>> H $,->> (ross argin #ess: coission J6 ? ,>>> #ess: fi?ed selling and adin. e?pense
J<;,>>> 4-,->> J->,6>> 14,>>> ;,>>>
perating incoe
J61,6>>
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. Fig!re 9"#)$ )onnor )opany produces spea8er systes for cars. Estiated sales in units in "anuary are 6>,>>>B in Feruary ;,>>>B and in *arc5 6,>>>. Eac5 unit is priced at J->. )onnor 3ants to 5ave 7G of t5e follo3ing ont52s sales in ending inventory. T5at re=uireent 3as et on "anuary 1.
Eac5 spea8er syste re=uires o?es and 17 yards of 3ire. !o?es cost J6 eac5 and 3ire is J>.-> per yard. )onnor 3ants to 5ave 4>G of t5e follo3ing ont52s production needs in ending ra3 aterials inventory. n "anuary 1, )onnor 5ad 46,>>> o?es and 1>>,>>> yards of 3ire in inventory. 74. 'efer to Figure $%1>. C5at is )onnor2s e?pected sales revenue for Feruary a. J4,>4>,>>> . J1,$>>,>>> c. J-> d. J1,147,>>> e. J4,44>,>>> ANS: E Feruary revenue K ;,>>> × J-> K J4,44>,>>> PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 7. 'efer to Figure $%1>. Lo3 any units does )onnor e?pect to produce in Feruary a. 47,;>> . >,7>> c. 4,;7> d. 7,$7> e. 47,>>> ANS: D
Sales Desired ending inventory 7G &nits needed #ess: eginning inventory Production
"anuary 6>,>>> 14,$7> 74,$7> 16,>>>
Feruary ;,>>> 11,$>> 6<,$>> 14,$7>
<,$7>
7,$7>
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. 76. 'efer to Figure $%1>. Lo3 any o?es does )onnor e?pect to purc5ase in "anuary a. 17$,-7> . 116,64> c. 416,77> d. 16<,7>> e. 1<,64> ANS: ! Production ? ra3 aterials per unit 'a3 aterials for production Desired ending inventory &nits needed #ess: eginning inventory Purc5ases in units
"anuary <,$7> ? 11-,<7> 41,7;> 1<,64> 46,>>> 116,64>
Feruary 7,$7> ? 1>;,<7>
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. Fig!re 9"##$ Pallen )opany estiated sales of 11,>>> units at J6> eac5, unit cost of goods sold of J44, ar8eting e?pense of J-7,>>> and a 1>G coission on eac5 unit sold. Adinistrative e?pense is udgeted at J7>,>>>.
77. 'efer to Figure $%11. C5at is total selling e?pense a. J-7,>>> . J66,>>> c. J<6,>>> d. J1>$,>>> e. J$,>>> ANS: D Total selling e?pense K J1>$,>>> Q1>$,>>> K J-7,>>> H J6> × >.1> × 11,>>>R PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 7-. 'efer to Figure $%11. C5at is Pallen2s udgeted operating incoe a. J4<1,>>> . J$,>>> c. J1$<,>>> d. J<,>>>
e. J66>,>>> ANS: ! !udgeted operating incoe K J$,>>> Q$,>>> K J6> × 11,>>> − J44 × 11,>>> − J1>$,>>> − J7>,>>>R Q1>$,>>> K J-7,>>> H J6> × >.1> × 11,>>>R K !udgeted *ar8eting E?penses PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 7;. !udgets are prepared in 35ic5 of t5e follo3ing orders a. production udget, sales udget, direct laor udget . production udget, cost of goods sold udget, direct laor udget c. sales udget, cas5 udget, production udget d. sales udget, production udget, direct aterials purc5ases udget e. production udget, cas5 udget, direct aterials purc5ases udget ANS: D PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. 7<. Suppose t5at a copany 5as t5e follo3ing accounts receivale collection pattern: Paid in t5e ont5 of sale Paid in t5e ont5 follo3ing sale
>G ;>G
All sales are on credit. If credit sales for "anuary and Feruary are J4>>,>>> and J1>>,>>> respectively, t5e cas5 collection for Feruary is a. J41>,>>> . J1>>,>>> c. J1>,>>> d. J16>,>>> e. J1;>,>>> ANS: E )as5 fro "anuary sales >.;J4>>,>>> )as5 fro Feruary sales >.J1>>,>>> )as5 received in Feruary
J16>,>>> >,>>> J1;>,>>>
PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. 7$. C5ic5 of t5e follo3ing stateents is true a. T5e production udget is t5e first udget to e prepared in t5e aster udget. . T5e cas5 udget is prepared efore t5e direct aterials purc5ases udget. c. T5e udgeted alance s5eet is prepared after t5e cas5 udget. d. Service firs need not prepare a aster udget. e. T5e cost of goods sold udget is prepared efore t5e direct laor and over5ead udgets.
ANS: ) PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. Fig!re 9"9$ 0uy "as )opany produces a line of as. 0uy2s estiated production of ars of a for t5e fourt5 =uarter of t5e year is as follo3s:
ctoer Noveer Deceer
;7,>>> $<,>>> -,>>>
Eac5 ar re=uires 5alf a pound of erries. 0uy prefers to uy t5e fres5est erries, so its policy is to 5ave ust G of t5e follo3ing ont52s production needs in ending inventory. n ctoer 1, t5e copany 5ad 1,147 pounds of erries in inventory. 0uy2s pays J>.-> per pound of erries. It uys all erries on account and typically pays 6>G of a ont52s purc5ases in t5at ont5, and t5e reaining ->G t5e follo3ing ont5. ->. 'efer to Figure $%$. Lo3 any pounds of erries 3ill e purc5ased during t5e ont5 of Noveer a. 4,;7 . 6<,6;7 c. $,$47 d. 61,$7> e. 6$,$67 ANS: ! Production ? .7> ls !erries needed for production Desired ending inventory !erries needed #ess: eginning inventory !erries purc5ases in pounds
ctoer Noveer Deceer ;7,>>> $<,>>> -,>>> ? .7> ? .7> ? .7> ;,7>> 6$,>>> 1,7>> 1,6;> $67 <,$;> 6$,$67 1,147 1,6;> ;,<67 6<,6;7
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. -1. 'efer to Figure $%$. C5at is t5e dollar cost of purc5ases for ctoer a. J1$,$47 . J44,;>; c. J1<,67> d. J4,>> e. J,4> ANS: !
Production ? .7> ls
ctoer ;7,>>> ? .7>
!erries needed for production Desired ending inventory !erries needed #ess: eginning inventory !erries purc5ases in pounds ? .-> per pound Total direct aterials cost
;,7>> 1,6;> <,$;> 1,147 ;,<67 ? .-> 44,;>;
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 + #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. -4. 'efer to Figure $%$. Lo3 uc5 cas5 is paid in Noveer for erry purc5ases rounded to t5e nearest dollar a. J47,47< . J41,><< c. J4<,$>> d. J1$,$- e. J4,414 ANS: A )as5 paid in Noveer for purc5ases: ctoer purc5ases J44,;>; ? .-> K 1,-46.4> Noveer purc5ases J4$,><7 ? .6> K 11,-6 Total J47,47<.4> PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 7 in. -. !an8 loan officers 3ould find 35ic5 of t5e follo3ing udgets to e one of t5e ost iportant in deterining 35et5er or not to give a copany a loan a. Sales udget . Production udget c. !udgeted incoe stateent d. !udgeted alance s5eet e. )as5 udget ANS: E PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: )opre5ension NT: 1 in. -6. A copany anticipates selling J4>>,>>> of goods, of 35ic5 J17,>>> 3ill proaly e uncollectile. C5ic5 of t5e follo3ing stateents is true a. J17,>>> does not appear on t5e cas5 udget. . J417,>>> is added to t5e cas5 udget. c. J17,>>> is sutracted fro t5e cas5 udget. d. J1<7,>>> appears as a disurseent on t5e cas5 udget. e. None of t5ese.
