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CMA Budget preparation SU2Author: hassan kHALED
Keywords: , , , , , , online teaching
1. the master budget is
A) A compilation of all the separate operationaland financial budget schedules of the organization
B) . The booklet containing budget guidelines,policies, and forms to use in the budgetingprocess
C) The current budget updated for operations forpart of the current year.
D) The current budget updated for operations forpart of the current year.
2. . A continuous (rolling) budget
A) Presents the plan for only one level of activity nd does not adjust to changes in the level of activity.
B) Presents the plan for a range of activity so theplan can be adjusted for changes in activity.
C) Is a plan that is revised monthly or quarterly,dropping one period and adding another
D) Is one of the budgets that is part of along-range strategic plan, unchanged unless the strategy of the company changes.
3. Harvest, Inc. pays out sales commissions to its sales team in the month the company receives cash for payment. These commissions equal 5%25 of total (monthly) cash inflows as a result of sales. Harvest has budgeted sales of $300,000 for August, $400,000 for September, and $200,000 for October. Approximately half of all sales are on credit, and the other half are cash sales. Experience indicates that 70%25. of the budgeted credit sales will be collected in the month following the sale, 20%25 the month after that, and 10%25 of the sales will be uncollectible. Based on this information, what should be the total amount of sales commissions paid out by Harvin in the month of October?
4. Pro forma financial statements are part of the budgeting process. Normally, the last pro forma statement prepared is the
A) Capital expenditure plan.
B) Statement of cash flows
C) Statement of cost of goods sold.
D) Income statement
5. Selocom Imports uses flexible budgeting for the control of costs. The company%27s annual master budget includes $324,000 for fixed production supervisory salaries at a volume of 180,000 units. Supervisory salaries are expected to be incurred uniformly throughout the year. During the month of September, 15,750 units were produced, and production supervisory salaries incurred were $28,000. A performance report for September would reflect a budget variance of
A) $350 favorable.
B) $350 unfavorable.
C) $1,000 favorable.
D) $1,000 unfavorable.
6. When sales volume is seasonal in nature, certain items in the budget must be coordinated. The three most significant items to coordinate in budgeting seasonal sales volume are
A) Raw material inventory, work-in-processinventory, and production volume.
B) Production volume, finished goods inventory,and sales volume.
C) Raw material inventory, direct labor hours, andmanufacturing overhead costs.
D) Direct labor hours, work-in-process inventory,and sales volume.
7. HanzBerg Company has developed the following sales projections for the calendar year. May $100,000 June 120,000 July 140;000 August 160,000 September 150,000 October 130,000 Normal cash collection experience has been that 50%25 of sales are collected during the month of sale and 45%25 in the month following sale. The remaining 5%25 of sales is never collected. HanzBerg%27s budgeted cash collections for the third calendar quarter are
8. . Jihan sales budget shows quarterly sales for the next year as follows Quarter units 1 10,000 2 8,000 3 12,000 4 14,000 Company policy is to have a finished goods inventory at the end of each quarter equal to 20%25 of the next. quarter%27s sales. Budgeted production for the second quarter of the next year would be
A) 7,200 units
B) 8,000 units
C) 8,800 units.
D) 8,400 units.
9. The cash receipts budget includes
A) Funded depreciation.
B) Operating supplies.
C) Extinguishment of debt.
D) Loan proceeds
10. Each unit of Product MT--55.requires three direct labor hours. Employee benefit costs are treated as direct labor costs. Data on direct labor are Number of direct employees 25 Weekly productive hours per employee 35 Estimated weekly wages per employee $245 Employee benefits (related to weekly wages) 25%25 The standard direct labor cost per unit of Product MT-55 is
11. Which one of the following may be considered an independent item in the preparation of the master budget?
A) Capital investment budget.
B) Ending inventory budget.
C) Pro forma income statement.
D) Pro forma statement of financial position.
