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Unformatted text preview: Chapter 8Budgeting for Planning and Control MULTIPLE CHOICE 1. Which of the following is NOT a component of the master budget? a. Sales Budget b. Capital Budget c. Cost of Goods Sold Budget d. Budget to Actual Variance Analysis ANS: D PTS: 1 OBJ: 8-1 2. Which of the following statement is correct regarding a continuous budget? a. the budget is prepared for a one year period that corresponds to the companys fiscal year b. a continuous budget is a monthly budget c. as a month/period expires in the budget, an additional month/period in the future is added so the company always has a 12 month budget on hand. d. none of the above ANS: C PTS: 1 OBJ: 8-1 3. Which of the following is the most common starting point in the information gathering process for budgeting? a. the personnel forecast b. the sales forecast c. the production forecast d. the projected income statement ANS: B PTS: 1 OBJ: 8-1 4. Control can be defined as: a. the process of setting standards, receiving feedback on actual performance, and taking cor- rective action whenever actual performance deviates significantly from plan b. a quantification of plans, stated in either physical or financial terms, or both c. identification of corporate objectives d. a comprehensive financial plan ANS: A PTS: 1 OBJ: 8-1 5. Which of the following is an operating budget? a. budgeted statement of cash flows b. capital expenditures budget c. budgeted income statement d. cash budget ANS: C PTS: 1 OBJ: 8-2 6. What is the formula used to compute the units to be produced? a. Units produced = Units sold b. Units produced = Units sold + Units in beginning inventory + Units in ending inventory c. Units produced = Units sold + Units in beginning inventory Units in ending inventory d. Units Produced = Units sold Units in beginning inventory + Units in ending inventory ANS: D PTS: 1 OBJ: 8-2 This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. 7. General Corporation manufactures boxes. The estimated number of boxes sold for the first three months of 20011 are: Month Sales January 3,000 February 4,200 March 3,900 Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal to 20 percent of the next month's sales. General Corporation expects to sell the boxes for $5 each. April 2006 sales is projected at 4,500 boxes. What is the expected sales revenue for March? a. $15,000 b. $21,000 c. $19,500 d. $4,500 ANS: C SUPPORTING CALCULATIONS: 3,900 $5 = $19,500 PTS: 1 OBJ: 8-2 8. Canceco Company produces and sells pillows. It expects to sell 10,000 pillows in the year 2011 and had 1,000 pillows in finished goods inventory at the end of 2010. Canceco would like to complete op- erations in the year 2011 with at least 1,250 completed pillows in inventory. There is no ending work- in-process inventory. The pillows sell for $5 each.in-process inventory....
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This note was uploaded on 01/19/2012 for the course ACC 3302 taught by Professor Pence during the Fall '10 term at University of Houston - Downtown.
- Fall '10