ANS: A PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. -7. A copany2s planned orro3ings and repayents appear on t5e a. production udget. . selling and adinistrative e?penses udget. c. interest incoe udget. d. cas5 udget. e. operating udget. ANS: D PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. --. T5e planned ending cas5 alance for t5e year appears on 35ic5 of t5e follo3ing stateents a. !udgeted incoe stateent . !udgeted alance s5eet c. Production udget d. !udgeted cas5 receipts e. !udgeted cas5 disurseents ANS: ! PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. -;. (ilert )opany purc5ased J6>,>>> of goods in "uly and e?pects to purc5ase J->,>>> of goods in August. (ilert typically pays for 47G of purc5ases in t5e ont5 of purc5ase and ;7G in t5e follo3ing ont5. C5at are (ilert )opany2s total e?pected cas5 disurseents for purc5ases in t5e ont5 of August a. J-7,>>> . J6>,>>> c. J67,>>> d. J->,>>> e. J1>>,>>> ANS: ) E?pected cas5 disurseents K J6>,>>> × >.;7 H J->,>>> × >.47 K J67,>>> PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1 in. -<. C5ic5 of t5e follo3ing appears on t5e udgeted alance s5eet a. Estiated sales . Estiated cost of goods sold c. Estiated ending accounts receivale d. Estiated fi?ed selling e?pense e. Estiated fi?ed factory over5ead
ANS: ) PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. -$. )as5 udgeting is iportant to 35ic5 of t5e follo3ing a. retail stores . anufacturing firs c. not%for%profit agencies d. local governent agencies e. all of t5ese ANS: E PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. ;>. 'essen )opany finds t5at typically >G of a ont52s sales are for cas5. Payents on accounts receivale are ->G in t5e ont5 of sale and >,>>>, for "uly J16>,>>>, and for August J14>,>>>. C5at are t5e total cas5 receipts udgeted for "uly a. J14;,6>> . J<7,6>> c. J144,>>> d. J4-4,>>> e. J16>,>>> ANS: A "uly J 64,>>>
)as5 sales J16>,>>> × >.> Payents on account for sales in: "une J1>>,>>>>.;>.< "uly J16>,>>>>.;>>.-> Total cas5 receipts
4-,->> 7<,<>> J14;,6>>
PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. ;1. Sc5randt )opany, an iporter and retailer of Polis5 pottery and 8itc5en3are, prepares a ont5ly aster udget. Data for t5e "uly aster udget are given elo3: T5e "une >t5 alance s5eet follo3s: )as5 Accounts receivale Inventory !uilding and e=uipent net
J 47,>>>Accounts payale 11>,>>>)apital stoc8 76,>>>'etained earnings 47>,>>>
J 67,>>> >>,>>> $6,>>>
Actual sales for "une and udgeted sales for "uly, August, and Septeer are given elo3: "une "uly
J1;,7>> ->,>>>
August Septeer
6>>,>>> 4>,>>>
Sales are 4>G for cas5 and <>G on credit. All credit sales are collected in t5e ont5 follo3ing t5e sale. T5ere are no ad dets. T5e gross argin percentage is 6>G of sales. T5e desired ending inventory is e=ual to 47G of t5e follo3ing ont52s sales. ne fourt5 of t5e purc5ases are paid for in t5e ont5 of purc5ase and t5e ot5ers are purc5ased on account and paid in full t5e follo3ing ont5. T5e ont5ly cas5 operating e?penses are J6,>>>, and t5e ont5ly depreciation e?penses are J;,>>>. C5at is t5e alance of t5e accounts receivale at t5e end of "uly a. J11>,>>> . J4<<,>>> c. J->,>>> d. J$<,>>> ANS: ! S&PP'TIN( )A#)&#ATINS: <>G × ->,>>> K J4<<,>>> PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. ;4. "une )orporation 5as t5e follo3ing sales forecasts for t5e first t5ree ont5s of t5e current year: *ont5 "anuary Feruary *arc5
Sales J-,>>> 46,>>> 6>,>>>
;7G of sales are collected in t5e ont5 of t5e sale and t5e reainder is collected in t5e follo3ing ont5. Accounts receivale alance "anuary 1 )as5 alance "anuary 1 *iniu cas5 alance needed
J44,<>> 44,>>> 4>,>>>
C5at is t5e cas5 alance at t5e end of "anuary, assuing t5at cas5 is received only fro custoers and t5at J6<,>>> is paid out during "anuary a. J1$,6>> . J4,<>> c. J4>,->> d. J41,>>> ANS: ! S&PP'TIN( )A#)&#ATINS: J44,>>> H J44,<>> H >.;7 × J-,>>> − J6<,>>> K J4,<>> PTS: 1 DIF: Difficulty: *oderate NAT: !&SP'(: Analytic
!": #: $%
STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. Fig!re 9"*$ Toscano )opany a8es all its sales on account. Accounts receivale payent e?perience is as follo3s:
Percent paid in t5e ont5 of sale Percent paid in t5e ont5 after t5e sale Percent paid in t5e second ont5 after t5e sale
47G -6G 7G
Toscano provided inforation on sales as follo3s: *ay "une "uly August e?pected
J16>,>>> J117,>>> J14-,>>> J14,>>>
;. 'efer to Figure $%-. Lo3 uc5 of *ay2s sales are e?pected to e uncollectile a. J<,6>> . J7,>>> c. J4,7>> d. J;,4>> e. J> ANS: A *ay uncollectile sales K J16>,>>> × >.>- K J<,6>> -G is otained y t5e follo3ing: 1.>> − .47 H .-6 H .7 K .>PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. ;6. 'efer to Figure $%-. Lo3 uc5 of "une credit sales are e?pected to e collected in t5e ont5 of "uly a. J>,>>> . J->,>>> c. J-,>>> d. J;,->> e. J<>,>>> ANS: D "une credit sales collected in "uly K J117,>>> × >.-6 K J;,->> PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. ;7. 'efer to Figure $%-. C5at is udgeted cas5 to e collected on account for t5e ont5 of August a. J67,>>> . J14,>>> c. J11$,$> d. J17>,>>>
e. J176,->> ANS: ) Fro "une J117,>>> ? >.>7 Fro "uly J14-,>>> ? >.-6 Fro August J14,>>> ? >.47 Total cas5 e?pected
J7,;7> <>,-6> ,>>> J11$,$>
PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. Fig!re 9"+$ #aert )opany purc5ased J16>,>>> of goods in Septeer and e?pects to purc5ase J1>,>>> of goods in ctoer. #aert typically pays for 4>G of purc5ases in t5e ont5 of purc5ase and <>G in t5e follo3ing ont5.
Every ont5, #aert ust a8e t5e follo3ing payents: 'ent Cages &tilities Telep5one #oan on e=uipent
J 7,>>> J16,>>> J ,>>> J 6>> J 1,4>>
In id%ctoer, #aert e?pects to uy a ne3 coputer for J6,7>> using t5e copany credit card. Typically, t5e credit card ill is paid in full in t5e follo3ing ont5. Septeer credit card purc5ases totaled J-,>>>. ;-. 'efer to Figure $%;. C5at is #aert2s e?pected cas5 disurseent in ctoer for purc5ases of goods a. J16>,>>> . J1>,>>> c. J114,>>> d. J1<,>>> e. J4-,>>> ANS: D )as5 payents for goods in ctoer K J16>,>>>>.< H J1>,>>>>.4 K J1<,>>> PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. ;;. 'efer to Figure $%;. C5at are t5e total cas5 disurseents e?pected y #aert during t5e ont5 of ctoer a. J1-;,->> . J1;4,1>> c. J1-1,->> d. J77,->> e. J->,1>> ANS: A
'ent Cages &tilities Telep5one #oan on e=uipent Payents for goods J16>,>>>>.< H J1>,>>>>.4 Payent for Septeer credit card purc5ases Total cas5 disurseents in ctoer
J
7,>>> 16,>>> ,>>> 6>> 1,4>> 1<,>>> -,>>> J1-;,->>
PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: in. Fig!re 9",$ )o5lia )opany a8es all its sales on account. )o5lia2s accounts receivale payent e?perience is as follo3s:
Percent paid in t5e ont5 of sale Percent paid in t5e ont5 after t5e sale Percent paid in t5e second ont5 after t5e sale
4>G ;7G 4G
)o5lia provided inforation on sales as follo3s: Septeer ctoer Noveer Deceer e?pected
J1>>,>>> J14>,>>> J4>>,>>> J47>,>>>
;<. 'efer to Figure $%<. C5at are t5e e?pected cas5 receipts in t5e ont5 of Noveer a. J4>>,>>> . J6>,>>> c. J1$>,>>> d. J14,>>> e. J116,>>> ANS: D Noveer cas5 receipts K J4>>,>>>>.4> H J14>,>>>>.;7 H J1>>,>>>>.>4 K J14,>>> PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. ;$. 'efer to Figure $%<. C5at are t5e e?pected cas5 receipts in Deceer a. J4>4,6>> . J41>,6>> c. J7>,>>> d. J47>,>>> e. J1;$,>>> ANS: A Deceer cas5 receipts K J47>,>>>>.4> H J4>>,>>>>.;7 H J14>,>>>>.>4 K J4>4,6>>
PTS: 1 DIF: Difficulty: Easy !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. <>. T5e follo3ing forecasted sales pertain to *ica5 )opany: *ont5 April *ay "une "uly
Sales J4>>,>>> 47>,>>> 17>,>>> 1>>,>>>
)ollection pattern: ->G in ont5 of sale 6>G in ont5 follo3ing t5e sale Accounts receivale as of *arc5 1 Finis5ed goods inventory as of *arc5 1
J7,>>> 6,>>> units
T5e copany 5as a selling price of J1> per unit and e?pects to aintain ending inventories e=ual to 4>G of t5e ne?t ont52s sales. Lo3 any units are e?pected to e produced in April a. 41,>>> units . 1$,>>> units c. 47,>>> units d. 4>,>>> units ANS: A S&PP'TIN( )A#)&#ATINS: J4>>,>>>J1> H QJ47>,>>>J1> × >.4R − 6,>>> K 41,>>> units PTS: 1 DIF: Difficulty: *oderate !": #: $%4 + #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. <1. T5e alignent of anagerial and organi9ational goals is referred to as goal a. congruence. . participation. c. pseudoparticipation. d. feedac8. e. incentives. ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <4. Traditional organi9ation t5eory uses 35ic5 of t5e follo3ing to otivate 3or8ers a. !onuses . Self%estee c. Nature of t5e 3or8 itself d. Increased responsiility e. "o satisfaction
ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <. @@@@ occurs 35en a anager delierately underestiates revenues or overestiates costs. a. !udgetary slac8 . Pseudoparticipation c. (oal congruence d. Setting standards too 5ig5 e. None of t5ese ANS: A PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <6. C5ic5 of t5e follo3ing is true of t5e aster udget a. *ont5ly udgets are derived y dividing t5e aster udget y 14. . Fi?ed costs cannot c5ange fro one ont5 to anot5er. c. ariale costs cannot c5ange fro one ont5 to anot5er. d. T5e aster udget can reflect seasonal effects. e. None of t5ese. ANS: D PTS: 1 DIF: Difficulty: *oderate !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <7. C5ic5 of t5e follo3ing is not an advantage of participative udgeting a. It fosters a sense of creativity in anagers. . It encourages t5e introduction of udgetary slac8. c. It encourages greater goal congruence. d. It encourages a 5ig5er level of perforance. e. It fosters a sense of anagerial responsiility. ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <-. C5ic5 of t5e follo3ing is an advantage of participative udgeting a. It fosters pseudoparticipation. . It encourages udgetary slac8. c. It tends to discourage goal congruence. d. It fosters a sense of responsiility. e. T5ere are no advantages of participative udgeting. ANS: D PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. <;. C5ic5 of t5e follo3ing is an e?aple of yopic e5avior a. Prootion of deserving eployees.