12. Maldeny Company is in the process of projecting its cash position at the end of the second quarter. Shown below is pertinent information from Maldeny%27s records. Cash balance at end of 1st quarter $36,600 Cash collections from customers for 2nd quarter 1,300,000 Accounts payable at end of 1st quarter 100,000 Accounts payable at end of 2nd quarter 75,000 All 2nd quarter costs and expenses(accrual basis) 1,200,000 Depreciation (accrued expense included above) 60,000 Purchases of equipment (for cash) 50,000 Gain on sale of asset (for cash) 5,000 Net book value of asset sold . 35,000 Repayment of notes payable 66,000 From the data above, determine Maldeny%27s projected cash balance at the end of the second quarter.
13. Celantro Company has just completed its prospective financial statements for the coming year. Relevant information is summarized below: Projected net income $100,000 Anticipated capital expenditures %27 50,000 Increase in working capital 25,000 Depreciation expense 15,000 From the information provided above, the increase in Celantro%27s cash account for the coming year will be
14. Loony Tunes manufactures a toy rabbit with moving parts and a built-in voice box. Projected sales in units for the next 5 months are as follows: Month Projected Sales in Units January 30,000 February 36,000 March 33,000 April 40,000 May 29,000 single supplier at $3.50 per rabbit. Voice boxes are purchased from another supplier at $1.00 each. Assembly labor cost is $2.00 per rabbit, and variable overhead cost is $.50 per rabbit. Fixed manufacturing overhead applicable to rabbit production is $12,000 per month. Loony%27s policy is to manufacture 1.5 times the coming month%27s projected sales every other month, starting with January (i.e., odd-numbered months) for February sales, and to manufacture 0.5 times the coming month%27s projected sales in alternate months (i.e., even-numbered months). This allows Loony to allocate limited manufacturing resources to other products as needed during the even-numbered months. Loony Tunes%27 unit production budget for toy rabbits for January is
A) 45,000 units.
B) 16,500 units.
C) 54,000 units.
D) 14,500 units.
15. The Dog feed Company is anticipating that a major supplier might. experience a strike this year. Because of the nature of the product and emphasis on quality, extra production cannot be stored as finished goods inventory. When developing a contingency budget that would anticipate a direct. materials buildup, the two most significant items that will be affected are
A) Direct materials and cash flow.
B) Production volume and direct material.
C) ASales and ending inventory.nswer_3
D) Production and cash flow.
16. Loony Tunes manufactures a toy rabbit with moving parts and a built-in voice box. Projected sales in units for the next 5 months are as follows: Month Projected Sales in Units January 30,000 February 36,000 March 33,000 April 40,000 May 29,000 single supplier at $3.50 per rabbit. Voice boxes are purchased from another supplier at $1.00 each. Assembly labor cost is $2.00 per rabbit, and variable overhead cost is $.50 per rabbit. Fixed manufacturing overhead applicable to rabbit production is $12,000 per month. Loony%27s policy is to manufacture 1.5 times the coming month%27s projected sales every other month, starting with January (i.e., odd-numbered months) for February sales, and to manufacture 0.5 times the coming month%27s projected sales in alternate months (i.e., even-numbered months). This allows Loony to allocate limited manufacturing resources to other products as needed during the even-numbered months. Loony Tunes%27 dollar production budget for toy rabbits for February is
17. Which one of the following statements regarding selling and administrative budgets is most accurate?
A) Selling and administrative budgets are usually optional.
B) Selling and administrative budgets are fixed in nature.
C) Selling and administrative budgets are difficult to allocate by month and are best presented as one number for the entire year.
D) Selling and administrative budgets need to be detailed in order that the key assumptions can be better understood.
18. Adams Manufacturing, Inc., produces farm tractors. The details of its budgeted cost of goods manufactured schedule should come from which of the following schedules?
A) Cost of goods sold plus or minus the change planned in finished goods.
B) Direct materials used, direct labor, manufacturing overhead, and work-in-process.
C) Purchases, direct labor, manufacturing overhead, finished goods, and work-in- process.
D) Purchases, raw material, work-in-process, and ifnished goods.
19. Define zero based budget (ZBB) and mention the advantages and limitations for using it