l>ACCT-202 Principles of Managerial Accounting – Practice Exam – Chapter 9
|ACCT 202 Principles of Managerial AccountingPractice Exam – Chapter 9Profit PlanningDr. Fred Barbee|
Select your answer by clicking on the button next to each alternative. You willreceive immediate feedback. 1. Which of the following budgets concerns the income-generating activities of the firm? a.Operating Budgetb.Financial Budgetc.Capital Budgetd.All of the above. 2. Which of the following is considered a financial budget? a.Selling and Administrative Expense Budgetb.Direct Labor Budgetc.Cash Budgetd.Sales Budget. 3. Of the budgets listed below, which is usually prepared last? a.Production Budgetb.Cash Budgetc.Sales Budgetd.Manufacturing Overhead Budget. 4. Which of the following statements is not correct? a.The sales budget is the starting point in preparing the master budget.b.The sales budget is constructed by multiplying the expected sales in units by the sales price.c.The sales budget generally is accompanied by a computation of expected cash receipts.d.None of the above. 5. Budgeted production needs are determined by: a.Adding budgeted sales in units to the desired EI in units and deducting the BI.b.Adding budgeted sales in units to the BI in units and deducting the desired EI in units.c.Adding budgeted sales in units to the desired ending inventory in units.d.Deducting the beginning inventory in units from budgeted sales in units. 6. A continuous (or perpetual) budget: a.Is prepared for a range of activity so that the budget can be adjusted for changes in activity.b.Is a plan that is updated monthly or quarterly, dropping one period and adding another.c.Is a strategic plan that does not change.d.Is used in companies that experience no change in sales. Use the following information to answer questions 7 and 8: Projected sales for Sommers, Inc. for the next year and beginning and ending inventory data are as follows: Sales 50,000 units; Beginning inventory 4,000 units; Desired ending inventory 8,000 units. The selling price is $40 per unit. Each unit requires four pounds of material which costs $6 per pound. The beginning inventory of raw materials is 12,000 pounds. The company wants to have 3,000 pounds of material in inventory at the end of the year. 7. Sommers” budgeted sales would be: a.$2,160,000b.$2,320,000c.$2,480,000d.$2,000,000 8. According to Sommers” production budget, how many units should be produced? a.54,000.b.46,000.c.62,000.d.38,000. 9. Budgeted sales for the first quarter for Cullison Company, a retailer, are as follows: January 75,000 units; February 100,000 units; March 110,000 units.
You are watching: Budgeted production needs are determined by:
Cullison started the year with an inventory of 7,500 units. The company likes to maintain an inventory equal to 10% of next month”s budgeted sales. Budgeted purchases in units for February would be: a.111,000b.110,000c.101,000d.100,000 10. Brown, Inc. has budgeted $60,000 for annual fixed overhead costs for the coming year. Budgeted variable overhead is $0.10/unit. For the next quarter, Brown plans to manufacture 500,000 units. Brown”s budgeted overhead for the quarter is: a.$50,000b.$65,000.c.$110,000.d.$150,000.Part II: Problems (To see the answer, click on the solution button.)Problem 1 The following budget estimates have been prepared by Clifton Company: CashReceipts CashPayments May $120,000 $150,000 June 110,300 150,000 The company likes to maintain a minimum cash balance of $40,000. Any excess cash is invested in a money market account earning 9% compounded monthly. Interest is reinvested in the money market account. Any cash deficiencies are covered by a withdrawal from the money market account. If additional cash is needed, the company has a line of credit at 12% interest with the local bank. Interest is paid monthly. Assume a cash balance on May 1 of $40,000, a money market account balance of $0, and a credit line balance of $0. Required:Prepare a cash budget for May and JuneProblem 2 The Good As Old Company manufactures antique-looking oak rocking chairs. Budgeted sales for the first five months of the year are as follows: Bugeted Sales (Units) January 200 February 240 March 180 April 160 May 240 Each rocking chair requires 10 square feet of oak, at a cost of $20 per square foot. The company wants to maintain an inventory of chairs equal to 25% of the following month”s sales. At the beginning of the year, 40 chairs are on hand. Assume the company maintains an inventory of oak equal to 10% of the next month”s needs. At the beginning of the year, 240 square feet of oak are on hand. Inventory of oak at March 31 is estimated to be 180 square feet. Required: 1. Prepare a production budget, in units, for each of the first four months. 2. Prepare a purchases budget, in dollars, for each of the first three months.
Last Modified October 29, 2004