. c. d. e.
'educing e?penditures on preventive aintenance. Increased spending on researc5 and developent. Productivity training for ne3 eployees. !uying c5eaper aterials of t5e sae =uality to decrease t5e aount spent on ra3 aterials.
ANS: ! PTS: 1 DIF: Difficulty: Easy !": #: $%6 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: /no3ledge NT: 1 in. PR-LEM
1. arney )opany a8es rolling suitcases. Its sales udget for four ont5s is: *ont5 *arc5 April *ay "une
&nit Sales J17,>>> J4>,>>> J6>,>>> J->,>>>
arney2s policy is t5at ending inventory of finis5ed suitcases s5ould e=ual >G of t5e ne?t ont52s sales. !eginning inventory *arc5 1 is 7,>> suitcases. Eac5 suitcase re=uired 1.7 yards of allistic nylon. T5e ending inventory policy for nylon is t5at 4>G of t5e follo3ing ont52s production needs ust e on 5and. n *arc5 1, arney 5ad 1>,67> yards of nylon in inventory. A. !. ). D. E.
C5at is t5e desired ending inventory of suitcases for April C5at is t5e udgeted production of suitcases for April C5at is t5e desired ending inventory of nylon for *arc5 C5at are t5e udgeted yards of nylon to e purc5ased in *arc5 Assuing eac5 suitcase re=uired t3o yards of allistic nylon, 35at is t5e desired ending inventory of nylon for *arc5
ANS: A. !.
14,>>> see tale elo3 4-,>>> see tale elo3
Sales H Desired EI &nits needed − !eginning inventory Production ).
;,<>> yards 4-,>>> × 1.7 × 4>G
D.
4>,$>> yards see tale elo3
Production
*arc5 17,>>> -,>>> 41,>>> − 7,>> 17,;>>
April 4>,>>> 14,>>> 4,>>> − -,>>> 4-,>>>
*arc5 17,;>>
April 4-,>>>
*ay 6>,>>> 1<,>>> 7<,>>> − 14,>>> 6-,>>>
1.7 yds nylon Nylon needed for production H Desired ending inventory Nylon needed − !eginning inventory Purc5ases of nylon in yards ×
E.
1.7 4,77> H ;,<>> 1,7> − 1>,67> 4>,$>> ×
1.7 $,>>> ×
1>,6>> yards 4-,>>> × 4 × 4>G
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in. 4. !orland )opany a8es ac8pac8s. Its production udget for t3o ont5s is: *ont5 "une "uly
!udgeted production in units 7,>>> 7>,>>>
!orland uses t3o types of laor to a8e t5e ac8pac8s: cutting laor and se3ing laor. Eac5 ac8pac8 re=uires - inutes, on average, of cutting laor. Eac5 ac8pac8 re=uires 46 inutes of se3ing laor. !orland 5as fi?ed over5ead of J6,6>> per ont5 and variale over5ead of J per direct laor 5our. A. !. ). D.
Lo3 any 5ours of cutting laor are udgeted for "uly Lo3 any 5ours of se3ing laor are udgeted for "uly C5at is t5e total aount of udgeted direct laor 5ours for "uly C5at is t5e udgeted total over5ead for t5e ont5 of "uly
ANS: A. !. ). D.
!udgeted cutting laor K -->7>,>>> K 7,>>> 5ours !udgeted se3ing laor K 46->7>,>>> K 4>,>>> 5ours !udgeted direct laor 5ours K 7,>>> H 4>,>>> K 47,>>> !udgeted total over5ead K J6,6>> H J47,>>> K J;$,6>>
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 7 in. . Aras !ottling )opany sells fruit%flavored colas. Estiated sales in cartons for *ay, "une, and "uly are 1,>>>, ,>>> and 7,>>> respectively. T5e price is forecast at J7 per carton. Aras re=uires t5at finis5ed goods ending inventory e 4>G of t5e ne?t ont52s sales. Inventory 3as 7>> units on *ay 1. Eac5 carton re=uires 14 o9 of fruit syrup and 1> o9 of caronated 3ater. *aterials ending inventory is 1>G of t5e ne?t ont52s production needs. *ay 1 inventory et t5at re=uireent. A. !. ). D. E.
!udgeted revenue for *ay is J .................. . !udgeted revenue for "uly is J .................. . Production in *ay is .................. cartons. Production in "une is .................. cartons. Purc5ases of syrup in *ay is .................. ounces.
F.
Purc5ases of caronated 3ater in *ay is .................. ounces.
ANS: A.
!udgeted revenue for *ay K J7,>>> Q7,>>> K 1,>>> × J7R
!.
!udgeted revenue for "uly K J47,>>> Q47,>>> K 7,>>> × J7R
).
Production in *ay K 1,1>> cartons. Q1,1>> K 1,>>> H ->> − 7>>R
D.
Production in "une K ,6>> cartons. Q,6>> K ,>>> H 1,>>> − ->>R
E.
Purc5ases of syrup in *ay K 17,$-> ounces. Q17,$-> K 1,1>> × 14 H ,6>> × 14.1 − 1,1>> × 14.1R
F.
Purc5ases of caronated 3ater in *ay K 1;4,$>> ounces. Q1;4,$>> K 1,1>> × 1> H ,6>> × 1>.1 − 1,1>> × 1>.1R
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in. 6. /ara Inc. 5as copiled t5e follo3ing data in order to put toget5er t5eir first =uarter operating udget for 4>MM:
Sales units
"anuary 7,>>>
Feruary 1,>>>
*arc5 <,>>>
April 4$,>>>
Additional inforation: /ara sells eac5 unit for J$7. )opany policy is to 5ave >G of ne?t ont5s sales in units in ending finis5ed goods inventory. T5is policy 3as et in Deceer. )opany policy is to 5ave 6>G of ne?t ont5s production needs in ending ra3 aterials inventory. T5e production needs for April is $7,7>>. T5is policy 3as et in Deceer. It ta8es t5ree pounds of aterial to produce eac5 unit and t5e cost is J4.;7pound. Re!ire01 A. Prepare a sales udget for t5e "anuary, Feruary and *arc5 and for t5e first =uarter in total. !. Prepare a production udget for "anuary, Feruary and *arc5 and for t5e first =uarter in total. ). Prepare a direct aterials purc5ases udget for "anuary, Feruary and *arc5 and for t5e first =uarter in total.
ANS:
A
/ara Inc. Sales !udget For t5e uarter Ended *arc5 1, 4>MM
Sales in units &nit selling price !udgeted sales
2an!ar3 7,>>> ? J$7 J,47,>>>
Fe4r!ar3 1,>>> ? J$7 J4,$67,>>>
!.
Mar5h <,>>> ? J$7 J,-1>,>>>
Total 1>6,>>> ? J$7 J$,<<>,>>>
/ara Inc. Production !udget For t5e uarter Ended *arc5, 1, 4>MM
Sales in units Desired ending inventory
2an!ar3 7,>>> $,>>
Fe4r!ar3 1,>>> 11,6>>
Mar5h <,>>> <,;>>
Total 1>6,>>> <,;>>
66,>>
64,6>>
6-,;>>
114,;>>
1>,7>>
$,>>
11,6>>
1>,7>>
,<>>
,1>>
7,>>
1>4,4>>
Total needs #ess: !eginning inventory &nits to e produced ).
/ara Inc. Production !udget For t5e uarter Ended *arc5, 1, 4>MM
&nits to e produced Direct aterials per unit Production needs Desired ending inventory Total needs #ess: !eginning inventory Direct aterials to e purc5ased )ost per pound Total purc5ase cost
2an!ar3 ,<>> ? 1>1,6>> $,;4>
Fe4r!ar3 ,1>> ? $$,>> 64,->
Mar5h 7,>> ? 1>7,$>> <,4>>
Total 1>4,4>> ? >-,->> <,4>>
161,14> 6>,7-> 1>>,7-> ? J4.;7 J4;-,76>
161,--> $,;4> 1>1,$6> ? J4.;7 J4<>,7
166,1>> 64,-> 1>1,;6> ? J4.;7 J4;$,;<7
66,<>> 6>,7-> >6,46> ? J4.;7 J <-,-->
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4> in. 7. !oyle )opany 5as put toget5er t5e follo3ing data in order to coplete t5eir operating udget for t5e second =uarter in 4>MM:
Sales units
April ;,4>>
*ay -<,$>>
"une -7,6>>
"uly -;,>>
Additional inforation: )opany policy re=uires ->G of ne?t ont5s sales in units e in ending inventory. T5is policy 3as et in *arc5.
