FOR ACCOUNT_TUTOR

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QUESTION 1

1. Budgeting is usually most closely associated with which management function?

A.

Motivating

B.

Planning

C.

Controlling

D.

Directing

QUESTION 2

1. Which of the following is not a financial budget?

A.

Manufacturing overhead budget

B.

Capital expenditure budget

C.

Budgeted balance sheet

D.

Cash budget

QUESTION 3

1. The following credit sales are budgeted by McNaughton Industries:

 

January

$204,000

 

February

295,000

 

March

407,000

 

April

354,000

2. The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of April is

A.

$352,800.

B.

$336,000.

C.

$370,320.

D.

$360,000.

6 points   

QUESTION 4

1. The following information was taken from Yang Company's cash budget for the month of July:

 

Beginning cash balance

$480,000

 

Cash receipts

304,000

 

Cash disbursements

564,000

2. If the company has a policy of maintaining a minimum end of the month cash balance of $300,000, the amount the company would have to borrow is

A.

$160,000.

B.

$80,000.

C.

$96,000.

D.

$240,000.

QUESTION 5

1. In May 2012, the budget committee of Dunker Stores assembles the following data in preparation of budgeted merchandise purchases for the month of June.

1.

Expected sales: June $1,500,000, July $1,800,000.

2.

Cost of goods sold is expected to be 70% of sales.

3.

Desired ending merchandise inventory is 40% of the following (next) month's cost of goods sold.

4.

The beginning inventory at June 1 will be the desired amount.

Instructions

Compute the budgeted merchandise purchases for June.

 

 

1. Top management's reaction to a difference between budgeted and actual sales often depends on

A.

whether management anticipated the difference.

B.

the materiality of the difference.

C.

whether the difference is favorable or unfavorable.

D.

the personality of the top managers.

QUESTION 7

1. What is the primary difference between a static budget and a flexible budget?

A.

The static budget contains only fixed costs, while the flexible budget contains only variable costs.

B.

The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management.

C.

The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.

D.

The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.

QUESTION 8

1. For June, Devin Manufacturing estimated sales revenue at $400,000. It pays sales commissions that are 4% of sales. The sales manager's salary is $190,000, estimated shipping expenses total 1% of sales, and miscellaneous selling expenses are $10,000. How much are budgeted selling expenses for the month of July if sales are expected to be $360,000?

A.

$220,000

B.

$28,000

C.

$218,000

D.

$18,000

6 points   

QUESTION 9

1. Edward Industries budgeted manufacturing costs for 50,000 sip-its are:

Fixed manufacturing costs

$50,000 per month

2.

Variable manufacturing costs

$12.00 per sip-it

3. Edward produced 40,000 sip-its during March. How much is the flexible budget for total manufacturing costs for March?

A.

$650,000

B.

$530,000

C.

$520,000

D.

$480,000

6 points   

QUESTION 10

1. Gant Co. manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per hour. The labor quantity variance was

A.

$3,660 U.

B.

$3,600 U.

C.

$2,460 U.

D.

$3,660 F.

6 points   

QUESTION 11

1. Gant Co. manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per hour. The labor price variance was

A.

$4,860 F.

B.

$1,260 U.

C.

$3,600 U.

D.

$4,860 U.

QUESTION 12

1. As one moves up to each higher level of managerial responsibility,

A.

a greater number of costs are controllable.

B.

performance evaluation becomes less important.

C.

fewer costs are controllable.

D.

the responsibility for cost incurrence diminishes.

QUESTION 13

1. The best measure of the performance of the manager of a profit center is the

A.

rate of return on investment.

B.

success in meeting budgeted goals for controllable costs.

C.

amount of contribution margin generated by the profit center.

D.

amount of controllable margin generated by the profit center.

QUESTION 14

1. Incremental analysis is most useful

A.

in developing relevant information for management decisions.

B.

as a replacement technique for variance analysis.

C.

in evaluating the master budget.

D.

in choosing between the net present value method and the internal rate of return method.

QUESTION 15

1. Nonfinancial information that management might evaluate in making a decision would not include

A.

contribution margin.

B.

the corporate profile in the community.

C.

the environment.

D.

employee turnover.

QUESTION 16

1. The decision rule on whether to sell or process further

A.

is process further as long as total revenue exceeds present revenues.

B.

is process further if incremental revenue from such processing exceeds incremental fixed costs.

C.

is process further if incremental revenue from such processing exceeds the incremental processing costs.

D.

varies from situation to situation.

6 points   

QUESTION 17

1. Fromherz Company produced and sold 50,000 units of product and is operating at 80% of plant capacity. Unit information about its product is as follows:

 

Sales Price

 

$68

2.

 

Variable manufacturing cost

$42

3.

 

Fixed manufacturing cost ($500,000 ÷ 50,000)

10

52

 

Profit per unit

 

$16

The company received a proposal from a Danish company to buy 10,000 units of Fromherz Company's product for $49 per unit. This is a one-time only order and acceptance of this proposal will not affect the company's regular sales. The president of Fromherz Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order. Instructions Prepare a schedule reflecting an incremental analysis of this proposal and indicate the effect the acceptance of this order might have on the company's income.

QUESTION 18

1. Capital budgeting is the process

A.

of making capital expenditure decisions.

B.

of eliminating unprofitable product lines.

C.

used in sell or process further decisions.

D.

of determining how much capital stock to issue.

QUESTION 19

1. A capital budgeting technique which takes into consideration the time value of money is the

A.

net present value method.

B.

annual rate of return approach.

C.

return on stockholders' equity approach.

D.

payback approach.

QUESTION 20

1. A company is considering purchasing factory equipment that costs $320,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $90,000 and annual operating expenses exclusive of depreciation expense are expected to be $38,000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is

A.

32.5%.

B.

7.5%.

C.

3.8%.

D.

16.3%.

QUESTION 21

1. A company is considering purchasing factory equipment that costs $320,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $90,000 and annual operating expenses exclusive of depreciation expense are expected to be $38,000. The straight-line method of depreciation would be used. The cash payback period on the equipment is

A.

6.2 years.

B.

8.0 years.

C.

3.1 years.

D.

13.3 years.

QUESTION 22

1. Use the following table,

 

Present Value of an Annuity of 1

2.

Period

8%

9%

10%

1

.926

.917

.909

2

1.783

1.759

1.736

3

2.577

2.531

2.487

3. A company has a minimum required rate of return of 10% and is considering investing in a project that requires an investment of $98,000 and is expected to generate cash inflows of $42,000 at the end of each year for three years. The present value of future cash inflows for this project is

A.

$114,898.

B.

$6,454.

C.

$98,000.

D.

$104,454.