Question 1

The following information has been provided by Buffalo Company: • Direct labour: $100 000
• Direct materials used: $40 000
• Direct materials purchased: $67 000
• Cost of goods manufactured: $199 000
• Ending work in process: $46 000
• Corporate headquarters' property rates: $6 000
• Manufacturing overhead: $79 000
How much was Buffalo's beginning work in process?

Accepted Answer

A)  $42 000
B)  $26 000
C)  $20 000
D)  $66 000E) A) and C)
F) None of the above

Question 2

All of the following are examples of manufacturing overhead EXCEPT for:

Accepted Answer

A)  indirect materials.
B)  wages of assembly line workers.
C)  electricity and gas incurred in the factory.
D)  insurance on factory equipment.E) B) and C)
F) A) and C)

Question 3

Managerial accounting includes the controlling function. Which of the following items would be part of the controlling function of a business's managerial accounting?

Accepted Answer

A)  Devising marketing and production plans
B)  Setting product prices
C)  Creating detailed budgets
D)  Comparing actual performance to previously budgeted amountsE) All of the above
F) B) and C)

Question 4

Argyle Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Variable and fixed expenses are as follows:
Variable: Power cost (40% of Sales) 
Miscellaneous expenses (5% of Sales) 
Fixed: Salary expense: $8 000 per month Rent expense: $5 000 per month
Depreciation expense: $1 200 per month Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1 000 per month
How much is the total operating expense for January?

Accepted Answer

A)  $47 500
B)  $43 000
C)  $41 700
D)  $38 500E) B) and C)
F) All of the above

Question 5

Caribbean Tool and Die Company's forecasted sales for April, May, June and July are $150 000, $225 000, $180 000, and $210 000, respectively. Sales are 50% cash and 50% credit with all accounts receivables collected in the month following the sale.
What are the cash collections budgeted for June?

Accepted Answer

A)  $202 500
B)  $112 500
C)  $220 000
D)  $180 000E) A) and D)
F) All of the above

Question 6

Which of the following best describes the term sensitivity analysis?

Accepted Answer

A)  An evaluation of the accuracy of the data's assumptions
B)  An analysis of the emotional sensitivity of a company's employees
C)  Testing data to determine how results would differ if key assumptions are changed
D)  Evaluating a company's financial condition by doing financial statement ratio analysisE) A) and D)
F) A) and C)

Question 7

Budget preparation is a part of the planning process.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following applies to goods that are partially completed?

Accepted Answer

A)  Materials inventory
B)  Finished goods inventory
C)  Inventory
D)  Work in process inventoryE) A) and D)
F) A) and C)

Question 9

Which of the following is NOT a characteristic of the budgeting process?

Accepted Answer

A)  The budget process helps coordinate the activities of the organisation.
B)  The budget process ensures that the business will make a profit.
C)  The budget process forces management to plan ahead.
D)  The budget process aids in performance evaluation.E) C) and D)
F) A) and C)

Question 10

Which of the following budgets focuses on the income statement and its supporting schedules?

Accepted Answer

A)  Cash budget
B)  Sales budget
C)  Operating budget
D)  Capital expenditures budgetE) All of the above
F) A) and B)

Question 11

Management is accountable to its employees in which of the following ways?

Accepted Answer

A)  Providing products that are safe and free of defects
B)  Providing a return on the owners' investment
C)  Providing a safe workplace
D)  Ensuring the business is environmentally responsible for impacts on the communityE) B) and C)
F) A) and D)

Question 12

Managerial accounting is focused on which of the following objectives?

Accepted Answer

A)  Providing summarised results of operations
B)  Providing information that managers need to make operational decisions
C)  Providing information to comply with laws and regulations of government bodies
D)  Providing historical data to investors and creditorsE) A) and B)
F) None of the above

Question 13

For a manufacturing business, which of the following would not be considered an inventoriable product cost?

Accepted Answer

A)  Sales commission
B)  Direct labour
C)  Factory electricity and gas
D)  Indirect materialsE) All of the above
F) A) and B)

Question 14

Which of the following statements about budgeting is INCORRECT?

Accepted Answer

A)  Budgets help to coordinate the activities of the entire organisation.
B)  Budgeting is an accounting function and does not need involvement of operations personnel.
C)  Budgets promote communication and coordination between departments.
D)  Budgeting is an aid to planning and control.E) C) and D)
F) None of the above

Question 15

Which of the following statements is TRUE about the operating budget?

Accepted Answer

A)  It includes the capital expenditures budget.
B)  It is a part of the financial budget.
C)  Its final component is the cash budget.
D)  It includes the operating expenses budget.E) B) and D)
F) B) and C)

Question 16

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for the Cash account, which document should be used?