It ta8es 4.7 5ours of direct laor to produce one unit. T5e average 3age cost is J16. ariale over5ead rate is J- per direct laor 5our and fi?ed over5ead is J17,>>> per ont5. Re!ire01 A. Prepare a production udget for April, *ay, "une and t5e =uarter in total. !. Prepare a direct laor udget for April, *ay, "une and t5e =uarter in total. ). Prepare an over5ead udget for April, *ay, "une and t5e =uarter in total.
ANS: !oyle )opany Production !udget For t5e uarter Ended "une >, 4>MM
A.
Sales in units Desired ending inventory
April ;,4>> 61,6>
Ma3 -<,$>> $,46>
2!ne -7,6>> 6>,<>
Total 4>;,7>> 6>,<>
Total needs #ess: eginning inventory
116,76> 6,$4>
1><,16> 61,6>
1>7,;<> $,46>
46;,<<> 6,$4>
;>,-4>
--,<>>
--,76>
4>,$->
&nits to e produced !
!oyle )opany Direct #aor !udget For t5e uarter Ended "une >, 4>MM
&nits to e produced Direct laor 5ours per unit Total 5ours needed Average 3age rate per 5our Total direct laor cost )
April ;>,-4> ? 4.7 1;-,77> ? J16 4,6;1,;>>
Ma3 --,<>> ? 4.7 1-;,>>> ? J16 4,<,>>>
2!ne --,76> ? 4.7 1--,7> ? J16 4,4<,$>>
Total 4>,$-> ? 4.7 7>$,$>> ? J16 ;,1<,->>
!oyle )opany ver5ead !udget For t5e uarter Ended "une >, 4>MM
!udgeted direct laor 5ours ariale over5ead rate !udgeted variale over5ead !udgeted fi?ed over5ead Total over5ead
April 1;-,77> ? J1,>7$,>> 17,>>>
Ma3 1-;,>>> ? J1,>>4,>>> 17,>>>
1,>;6,>>
1,>1;,>>>
2!ne 1--,7> ? J$$<,1>> 17,>>>
1,>1,1>>
Total 7>$,$>> ? J,>7$,6>> 67,>>>
,1>6,6>>
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4> in.
-. "ones )orporation 5as t5e follo3ing udgeted sales for t5e selected four%ont5 period: *ont5 "uly August Septeer ctoer
&nit Sales 4>,>>> 7,>>> 47,>>> >,>>>
Sales price per unit is J1<> Plans are to 5ave an inventory of finished product e=ual to 4>G of t5e unit sales for t5e ne?t ont5. T5ere 3as 6,>>> units in eginning inventory on "uly 1st. T5ree pounds of aterials are re=uired for eac5 unit produced. Eac5 pound of aterial costs J4>. Inventory levels for aterials e=ual >G of t5e needs for t5e ne?t ont5. Desired ending inventory for Septeer is 47,4>> pounds of aterial. !eginning inventory for "uly 3as 4>,;>> pounds of aterial. Eac5 unit re=uires >.- 5ours of direct laor and t5e average 3age rate is J1- per 5our. ariale over5ead rate is J.7> per direct laor 5our. T5ere is also fi?ed over5ead of J44,>>> per ont5. T5e copany pays a G coission on sales. )opany 5as fi?ed selling and adinistrative e?penses as follo3s: 'ent J-,>>>ont5 &tilities J1,4>>ont5 Advertising J6>>ont5 ffice Salaries J7,>>>ont5 Re!ire01 A. Prepare a sales udget for "uly, August, and Septeer and in total for t5e =uarter. !. Prepare production udgets for "uly, August, and Septeer and in total for t5e =uarter. ). Prepare a direct aterials purc5ases udget in pounds and dollars for "uly, August, and Septeer and in total for t5e =uarter. D. Prepare a direct laor udget in 5ours and total cost for "uly, August and Septeer and in total for t5e =uarter. E. Prepare an over5ead udget for "uly, August and Septeer and in total for t5e =uarter. F. Prepare a selling and adinistrative e?penses udget for "uly, August and Septeer and in total for t5e =uarter. (. Prepare an ending finis5ed goods inventory udget for t5e =uarter Lint: 0ou 5ave already calculated t5e desired ending finis5ed goods inventory aount. Assue a stale per unit rate and round t5e per unit fi?ed factory over5ead rate to t3o decial places. L. Prepare a cost of goods sold udget for t5e =uarter I. Prepare a udged incoe stateent for t5e =uarter%t5e copany falls into t5e 7G ta? rac8et for incoe ta?es.
ANS:
&nits to e sold Sales price Total sales dollars
Sale6 -!0get 2!l3 A!g!6t 4>,>>> 7,>>> ? J1<> ? J1<> J,->>,>>> J-,>>,>>>
Septe74er Total 47,>>> <>,>>> ? J1<> ? J1<> J6,7>>,>>> J16,6>>,>>>
Sales Add: Desired ending inventory Total needs #ess: !eginning inventory &nits to e produced
Pro0!5tion -!0get 2!l3 A!g!6t Septe74er J4>,>>> J7,>>> J47,>>> J;,>>> J7,>>> J-,>>> J4;,>>> J6>,>>> J1,>>> J6,>>> J;,>>> J7,>>> J4,>>> J,>>> J4-,>>>
Total J<>,>>> J-,>>> J<-,>>> J6,>>> J<4,>>>
8ire5t 7aterial6 -!0get 2!l3 4,>>> ?
A!g!6t ,>>> ?
Septe74er 4-,>>> ?
Total <4,>>> ?
Pounds needed Desired ending inventory
-$,>>> J4$,;>>
$$,>>> J4,6>>
;<,>>> J47,4>>
46-,>>> J47,4>>
Total needs #ess eginning inventory
J$<,;>> J4>,;>>
J144,6>> J4$,;>>
J1>,4>> J4,6>>
J4;1,4>> J4>,;>>
J;<,>>> ? J4>
J$4,;>> ? J4>
J;$,<>> ? J4>
J47>,7>> ? J4>
J1,7->,>>>
J1,<76,>>>
J1,7$-,>>>
J7,>1>,>>>
&nits to e produced ? ls per unit
Purc5ases needed ? J4>l Total purc5ase cost
&nits to e produced ? .- of direct laor 5ours per unit Direct laor 5ours needed ? 1- per 5our
8ire5t La4or -!0get 2!l3 A!g!6t Septe74er 4,>>> ,>>> 4-,>>> ? >.? >.? >.1,<>> 1$,<>> 17,->> ? 1? 1? 1-
Total <4,>>> ? >.6$,4>> ? 1-
Total direct laor cost
J 44>,<>>
J;<;,4>>
#aor 5ours ? variale rate per 5our Total variale L Fi?ed over5ead
erhea0 -!0get 2!l3 A!g!6t Septe74er 1,<>> 1$,<>> 17,->> J.7> J.7> J.7> J6<,>> J-$,>> J76,->> J44,>>> J44,>>> J44,>>>
Total over5ead
ariale selling e?pense Fi?ed e?penses: 'ent &tilities Advertising ffice salaries
J;>,>>
J1-,<>>
J46$,->>
J$1,>>
Selling an0 A07ini6tratie -!0get 2!l3 A!g!6t Septe74er J1><,>>> J1<$,>>> J17,>>>
J-,>>> J1,4>> J6>> J7,>>>
J-,>>> J1,4>> J6>> J7,>>>
J-,>>> J1,4>> J6>> J7,>>>
J;-,->>
Total J64,>>>
J1<,>>> J,->> J1,4>> J1>7,>>>
Total J6$,4>> J.7> J1;4,4>> J--,>>>
J4<,4>>
Total
J17>,->>
Desired ending inventory Direct aterials 4> ? Direct laor .- 1- ver5ead: ariale over5ead .-.7 Fi?ed over5ead >.- J--,>>>6$,4>> &nit cost
Direct aterials Direct laor ver5ead Add: !eginning inventory 6,>>> ? J;4.7> (oods availale for sale #ess: ending inventory )ost of goods sold
Sales J1<> <>,>>> )ost of goods sold
J41,->>
J1;;,->>
J77$,<>>
En0ing Fini6he0 Goo06 Inentor3 -!0get J-,>>> J;4.7> J67,>>>ending inventory
J->.>> J$.-> J4.1> J>.<> J;4.7> Co6t of goo06 6ol0 -!0get J6,$4>,>>> J;<;,4>> J4<,4>> J4$>,>>> J-,47,6>> J67,>>>
J7,<>>,6>> -!0gete0 In5o7e State7ent J16,6>>,>>> J7,<>>,6>>
(ross argin #ess: ariale selling and adinistrative Fi?ed selling and adinistrative e?penses perating incoe #ess: Incoe ta?es Net incoe
J<,7$$,->> J64,>>> J14;,<>> J<,>$,<>> J4,<1,$> J7,447,<;>
PTS: 1 DIF: Difficulty: )5allenging !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: -> in. ;. 'apid%#ue provides oil c5anges and lues. T5e estiated nuer of oil c5anges for April and *ay are ,->> and 6,>>>. Eac5 oil c5ange ta8es 14 inutes of direct laor. T5e 3age rate is J1> per 5our. ver5ead is J,;>> per ont5 and J4 per oil c5ange. A. !. ). D. ANS:
!udgeted direct laor for April is J .................. . !udgeted direct laor for *ay is J .................. . !udgeted over5ead for April is J .................. . !udgeted over5ead for *ay is J .................. .
