Q1. Why are budgets useful in the planning process?
They provide management with information about the company's past performance.
They help communicate goals and provide a basis for evaluation.
They guarantee the company will be profitable if it meets its objectives.
They enable the budget committee to earn their paycheck.
Q2. An unrealistic budget is more likely to result when it
has been developed in a top down fashion.
has been developed in a bottom up fashion.
has been developed by all levels of management.
is developed with performance appraisal usages in mind.
Q3. A budget is most likely to be effective if
it is used to assess blame when things do not occur according to plans.
it is not used to evaluate a manager's performance.
employees and managers at the lower levels do not get involved in the budgeting process.
it has top management support.
Q4. Long-range planning
generally presents more detailed information than an annual budget.
generally encompasses a longer period of time than an annual budget.
is usually more accurate than an annual budget.
is prepared on a quarterly basis if the budget is prepared on a quarterly basis.
Q5. If there were 70,000 pounds of raw materials on hand on January 1, 140,000 pounds are desired for inventory at January 31, and 420,000 pounds are required for January production, how many pounds of raw materials should be purchased in January?
350,000 pounds
560,000 pounds
280,000 pounds
490,000 pounds
Q6. The direct materials budget shows:
Desired ending direct materials 36,000 pounds
Total materials required 54,000 pounds
Direct materials purchases 47,400 pounds
The total direct materials needed for production is
18,000 pounds.
6,600 pounds.
11,400 pounds.
101,400 pounds.
Q7. Which of the following would not appear as a fixed expense on a selling and admini-strative expense budget?
Freight-out
Office salaries
Property taxes
Depreciation
Q8. The following credit sales are budgeted by Roswell Company:
January $102,000
February 150,000
March 210,000
April 180,000
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
$185,160.
$168,000.
$180,000.
$176,400.
Q9. On January 1, Dooley Company has a beginning cash balance of $63,000. During the year, the company expects cash disbursements of $510,000 and cash receipts of $435,000. If Dooley requires an ending cash balance of $60,000, Dooley Company must borrow
$48,000.
$60,000.
$72,000.
$138,000.
Q10. Stanbrough Company has the following budgeted sales: July $100,000, August $150,000, and September $125,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during September are
$140,000.
$132,500.
$131,250.
$125,000.