Accepted Answer

A)  Inventory, purchases and cost of sales budget
B)  Sales budget
C)  Cash budget
D)  Budgeted income statementE) A) and D)
F) A) and C)

Question 17

Farmington Enterprises has budgeted sales for the months of September and October at $300 000 and $280 000, respectively. Monthly sales are 80% credit and 20% cash. Of the credit sales, 50% are collected in the month of sale and 50% are collected in the following month. What are the October cash collections from customers?

Accepted Answer

A)  $290 000
B)  $288 000
C)  $168 000
D)  $232 000E) A) and B)
F) All of the above

Question 18

The capital expenditures budget is part of the operating budget.

Accepted Answer

A) True 
 B)False

Question 19

Lan Corporation had beginning inventory of $42 000 and expects cost of sales of $96 000 units during the month. Desired ending inventory is $31 000. How much inventory should Lan Corporation purchase?

Accepted Answer

A)  $73 000
B)  $65 000
C)  $85 000
D)  $107 000E) B) and C)
F) A) and B)

Question 20

Which of the following statements is INCORRECT?

Accepted Answer

A)  Managerial accounting is used to report the company's financial position and results of operations to creditors and investors.
B)  Managerial accounting is used to plan and control business operations.
C)  Managerial accounting is used to prepare budgets.
D)  Managerial accounting is used to determine the cost of products and services.E) A) and C)
F) All of the above

Exam 19: Introduction to Managerial Accounting and the Master Budget

Correct Answer
verified

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for the Cash account, which document should be used?

Correct Answer
verified

Caribbean Tool and Die Company's forecasted sales for April, May, June and July are $150 000, $225 000, $180 000, and $210 000, respectively. Sales are 50% cash and 50% credit with all accounts receivables collected in the month following the sale. What are the cash collections budgeted for June?

Correct Answer
verified

Which of the following budgets focuses on the income statement and its supporting schedules?

Correct Answer
verified

Lan Corporation had beginning inventory of $42 000 and expects cost of sales of $96 000 units during the month. Desired ending inventory is $31 000. How much inventory should Lan Corporation purchase?

Correct Answer
verified

Managerial accounting includes the controlling function. Which of the following items would be part of the controlling function of a business's managerial accounting?

Correct Answer
verified

For a manufacturing business, which of the following would not be considered an inventoriable product cost?

Correct Answer
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Correct Answer
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Managerial accounting is focused on which of the following objectives?

Correct Answer
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Which of the following best describes the term sensitivity analysis?

Correct Answer
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All of the following are examples of manufacturing overhead EXCEPT for:

Correct Answer
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Correct Answer
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Budget preparation is a part of the planning process.

Correct Answer
verified

Management is accountable to its employees in which of the following ways?

Correct Answer
verified

Which of the following statements about budgeting is INCORRECT?

Correct Answer
verified

Which of the following statements is INCORRECT?

Correct Answer
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Which of the following statements is TRUE about the operating budget?

Correct Answer
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Which of the following is NOT a characteristic of the budgeting process?

Correct Answer
verified

The capital expenditures budget is part of the operating budget.

Correct Answer
verified

Which of the following applies to goods that are partially completed?

Correct Answer
verified

Exam 19: Introduction to Managerial Accounting and the Master Budget

Correct AnswerverifiedShow Answer

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for the Cash account, which document should be used?

Correct AnswerverifiedShow Answer

Caribbean Tool and Die Company's forecasted sales for April, May, June and July are $150 000, $225 000, $180 000, and $210 000, respectively. Sales are 50% cash and 50% credit with all accounts receivables collected in the month following the sale. What are the cash collections budgeted for June?

Correct AnswerverifiedShow Answer

Which of the following budgets focuses on the income statement and its supporting schedules?

Correct AnswerverifiedShow Answer

Lan Corporation had beginning inventory of $42 000 and expects cost of sales of $96 000 units during the month. Desired ending inventory is $31 000. How much inventory should Lan Corporation purchase?

Correct AnswerverifiedShow Answer

Managerial accounting includes the controlling function. Which of the following items would be part of the controlling function of a business's managerial accounting?

Correct AnswerverifiedShow Answer

For a manufacturing business, which of the following would not be considered an inventoriable product cost?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Managerial accounting is focused on which of the following objectives?

Correct AnswerverifiedShow Answer

Which of the following best describes the term sensitivity analysis?

Correct AnswerverifiedShow Answer

All of the following are examples of manufacturing overhead EXCEPT for:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Budget preparation is a part of the planning process.

Correct AnswerverifiedShow Answer

Management is accountable to its employees in which of the following ways?

Correct AnswerverifiedShow Answer

Which of the following statements about budgeting is INCORRECT?

Correct AnswerverifiedShow Answer

Which of the following statements is INCORRECT?

Correct AnswerverifiedShow Answer

Which of the following statements is TRUE about the operating budget?

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of the budgeting process?

Correct AnswerverifiedShow Answer

The capital expenditures budget is part of the operating budget.

Correct AnswerverifiedShow Answer

Which of the following applies to goods that are partially completed?

Correct AnswerverifiedShow Answer

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