A.
!udgeted direct laor for April K J;,4>> QJ;,4>> K ,->> × .4 × J1>R
!.
!udgeted direct laor for *ay K J<,>>> QJ<,>>> K 6,>>> × .4 × J1>R
).
!udgeted over5ead for April K J1>,$>> QJ1>,$>> K J,;>> H J4 × ,->>R
D.
!udgeted over5ead for *ay K J11,;>> QJ11,;>> K J,;>> H J4 × 6,>>>R
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 4 in. <. Terrill )opany a8es and sells t3o types of s5aving crea: foay, and gel. #ast year, Foay sold for J4.> per can, and (el sold for J.17 per can. Sales volue 3as as follo3s:
Foay (el
uarter 1 J;-,>>> J7>,>>>
uarter 4 J<>,>>> J<>,>>>
uarter J<4,>>> J$>,>>>
uarter 6 J;>,>>> J->,>>>
Terrill e?pects sales for Foay to increase y 7G over t5e sae =uarter last year. T5e (el price 3ill increase to J.7>, ut aggressive advertising is e?pected to raise volue y 7G in =uarters 1 and 6 and y 1>G in =uarters 4 and . Prepare a sales udget for t5e coing year. ANS:
Foay (el
uarter 1 J1<,76> 1<,;7>
uarter 4 J1$,4>> ><,>>>
uarter J1$<,>> 6-,7>>
uarter 6 J1-$,>7> 44>,7>>
Supporting calculations: uarter 1 uarter 4 Foay J4.> ? ;-,>>> H ;-,>>> ? 7G J4.> ? <>,>>> H <>,>>> ? 7G (el J.7> ? 7>,>>> H 7>,>>> ? 7G J.7> ? <>,>>> H <>,>>> ? 1>G uarter uarter 6 Foay J4.> ? <4,>>> H <4,>>> ? 7G J4.> ? ;>,>>> H ;>,>>> ? 7G (el J.7> ? $>,>>> H $>,>>> ? 1>G J.7> ? ->,>>> H ->,>>> ? 7G PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 7 in. $. Allison )opany a8es luggage. ne popular odel is t5e Traveler a 41 35eeled carry%on. !udgeted sales for t5is odel are:
*ont5 *arc5 April *ay "une
&nit Sales J47,>>> J6,>>> J7>,>>> J;>,>>>
Desired ending inventory is 4>G of t5e ne?t ont52s sales. Inventory on *arc5 1 is ,1>> units. Prepare a production udget for as any ont5s as possile. ANS: *arc5 47,>>> -,<>> 1,<>> ,1>> 4<,;>>
Sales H Desired ending inventory &nits needed #ess: eginning inventory Production
April 6,>>> 1>,>>> 66,>>> -,<>> ;,4>>
*ay 7>,>>> 16,>>> -6,>>> 1>,>>> 76,>>>
NTE: A production udget for "une is ipossile ecause estiated "uly sales on 35ic5 "une2s desired ending inventory are ased are un8no3n. PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 7 in. 1>. )ut*aster Salons anticipates giving 1>> peranents in *ay, 1> in "une, and 14> in "uly. )ut*aster needs one peranent 3ave 8it for eac5 per, along 3it5 t3o o?es of 3ave tissues. Its inventory policy is to 5ave 1>G of t5e follo3ing ont52s aterials needs on 5and. n *ay 1, t5ere 3ere 17 3ave 8its and four o?es of 3ave tissues on 5and. 'ound any fractions of a unit to t5e nearest 35ole unit. A. !. ). D.
T5e 3ave 8its to e purc5ased in *ay e=ual .................. . T5e 3ave 8its to e purc5ased in "une e=ual .................. . T5e o?es of tissues to e purc5ased in *ay e=ual .................. . T5e o?es of tissues to e purc5ased in "une e=ual .................. .
ANS: A.
*ay 3ave 8it purc5ases K $< Q$< K 1>> H 1 − 17R
!.
"une 3ave 8it purc5ases K 14$ Q14$ K 1> H 14 − 1R
).
*ay purc5ases of tissue o?es K 444 Q444 K 1>>4 o?es H 1>4 o?es>.1> − 6R
D.
"une purc5ases of tissue o?es K 47< Q47< K 1>4 o?es H 14>4 o?es>.1> − 1>4 o?es.1>R
PTS: 1
DIF:
Difficulty: Easy
!": #: $%4
NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 7 in. 11. Foster )opany a8es po3er tools. T5e sales udget for drills for t5e first four ont5s of t5e year is: *ont5 "anuary Feruary *arc5 April
&nit Sales J4>,>>> J17,>>> J44,>>> J47,>>>
Foster 5as ta8en a ust%in%tie approac5 to production and 3ants only 7G of t5e ne?t ont52s sales needs in ending inventory. "anuary 1 inventory of drills 3as 9ero. Eac5 drill ta8es 17 inutes of direct laor at J1< per 5our. T5e factory over5ead forula is J4;,>>> H J1.4> per direct laor 5our. A. !. ). D. E. F. (.
!udgeted production for "anuary is .................. . !udgeted production for Feruary is .................. . !udgeted production for t5e entire first =uarter of t5e year is .................. . !udgeted direct laor cost for "anuary is J .................. . !udgeted direct laor cost for Feruary is J .................. . !udgeted variale over5ead for *arc5 is J .................. . !udgeted total over5ead for *arc5 is J .................. .
ANS: A.
!udgeted production for "anuary K 4>,;7> Q4>,;7> K 4>,>>> H ;7> − >R
!.
!udgeted production for Feruary K 17,7> Q17,7> K 17,>>> H 1,1>> − ;7>R
).
!udgeted production for t5e entire first =uarter of t5e year K 7<,47> Q7<,47> K 4>,;7> H 17,7> H 44,17>R 44,>>> H 1,47> − 1,1>>
D.
!udgeted direct laor cost for "anuary K J$,;7 17-> Q$,;7 K 4>,;7> × .47 × J1
E.
!udgeted direct laor cost for Feruary K J-$,>;7 Q-$,>;7 K 17,7> × .47 × J1
F.
!udgeted variale over5ead for *arc5 K J-,-67 Q-,-67 K 44,17> × .47 × J1.4>R
(.
*arc5 udgeted total over5ead K J,-67 Q,-67 K J4;,>>> H -,-67R
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in.
14. &a )opany production 5as variale over5ead costs of J< per direct laor 5our and fi?ed over5ead costs of J7-,>>> per ont5. !udgeted production for t5e ne?t t5ree ont5s is as follo3s: *ont5 ctoer Noveer Deceer
Production J-,>>> J7,7>> J<,>>>
Eac5 unit re=uires t5ree 5ours of direct laor. A. !. ). D. E.
&a2s total variale over5ead for ctoer is J .................. . &a2s total over5ead for ctoer is J .................. . &a2s total variale over5ead for Noveer is J .................. . &a2s total fi?ed over5ead for Deceer is J .................. . &a2s total udgeted over5ead for t5e last t5ree ont5s of t5e year e=uals J .................. .
ANS:
*ont5 ctoer Noveer Deceer A. !. ). D. E.
ariale over5ead J166,>>> J14,>>> J1$4,>>>
Fi?ed over5ead J7-,>>> J7-,>>> J7-,>>>
Total over5ead J4>>,>>> J1<<,>>> J46<,>>>
ctoer total variale over5ead K -,>>>J< K J166,>>> ctoer total over5ead K J166,>>> H J7-,>>> K J4>>,>>> Noveer total variale over5ead K 7,7>>J< K J14,>>> Deceer total fi?ed over5ead K J7-,>>> Total udgeted over5ead for t5e last t5ree ont5s of t5e year K J--,>>> J--,>>> K J4>>,>>> H J1<<,>>> H J46<,>>>
Aove nuers calculated as follo3s: J1<<,>>> K J14,>>> H J7-,>>> J46<,>>> K <,>>>J<H7-,>>>
Noveer Total !udgeted ver5ead Deceer Total !udgeted ver5ead
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in. 1. /anan )opany estiated sales of 6>,>>> units at J- eac5. !udgeted cost of goods sold per unit includes J1.4> of direct aterials, si? inutes of direct laor tie at J17 per 5our, and unit over5ead cost of J1.>. /anan pays a sales coission of 1>G of sales revenue. Fi?ed selling and adinistrative e?penses are udgeted at J47,>>>. Prepare a stateent of operating incoe. A. !. ).
ANS:
!udgeted variale ar8eting e?pense is J . !udgeted operating incoe is J .................. . 'ecalculate udgeted operating incoe assuing fi?ed selling and adinistrative e?penses doule and t5e selling price per unit increases 1>G.
J46>,>>> 1->,>>> J <>,>>> 46,>>> 47,>>> J 1,>>>
Sales J- × 6>,>>> )ost of goods sold J1.4> H J1.7> H J1.>6>,>>> (ross profit #ess: Sales coission J46>,>>> × >.1> #ess: Fi?ed selling and adinistrative e?pense perating incoe A. !. ).
