Question: 1. Which of the following activities can and should proceed in the absence of a budget?
- Worldwide Courier responds to a government plea for help in delivering food and medical supplies to a city that has been devastated by a hurricane.
- Synapse Biologic Inc. is only a few months away from completing the research necessary to gain European regulatory approval for their arthritis medication. Resources are strained to the point where creditors are concerned, but Synapse plows ahead.
- Rest Easy, a multinational hotel chain, intends to equip all its guest rooms with high-speed Internet access within the next three years.
- Atlantic
- Pacific Airlines wants to hire more mechanics as it prepares to expand service to South America.
2. As the manager of global sales for Ellipse Pharmaceutical, you have already resolved to increase your Asian sales by 10 percent in the coming year. You are currently reviewing the records of inquiries generated by various forms of advertising. The information gained will be useful in determining your future course of action. This strategy represents what step of the budget planning process?
-Setting goals.
-Evaluating and choosing options.
-Identifying budget impacts.
-Implementation.
3. World Realty intends to increase its condominium sales worldwide over the next three years. As head of finance, you have organized the budgets of each office into a master budget in order to monitor the expansion process. In analyzing this budget, you recommend corrective action in one territory that has an unfavorable variance in the (actual sales/expected sales) category. Which one?
-Asia (50,500 / 48,000).
-North America (85,000 / 84,000).
-South America (90,000 / 110,000).
-Europe (68,000 / 68,000).
4. The annual report of Geomatic Telecommunications is being prepared. How will the company?s gross margin be calculated?
-Gross profit divided by sales.
-Net income divided by sales.
-Sales divided by gross profit.
-Net income divided by opportunity cost.
5. You are the head of finance at a global company that discovers and markets genetic-based therapies for diseases. This sector is very competitive. Keeping one step ahead of your competitors means the company must continually develop new products ? an expensive process. However, because of an economic downturn you have also been charged with reducing costs over the next two years. Which budget process is your best choice?
-Incremental budgeting.
-Zero-based budgeting.
-Kaizen budgeting.
-Variance.
6. As chief executive officer of Global Thermal Power Systems, Jacqueline is responsible for the approval of the overall budget. Jacqueline has acknowledged the expertise of her various managers by having them draft the budgets for their divisions. This process is an example of.
-Iterative budgeting.
-Top-down budgeting.
-Participatory budgeting.
-Communication budgeting
7. It is December, and Nancy is in the process of drawing up the yearly budget for her company, the Pack-n-Go Travel Agency. She is making a list of all the costs she expects to incur for the coming year. Which of the following expenses would not go under the column labeled ?Fixed Costs?
-The sales representative's commissions.
-The buyer's benefit package.
-The marketing representative's advertising budget.
-The receptionist's salary.
8. You are the comptroller for the Integrated Black Box Company with locations across the United States. When you draw up your budget, which one of the following outlays would not be considered an overhead cost?
-Rent for the corporate offices.
-Wages for the assembly-line workers.
-The annual cost of corporate liability insurance.
-Utilities for the head office.
9. KarCorp Ltd. is a large automobile manufacturer with numerous divisions. The company proposes to adopt activity-based budgeting (ABB) in order to obtain a clearer picture of costs and to plan more effectively. In this situation, which of the following statements is false?
-ABB is an appropriate way of linking costs to outputs.
-ABB can improve accuracy in identifying resource needs.
-ABB is appropriate for a single division.
-ABB is helpful in establishing more realistic budgets.
10. Which of the following statements about the Balanced Scorecard is not true? The Balanced Scorecard.
-Helps management communicate strategic goals to all stakeholders.
-Puts financial controls at the center of the planning process.
-Gives management a clear look at key factors affecting the organization.
-Gives management a way to view the organization's progress from the perspective of customer satisfaction.
11. The operating budget.
-Includes the capital budget.
-Includes the cash flows.
-Provides the budgeted income.
-Includes the cash budget.