Chapter 9 Profit Planning

Chapter 9 Profit Planning - Chapter 9 Profit Planning...

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Chapter 9 Profit Planning 460 Garrison, Managerial Accounting, 12th Edition True/False Questions 1. The sales budget is usually prepared before the production budget. Answer: True Level: Easy LO: 1,2,3 2. The cash budget is the starting point in preparing the master budget. Answer: False Level: Medium LO: 1,8 3. The first budget a company prepares in a master budget is the production budget. Answer: False Level: Medium LO: 1 4. One of the weaknesses of budgets is that they are of little value in uncovering potential bottlenecks in an organization. Answer: False Level: Medium LO: 1 5. One of the advantages of a self-imposed budget is that the person directly involved in an activity is more likely to be in a position to make good budget estimates. Answer: True Level: Easy LO: 1 6. The basic idea behind responsibility accounting is that top management is responsible for preparing detailed budgets by which the performance of middle and lower management will be evaluated. Answer: False Level: Easy LO: 1 7. Budgeting is a trade-off between planning and control in that increased use of budgeting will usually improve planning but will weaken control. Answer: False Level: Medium LO: 1 8. The sales budget often includes a schedule of expected cash collections. Answer: True Level: Easy LO: 2 9. Uncollectible amounts on credit sales to customers will be listed as cash outflows on the schedule of expected cash collections. Answer: False Level: Medium LO: 2
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Chapter 9 Profit Planning Garrison, Managerial Accounting, 12th Edition 461 10. The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory. Answer: True Level: Medium LO: 3 11. When preparing a direct materials budget, beginning inventory for raw materials should be added to production needs, and desired ending inventory should be subtracted to determine the amount of raw materials to be purchased. Answer: False Level: Medium LO: 4 12. The manufacturing overhead budget provides a schedule of all costs of production other than direct materials and direct labor. Answer: True Level: Easy LO: 6 13. Both variable and fixed manufacturing overhead costs are included in the selling and administrative expense budget. Answer: False Level: Medium LO: 7 14. On a cash budget, the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment. Answer: True Level: Easy LO: 8 15. In zero-base budgeting, only changes from the prior budget must be justified. Answer: False Level: Easy LO: 11
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Chapter 9 Profit Planning 462 Garrison, Managerial Accounting, 12th Edition Multiple Choice Questions 16. Which of the following budgets are prepared before the production budget? Direct Materials
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This note was uploaded on 01/23/2012 for the course ADMS 2510 taught by Professor Beavis during the Fall '08 term at York University.

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Chapter 9 Profit Planning - Chapter 9 Profit Planning...

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