!udgeted variale ar8eting e?pense is J46,>>>. !udgeted operating incoe is J1,>>>. !udgeted operating incoe is J4;,->>. see tale elo3 J4-6,>>> 1->,>>> J1>6,>>> 4-,6>> 7>,>>> J 4;,->>
Sales J-.-> × 6>,>>> )ost of goods sold J1.4> H J1.7> H J1.>6>,>>> (ross profit #ess: Sales coission J4-6,>>> × >.1> #ess: Fi?ed selling and adinistrative e?pense perating incoe
PTS: 1 DIF: Difficulty: *oderate !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in. 16. 0ou 5ave decided to t5ro3 a party ne?t 3ee8end for 1$ friends. T5e friends are going to ring 5ealt5 food, so all you 5ave to 5ave availale are t5e drin8s. 0ou estiate t5at, on average, eac5 person 3ill drin8 four ottles of soft drin8s. T5ree of your friends 3ill drin8 only natural soda 3it5out unneeded color − so Sulo (inger Ale s5ould 3or8 3ell for t5e. For t5e ot5ers and yourself, you decide to uy Sulo )ola. !efore going online, you c5ec8 t5e refrigerator − you already 5ave si? ottles of Sulo (inger Ale and 16 of Sulo )ola. Since t5is is t5e end of t5e seester − you decide t5at you don2t really 3ant any of t5e soft drin8s on 5and after t5e party. No3, you are ordering on t5e Internet. A. !.
Lo3 any ottles of Sulo (inger Ale do you plan to uy Lo3 any ottles of Sulo )ola do you plan to uy
ANS: (inger Ale To drin8 at t5e party: friends × 6 ottles 1; friends × 6 ottles H Desired ending inventory !ottles needed − !eginning inventory !ottles to purc5ase
)ola
14 > 14 − -
-< > -< − 16 76
PTS: 1 DIF: Difficulty: Easy !": #: $%4 NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 7 in. 17. uillin )opany 5ad t5e follo3ing udgeted inforation for ctoer:
1. 4. . 6. 7. -. ;.
ctoer 1 cas5 alance J,7>> E?pected sales 4,7>> units at J47 eac5 5alf in cas5, reainder on credit due in Noveer Inventory purc5ases ,>>> units at J16 eac5 all in cas5 'ent J1,67> Payroll J1,>>> &tilities and ot5er costs J6,7>> Accounts receivale alance ct. 1, J7,>>> includes J;>> ad dets allo3ance &se t5is aount for ot5 parts A and D.
A. !. ). D.
C5at is t5e udgeted collection on accounts receivale for ctoer C5at are t5e total cas5 disurseents for ctoer C5at is t5e ending cas5 alance for ctoer Assuing sales are collected ;7G in t5e ont5 of sale and 47G t5e follo3ing ont5, 35at is t5e ending cas5 alance for ctoer
ANS: A. !. ).
J6,>> see tale elo3 J6<,$7> see tale elo3 J4>,1>> see tale elo3 !eginning cas5 alance Sales in cas5 4,7>>J47>.7 )ollections on account J7,>>> − J;>> )as5 availale Payents for purc5ases ,>>> × J16 'ent Payroll &tilities, etc. Total cas5 disurseents Ending cas5 alance
D.
J ,7>> 1,47> 6,>> J-$,>7> J64,>>> 1,67> 1,>>> 6,7>> 6<,$7> J4>,1>>
J7,;47 see tale elo3 !eginning cas5 alance Sales in cas5 4,7>>J47>.;7 )ollections on account J7,>>> − J;>> )as5 availale Payents for purc5ases ,>>> × J16 'ent Payroll &tilities, etc. Total cas5 disurseents Ending cas5 alance
J ,7>> 6-,<;7 6,>> J<6,-;7 J64,>>> 1,67> 1,>>> 6,7>> 6<,$7> J7,;47
PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in.
1-. Fredder )opany usually sells aout 4>G of its erc5andise during a ont5 for cas5 3it5 t5e reaining sales on account. T5e copany2s accounts receivale payent 5istory is as follo3s: >G in t5e ont5 of sale, 7>G in t5e ont5 follo3ing, and 17G in t5e second ont5 follo3ing sale. Total udgeted sales for t5e second =uarter are as follo3s: April *ay "une
J1>>,>>> 14>,>>> <>,>>>
Assue all =uestions relate to t5e ont5 of "une. A. !. ). D. E.
C5at are t5e e?pected cas5 sales C5at are t5e e?pected receipts fro accounts receivale for sales ade in April C5at are t5e e?pected receipts fro accounts receivale for sales ade in *ay C5at are t5e total e?pected cas5 receipts Fro t5e aove accounts receivale 5istory inforation, receipts fro accounts receivale do not e=ual 1>>G. C5y not Does t5is aount appear on t5e cas5 udget
ANS: A.
"une cas5 sales K J<>,>>> × >.4 K J1-,>>>
!.
'eceipts on accounts receivale for sales ade in April K >.<J1>>,>>>>.17 K J14,>>>
).
'eceipts on accounts receivale for sales ade in *ay K >.<J14>,>>>>.7> K J6<,>>>
D.
Total cas5 e?pected in "une K J1-,>>> H J14,>>> H J6<,>>> H >.<J<>,>>>>.> K J$7,4>>
E.
>G H 7>G H 17G K $7G T5e reaining 7G is uncollectile. It does not appear on t5e cas5 udget ecause t5ere is no cas5 involved.
PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Analysis NT: 1> in. 1;. 'ivers )opany purc5ases erc5andise on account. In general, 'ivers pays 7>G in t5e ont5 of purc5ase and 7>G in t5e follo3ing ont5. All payents in t5e ont5 of purc5ase =ualify for a 4G cas5 discount. First =uarter udgeted purc5ases are: "anuary Feruary *arc5 A. !. ).
ANS:
J$>,>>> <>,>>> $-,>>>
C5at are t5e total cas5 disurseents e?pected in Feruary C5at are t5e total cas5 disurseents e?pected in *arc5 No3 suppose t5at t5ere is no cash discount for purc5ases ade in t5e ont5 of purc5ase. No3 35at are t5e total cas5 disurseents e?pected in Feruary In *arc5
A. !.
J<6,4>> see tale elo3 J<;,>6> see tale elo3
"anuary purc5ases >.7J$>,>>> Feruary purc5ases: >.7J<>,>>>>.$< >.7J<>,>>> *arc5 purc5ases >.7J$-,>>>>.$< Total cas5 disurseents ).
Feruary J67,>>>
*arc5
$,4>>
J<6,4>>
J6>,>>> 6;,>6> J<;,>6>
Feruary cas5 disurseents K J<7,>>> *arc5 cas5 disurseents K J<<,>>>
"anuary purc5ases >.7J$>,>>> Feruary purc5ases: >.7J<>,>>> >.7J<>,>>> *arc5 purc5ases >.7J$-,>>> Total cas5 disurseents
Feruary J67,>>>
*arc5
6>,>>> @@@@@@@ J<7,>>>
J6>,>>> 6<,>>> J<<,>>>
PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 7 in. 1<. Ce?ler )opany e?pects sales of J6>,>>> in "uly, J7>,>>> in August, and J>,>>> in Septeer. Ce?ler2s e?perience is t5at 6>G of sales are cas5, and t5e reainder is on account. Accounts receivale are paid: ;>G in t5e ont5 of sale, and 47G in t5e follo3ing ont5. A. !. ). D. E.
C5at are t5e e?pected cas5 receipts on accounts receivale in August for "uly sales C5at are t5e e?pected cas5 receipts on accounts receivale in August for August sales C5at are t5e total e?pected cas5 receipts on accounts receivale in August C5at are t5e total e?pected cas5 receipts in August Lo3 uc5 of "uly sales are deeed to e uncollectile
ANS: A.
E?pected cas5 receipts on accounts receivale in August for "uly sales K J-,>>> Q>.- × J6>,>>> × >.47 K J-,>>>R
!.
E?pected cas5 receipts on accounts receivale in August for August sales K J41,>>> QJ41,>>> K >.-> × J7>,>>> × >.;>R
).
Total e?pected cas5 receipts on accounts receivale in August K J4;,>>> QJ4;,>>> K >.- × J6>,>>> × >.47 H >.-> × J7>,>>> × >.;>R
D.
Total e?pected cas5 receipts in August K J6;,>>> QJ6;,>>> K >.- × J6>,>>> × >.47 H >.-> × J7>,>>> × >.;> H >.6 × J7>,>>>R
E.
"uly sales of J6>,>>> × .- K J46,>>> on account
J46,>>> × .>7 K J1,4>> uncollectile PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in. 1$. S5orter )opany developed t5e follo3ing data for t5e ont5 of "une. 1. 4. .
6. 7.
"une 1 cas5 alance J4,>> )as5 sales in "une J-;,>>> )redit sales for "une are J4>,>>>B for *ay J1>,>>>B and for April J1-,>>>. ->G of credit sales are collected in t5e ont5 of sale, 4>G in t5e follo3ing ont5, and 1>G in t5e second ont5 follo3ing t5e sale. Purc5ases for *ay 3ere J6,>>> and for "une are J6>,>>>. Lalf of purc5ases are paid in t5e ont5 of purc5ase and t5e reainder in t5e follo3ing ont5. "une salaries are J4<,6>>, utilities are J1,>$>, and depreciation on t5e uilding is J1,>>>.
