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Exam 20: Master Budgets and Performance Planning

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Question 61

Multiple Choice

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A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

A) Traditional budgeting.
B) Management budgeting.
C) Master budgeting.
D) Activity-based budgeting.
E) Cash budgeting.

F) C) and E)
G) A) and B)

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Question 62

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

A) Participatory budgeting
B) Capital budgeting
C) Balanced budgeting
D) Continuous budgeting
E) Primary budgeting

F) B) and E)
G) B) and D)

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Question 63

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Effective budgeting requires all of the following except:

The budget process is usually administered by a _____________________.

The master budget consists of three major groups of budget components: the operating budgets,the capital expenditures budgets,and the financial budgets.

Nano,Inc.is preparing its budget for the second quarter.The following sales data have been forecasted: $\begin{array}{llr}&\text { April}&\text { May}&\text { June}&\text { July }&\text {August }\\\text { Total sales } & 640 & 720 & 780 & 620 & 660 \end{array}$ Additional information follows: $\begin{array}{ll}\text { Inventory on March } 31: & 192 \text { units } \\\text { Desired ending inventory each month: } & 30 \% \text { of next month's sales }\end{array}$ How many units should be purchased in April,May,and June? How many units should be purchased in the second quarter in total?

A sporting goods store budgeted August purchases of ski jackets at $140,000.The store had ski jackets costing $12,000 in its inventory at the beginning of August; and to cover part of anticipated September sales,they expect to have $25,000 of ski jackets in inventory at the end of the month of August.What is the budgeted cost of goods sold for August?

A sporting goods store purchased $7,000 worth of ski boots in October.The store had $3,000 of ski boots in inventory at the beginning of October and expects to have $2,000 of ski boots in inventory at the end of October to cover part of anticipated November sales.What is the budgeted cost of goods sold for October?

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

A Company is preparing a cash budget for June.The company has $67,000 cash at the beginning of June and anticipates $82,330 in cash receipts and $93,520 in cash disbursements during June.This company has an agreement with its bank to maintain a cash balance of at least $65,000.As of May 31,the company owes $25,000 to the bank.To maintain the $65,000 required balance,during June the company must:

Which of the following would not be used in preparing a cash budget for October?

Why is the sales budget usually prepared first?

The merchandise purchases budget is the starting point for preparing the master budget.

Use the following data to determine the company's cash disbursements for the month of August and September:

___________________________ is a budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities.

Merchandising companies prepare the production budget after preparing the sales budget.

The purchases budget depends on information provided by the sales budget.

A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:

The master budget includes:

A Company forecasts sales of $91,500 for the quarter ended December 31.Its gross profit rate is 18% of sales,and its September 30 inventory is $25,000.If the December 31 inventory is targeted at $7,500,budgeted purchases for the fourth quarter should be: