DeVry Chicago ACCT 434 Week 2 Master Budget Flexible Budgets MCQs

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 1. Question : (TCO 2) Operating budgets and financial budgets

     have nothing to do with the master budget.

     are prepared after the master budget.

      combined, form the master budget.

     are prepared before the master budget.

 2. Question : (TCO 2) To gain the benefits of budgeting, ________ must understand and support the budget.

     customers

      management at all levels

     suppliers

     All of the above

 3. Question : (TCO 2) Which budget is not necessary to prepare the budgeted balance sheet?

     Revenues budget

     Budgeted income statement

     Cash budget

      Budgeted statement of cash flows

 4. Question : (TCO 2) A feature of a standard-costing system is that the costs of every product or service planned to be worked on during the period can be computed at the start of that period.  This feature of standard costing makes it possible to

     maintain actual costs as an integral part of the costing system.
      use a simple recording system.

     eliminate routine reports.

     justify eliminating the budgeting process.

   
 5. Question : (TCO 2) An unfavorable variance indicates that

     actual costs are less than budgeted costs.

     actual revenues exceed budgeted revenues.

      the actual amount decreased operating income relative to the budgeted amount.
     All of the above

   
 6. Question : (TCO 2) Which of the following statements is true about overhead cost variance analysis using activity-based costing?

     Overhead cost variances are calculated for output-unit level costs only.
     Overhead cost variances are calculated for variable manufacturing overhead costs only.
      A four-variance analysis can be conducted.

     Activity-based costing uses input measures for all activities, resulting in the inability to do flexible budgets needed for variance analysis.

 7. Question : (TCO 2) Overhead costs have been increasing due to all of the following except

     product proliferation.

      tracing more costs as direct costs with the help of technology.
     more complexity in distribution processes.

     increased automation.

 8. Question : (TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000 units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating income $150,000.  Katie is developing the 20X9 budget.  In 20X9, the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%.  All other operating expenses are expected to remain constant.  Assume that COGS is a variable cost and that operating expenses are a fixed cost.  What is budgeted sales for 20X9?

     $582,400

      $524,160

     $504,000

     $560,000

  
 9. Question : (TCO 2) Hester Company budgets on an annual basis for its fiscal year.  The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 2008, through June 30, 2009.
                                        July 1, 2008                   June 30, 2009
Raw material (note)               40,000                          10,000
Work in process                      8,000                            8,000 
Finished goods                       30,000                           5,000
(note) Three units of raw material are needed to produce each unit of finished product.
If Hester Company plans to sell 600,000 units during the 2008-2009 fiscal year, the number of units it would have to manufacture during the year would be   

     625,000.

      575,000.

     540,000.

     640,000.

  
 10. Question : (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table:
                                         February              March               April
           Cash Sales             $160,000             $150,000           $120,000
           Credit Sales             300,000               400,000             280,000
               Total Sales         $460,000             $550,000            $400,000
Management estimates that 5% of credit sales are not collectible.  Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale.  Cost of purchases of inventory each month are 70% of the next month's projected total sales.  ll purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase.
Brenton's budgeted total cash payments in March for inventory purchases are

     $385,000.

      $358,750.

     $306,250.

     $280,000.

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