A. !. ). D.
Anticipated cas5 receipts fro accounts receivale in "une e=ual J .................. . Anticipated total cas5 availale in "une is J .................. . "une cas5 payents for purc5ases are J .................. . Anticipated cas5 alance on "une > is J .................. .
ANS: A.
Anticipated cas5 receipts fro accounts receivale in "une K J17,->> Q17,->> K J4>,>>> × .- H J1>,>>> × .4 H J1-,>>> × .1R
!.
Anticipated total cas5 availale in "une K J<6,$>> Q<6,$>> K J-;,>>> H J17,->> H J4,>>R
).
"une cas5 payents for purc5ases K J;,>>> Q;,>>> K J6>,>>> × .7 H J6,>>> × .7R
D.
Anticipated cas5 alance on "une > K J1<,61> Q1<,61> K J<6,$>> − J;,>>> − 4<,6>> − 1,>$>R
PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in. 4>. )alino )opany developed t5e follo3ing data for t5e ont5 of August. 1. 4. .
August 1 cas5 alance J14,>>. )as5 sales in August J<>,>>>. )redit sales for August are J>,>>>B for "uly J6>,>>>B and for "une J6>,>>>. ;>G of credit sales are collected in t5e ont5 of sale, 17G in t5e follo3ing ont5, and 1>G in t5e second ont5 follo3ing t5e sale. 6. Purc5ases for "uly 3ere J7>,>>> and for August are J6>,>>>. ne%fourt5 of purc5ases are paid in t5e ont5 of purc5ase and t5e reaining t5ree%=uarters in t5e follo3ing ont5. 7. August salaries are J1,6>>, utilities are J,44>, and depreciation on t5e uilding and
e=uipent is J1>,>>>. A. !. ). D.
Anticipated cas5 receipts fro accounts receivale in August are J .................. . Anticipated total cas5 availale fro all sources in August is J .................. . August cas5 payents for purc5ases ade in "uly and August are J .................. . Anticipated cas5 alance on August 1 is J .................. .
ANS: A. !. ). D.
August cas5 receipts fro accounts receivale K J1,>>> August anticipated total cas5 availale fro all sources K J14,>> August cas5 payents for purc5ases K J6;,7>> Anticipated cas5 alance on August 1 K J61,1<>
Accounts 'eceivale Payents to e received in August fro sales in: "une J6>,>>> × >.1> "uly J6>,>>> × >.17 August J>,>>> × >.;> Total
J 6,>>> -,>>> 41,>>> J1,>>>
)as5 !udget for August: !eginning alance )as5 sales Payents fro Accounts 'eceivale )as5 availale Payents on "uly purc5ases J7>,>>> × >.;7 Payents on August purc5ases J6>,>>> × >.47 Salaries &tilities Total disurseents )as5 alance, August 1
J 14,>> <>,>>> 1,>>>
111,>>> J14,>>
;,7>> 1>,>>> 1,6>> ,44> <4,14> J 61,1<>
PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in. 41. It is *ay 4< and you 5ave ust gotten a suer o t5at 3ill pay you net of ta?es J<>> per ont5. 0ou start "une 1 and 3ill 3or8 until sc5ool starts − 5alf3ay t5roug5 August. 0our sc5olars5ip pays for tuition, roo and oard. !ut you ust uy oo8s, pay for transportation to and fro sc5ool, and pa y for clot5ing, any e?tra eals, entertainent, and so on. 0ou 5ave gat5ered t5e follo3ing data: 1.
ne round trip airline tic8et is J4->, and you2d li8e to coe 5oe for T5an8sgiving your parents 3ill drive you t5ere in August, and you 3ill try to catc5 a ride 5oe 3it5 anot5er student in Deceer. 4. !oo8s are estiated to cost aout J7>> per seester for your anticipated aor . Supplies s5ould e anot5er J17> 6. )lot5ing ig5t run J1>> − you already 5ave alost everyt5ing you t5in8 you2ll need.
7. -.
T5ere are 1- 3ee8s in t5e seester, and you t5in8 you2ll need J7> per 3ee8 for allo3ance to cover e?tra eals and entertainent !efore sc5ool even starts, you need to cover any suer e?penses, including going out 3it5 friends. J> a 3ee8 sounds aout rig5t, since all your friends 3ill e 3or8ing and saving for college as 3ell. T5ere are 11 3ee8s of suer.
'ig5t no3, you 5ave J4>> in your c5ec8ing account. A. !.
Prepare a cas5 udget for t5e suer and t5e first seester of college. Do t5e entire tie periodB do not rea8 it do3n y 3ee8 or y ont5. )oent on t5e estiated ending alance. C5at actions can you ta8e, if any, to increase it
ANS: A.
!.
!eginning alance c5ec8ing account Salary fro suer o 4.7 × J<>> )as5 availale #ess disurseents: Airline tic8et !oo8s Supplies )lot5ing Cee8ly allo3ance at sc5ool 1- × J7> Cee8ly allo3ance during t5e suer 11 × J> Total disurseents Estiated ending alance
J 4>> 4,>>> J4,4>> 4-> 7>> 17> 1>> <>> > J4,16> J ->
A J-> ending alance for a si? ont5 tie period sees too close for cofort. 'esponses 3ill vary. Lo3ever, it 3ould e relatively easy to suggest cutting out t5e trip 5oe at T5an8sgiving − or attept to find a ride 5oe 3it5 anot5er student instead. Siilarly, t5e estiated allo3ances can e cut. T5e real prole is t5at t5ese are estiates. So per5aps anot5er source of cas5, suc5 as a student loan, s5ould e located in advance.
PTS: 1 DIF: Difficulty: *oderate !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Evaluation NT: 1> in. 44. *iller )orporation 5as t5e follo3ing sales udget for t5e first four ont5s of t5e current year: *ont5 "anuary Feruary *arc5 April
Sales J6>>,>>> J4>,>>> J66>,>>> J->,>>>
Listorically, t5e follo3ing trend 5as een estalis5ed regarding cas5 collection of sales: -7G in ont5 of sale 47G in ont5 follo3ing sale
4G uncollectile T5e copany allo3s a 4G cas5 discount for payents ade y custoers during t5e ont5 of t5e sale. Noveer and Deceer sales 3ere J6>>,>>> and J46>,>>>, respectively. All sales are on account. Re!ire01 Prepare a sc5edule of udgeted cas5 collections fro sales for "anuary, Feruary, and *arc5.
ANS:
Noveer Deceer "anuary Feruary *arc5 Total cas5 collections
"anuary J 4,>>> ->,>>> 476,<>>
J6>>,>>> J46>,>>> J6>>,>>> J4>,>>> J66>,>>>
J6-,<>>
Feruary J 1$,4>> 1>>,>>> 4>,<6> J4,>6>
*arc5
J 4,>>> <>,>>> 4<>,4<> J$4,4<>
PTS: 1 DIF: Difficulty: )5allenging !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 1> in. 4. Allan )orporation 5as a sales udget for *arc5 of J66>,>>>. Aout 1>G are cas5 sales and t5e reainder is sold on account. T5e copany e?pects t5at ->G of credit sales 3ill e collected in t5e ont5 of t5e sale, 47G in t5e ne?t ont5 and 1>G in t5e follo3ing ont5. *aterials purc5ased on account are e?pected to e J47>,>>>. Allan pays 7G in t5e ont5 of t5e purc5ase, 7>G in t5e ont5 follo3ing t5e purc5ase and t5e reaining 17G in t5e second ont5 after t5e purc5ase. Salaries and 3ages of t5e 3or8ers are appro?iately J67,>>> per ont5. T5e eployees are paid 3ee8ly so on average $7G of t5eir 3ages are paid in t5e ont5 to 35ic5 t5ey relate and t5e reaining 7G is paid in t5e follo3ing ont5. &tilities average J6,>> per ont5. 'ent on t5e uilding is J$,>>> per ont5. Insurance is J,>>> per ont5 and advertising costs are J1,>>> per ont5. Feruary sales 3ere J4>,>>> and purc5ases of aterials in Feruary 3ere J1;>,>>>B "anuary sales 3ere J4>>,>>> and purc5ases of aterials in "anuary 3ere J1>,>>>. T5e cas5 alance on *arc5 1st is J7,6>>.
'e=uired: A. Prepare a sc5edule of cas5 receipts !. Prepare a sc5edule of cas5 payents Accounts payale payents ). Prepare a cas5 udget ANS: A. )as5 receipts for *arc5 "anuary collection
1<,>>>
Feruary collection
;4,>>>
*arc5 cas5 sales *arc5 accounts receivale sales
66,>>> J4;,->>
Total cas5 collection
J;1,->>
!. )as5 disurseents for *arc5 "anuary payent Feruary payent *arc5 payent
1$,7>> <7,>>> <;,7>>
Total cas5 disurseents
J1$4,>>>
). !eginning cas5 alance )as5 collections
7,6>> J;1,->>
)as5 availale #ess: disurseents: Payents for: 'a3 aterials Salaries &tilities 'ent Insurance Advertising Total disurseents
;;,>>>
1$4,>>> 67,>>> 6,>> $,>>> ,>>> 1,>>> J476,>>
Ending cas5 alance
J144,;>>
PTS: 1 DIF: Difficulty: )5allenging !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 67 in. 46. Tris5 *orro3 o3ns and operates 0uy !a8ery 35ic5 sells a 3ide variety of cupca8es. S5e 5as copiled t5e follo3ing data and inforation in order to put toget5er a cas5 udget for Septeer and ctoer. •
• •
•
•
!udgeted sales for Septeer are -7,>>> cupca8es and $<,>>> in ctoer. Eac5 cupca8e sells for J.7>. n average ->G are cas5 sales and 6>G are done on account. T5e copany e?pects to collect ;7G of credit sales in t5e ont5 of t5e sale and 4>G in t5e ont5 after t5e sale. All necessary ra3 aterials are purc5ased on account. Purc5ases are paid <7G in t5e ont5 of t5e purc5ase and 17G in t5e follo3ing ont5. Purc5ases for Septeer are estiated to e J4>>,>>> and J4$>,>>> in ctoer. *ont5ly e?penses include: Cages J1>,>>> o
'ent J6,>>> o &tilities J,7>> o Insurance J4,7>> o Advertising J4,4$> )as5 alance on Septeer 1 st 3as J-,>>>. T5e copany 5as a policy to aintain a iniu cas5 alance of J7,>>>. If necessary t5e copany 3ill orro3 to eet its s5ort%ter needs. All orro3ing is done at t5e eginning of t5e ont5 and all payents on principal and interest are ade at t5e end of t5e ne?t ont5. T5e annual interest rate is ;G. T5e copany ust orro3 in ultiples of J1,>>>. August sales 3ere 6,>>> cupca8es and ra3 aterials purc5ased e=ual J4>,>>>. o
• •
•
Prepare a cas5 udget for Septeer and ctoer. ANS: Septeer collections: Total sales )as5 sales Accounts receivale collections%Septeer Accounts receivale collections%August
44;,7>> 1-,7>> -<,47> J14,>6>
Total cas5 collections
J41-,;$ >
-7,>>> ? J.7> J44;,7>> ? ->G J44;,7>> ? 6>G ? ;7G 6,>>> ? J.7 ? 6>G ? 4>G ctoer collections Total sales )as5 sales Accounts receivale collections%ctoer Accounts receivale collections%Septeer
6,>>> 4>7,<>> 1>4,$>> J1<,4>>
Total cas5 collections
J4-,$> >
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!eginning cas5 alance )as5 collections Total cas5 availale )as5 disurseents: Purc5ases Cages
Septe74er -,>>> 41-,;$>
5to4er 7,>>> 4-,$>>
J444,;$>
J1,$>>
4>6,7>> 1>,>>>
4;-,7>> 1>,>>>
'ent &tilities Insurance Advertising Total disurseents *iniu cas5 alance Total cas5 needs E?cess deficiency Financing: !orro3ings
6,>>> ,7>> 4,7>> 4,4$>
6,>>> ,7>> 4,7>> 4,4$>
J44-,;$>
J4$<,;$>
7,>>>
7,>>>
J41,;$> $,>>>
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$,>>>
'epayents Interest
$,>>>.>> 1>7.>>
Total financing
J$,>>>
J$,1>7.>>
Ending cas5 alance
J7,>>>
J46,>>7.>>
PTS: 1 DIF: Difficulty: )5allenging !": #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Application NT: 67 in. 47. Dic8son )opany 5as t5e follo3ing proected account alances for Septeer > of t5e current year: Accounts payale Accounts receivale Depreciation, factory Inventories <1 Inventories $> *aterials used ffice salaries Insurance, factory Factory 3ages !onds payale
J4>,>>>Sales 7>,>>>)apital stoc8 14,>>>'etained earnings eginning $>,>>>*aintenance, factory $>,>>>)as5 1>>,>>>E=uipent, net 6>,>>>!uildings, net 4,>>>&tilities, factory ;>,>>>Selling e?penses <>,>>>
J6>>,>>> 4>>,>>> -6,>>> 16,>>> 4<,>>> 14>,>>> 4>>,>>> <,>>> >,>>>
Re!ire01 A. Prepare a udgeted incoe stateent for t5e ont5 ended Septeer >. !. Prepare a udgeted alance s5eet as of Septeer >.
ANS: A.
Dic8son )opany !udgeted Incoe Stateent For t5e *ont5 Ended Septeer > Sales )ost of goods sold: !eginning inventory *aterials used Factory 3ages Depreciation Insurance *aintenance
J6>>,>>> J $>,>>> 1>>,>>> ;>,>>> 14,>>> 4,>>> 16,>>>
&tilities Ending inventory (ross argin
<,>>> $>,>>>
perating e?penses: Selling e?penses ffice e?penses Net incoe
J >,>>> 6>,>>>
!.
Dic8son )opany !udgeted !alance S5eet Septeer > #ia. and 3ners2 E=uity J 4<,>>>Accounts payale 7>,>>>!onds payale $>,>>>)apital stoc8 14>,>>>'etained earnings 4>>,>>> J6<<,>>>Total
Assets )as5 Accounts receivale Inventories E=uipent, net !uildings, net Total
4>-,>>> J1$6,>>>
;>,>>> J146,>>>
J 4>,>>> <>,>>> 4>>,>>> 1<<,>>> J6<<,>>>
PTS: 1 DIF: Difficulty: )5allenging !": #: $%4 + #: $% NAT: !&SP'(: Analytic STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Analysis NT: 4> in. ESSA:
1. C5at are t5e advantages of udgeting ANS: T5ere are several advantages of udgeting: 1. 4. . 6.
It forces anagers to plan. It provides inforation t5at can e used to iprove decision a8ing. It provides a standard for perforance evaluation. It iproves counication and coordination.
PTS: 1 DIF: Difficulty: Easy !": #: $%1 NAT: !&SP'(: )ounication STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: )opre5ension NT: 7 in. 4. C5ic5 udget is t5e first one t5at ust e copleted in t5e aster udgeting process and 35y ANS: T5e sales udget is t5e first udget to e developed in t5e aster udgeting process. T5e sales udget fors t5e asis for t5e rest of t5e udgets. A copany ust 8no3 estiated sales of eac5 product in order to deterine 5o3 uc5 ust e produced. T5e production udget, in turn, is used to develop t5e direct aterials purc5ases, direct laor, and over5ead udgets. T5ese t5ree udgets provide useful inforation in deterining cost of goods sold. )learly, t5e udgeted incoe stateent re=uires t5e udgeted revenue fro t5e sales udget. Cit5out t5is udget, t5e ot5ers cannot e developed. PTS: 1
DIF:
Difficulty: *oderate
!": #: $%4
NAT: !&SP'(: )ounication STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: )opre5ension NT: 7 in. 0ou decide . 0ou are t5e senior accountant at )annon *anufacturing and 5ave een as8ed y t5e udget director to prepare t5e production udget for t5e upcoing =uarter. T5e udget director stated t5at t5ey c5ose you to prepare t5is udget ecause it is an iportant part of t5e overall operating udget and financial udget. E?plain 35at t5e production udget calculates and 5o3 t5e production udget 3ould affect ot5er operating udgets and t5e financial udget. ANS: T5e production udget tells 5o3 any units ust e produced to eet sales needs and to satisfy ending inventory re=uireents. T5e total units to e produced eac5 ont5 or =uarter is t5en used in deterining t5e direct aterials to e purc5ased and t5e nuer of direct laor 5ours needed during t5e period to produce t5e units. After deterining 5o3 any direct laor 5ours 3ould e necessary to produce t5e given aount of units, t5e over5ead udget can e prepared. T5e direct aterials purc5ases udget, t5e direct laor udget and t5e over5ead udget also calculate t5e total aount of cas5 needed to pay for t5e ra3 aterials, direct laor eployees, and over5ead costs, 35ic5 5ave a direct affect on t5e preparation of t5e cas5 udget. PTS: 1 DIF: Difficulty: )5allenging !": #: $%4 NAT: !&SP'(: )ounication STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Analysis NT: 1> in. 6. Does a not%for%profit agency need to udget C5y or 35y not ANS: All entities need to use t5e foral udgeting process. C5ile t5e nonprofit agency is not trying to a8e a profit, it does need to deterine sources and uses of revenues. For e?aple, local &nited Cays develop udgets eac5 year. First, t5ey listen to proposals fro t5e agencies t5at 3ant funding. Cort5y proposals are c5osen and a udget to otain revenues and t5en distriute t5ose revenues is developed. T5e udget fors t5e foundation for t5e fall fundraising efforts. PTS: 1 DIF: Difficulty: )5allenging !": #: $%1 + #: $%4 NAT: !&SP'(: )ounication STA: AI)PA: FN%Decision *odeling + I*A: !udget Preparation + A)!SP: AP)%-%!udgeting and 'esponsiility /E0: !loo2s: Evaluation NT: 7 in. 7. !riefly descrie t5e attriutes of an ideal udgetary syste. C5at features of udgeting 5ave een identified t5at encourage positive e5avior ANS: An ideal udgetary syste is one t5at ac5ieves coplete goal congruence and at t5e sae tie creates a drive in anagers to ac5ieve t5e organi9ation2s goals in an et5ical anner. Features t5at encourage t5e positive e5avior t5at 3ould ove t5e fir closer to an ideal udgetary syste include: Fre=uent feedac8 on perforance *onetary and nononetary incentives Participative udgeting 'ealistic standards )ontrollaility of costs
