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Homework answers / question archive / accounting chapter 8   Which of the following represents the normal sequence in which the indicated budgets are prepared? A

accounting chapter 8   Which of the following represents the normal sequence in which the indicated budgets are prepared? A

Accounting

accounting chapter 8

 

  1. Which of the following represents the normal sequence in which the indicated budgets are prepared?
    A. Direct Materials, Cash, Sales
    B. Production, Cash, Income Statement
    C. Sales, Balance Sheet, Direct Labor
    D. Production, Manufacturing Overhead, Sales
  2. Which of the following is not a benefit of budgeting?
    A. It reduces the need for tracking actual cost activity.
    B. It sets benchmarks for evaluation performance.
    C. It uncovers potential bottlenecks.
    D. It formalizes a manager's planning efforts.
  3. Self-imposed budgets typically are:
    A.
    not subject to review by higher levels of management since to do so would contradict the participative
    aspect of the budgeting processing.
    B.
    not subject to review by higher levels of management except in specific cases where the input of higher
    management is required.
    C.
    subject to review by higher levels of management in order to prevent the budgets from becoming too
    loose.
    D. not critical to the success of a budgeting program.
  4. Which of the following represents the correct order in which the indicated budget documents for a
    manufacturing company would be prepared?
    A. Sales budget, cash budget, direct materials budget, direct labor budget
    B. Production budget, sales budget, direct materials budget, direct labor budget
    C. Sales budget, cash budget, production budget, direct materials budget
    D.
    Selling and administrative expense budget, cash budget, budgeted income statement, budgeted balance
    sheet
  5. National Telephone company has been forced by competition to put much more emphasis on planning
    and controlling its costs. Accordingly, the company's controller has suggested initiating a formal
    budgeting process. Which of the following steps will NOT help the company gain maximum acceptance
    by employees of the proposed budgeting system?
    A. Implementing the change quickly.
    B.
    Including in departmental responsibility reports only those items that are under the department
    manager's control.
    C. Demonstrating top management support for the budgeting program.
    D.
    Ensuring that favorable deviations of actual results from the budget, as well as unfavorable deviations,
    are discussed with the responsible managers.
  6. A continuous (or perpetual) budget:
    A. is prepared for a range of activity so that the budget can be adjusted for changes in activity.
    B. is a plan that is updated monthly or quarterly, dropping one period and adding another.
    C. is a strategic plan that does not change.
    D. is used in companies that experience no change in sales.
  7. Which of the following statements is not correct?
    A. The sales budget is the starting point in preparing the master budget.
    B. The sales budget is constructed by multiplying the expected sales in units by the sales price.
    C.
    The sales budget generally is accompanied by a computation of expected cash receipts for the
    forthcoming budget period.
    D.
    The cash budget must be prepared prior to the sales budget because managers want to know the
    expected cash collections on sales made to customers in prior periods before projecting sales for the
    current period.
  8. Budgeted production needs are determined by:
    A.
    adding budgeted sales in units to the desired ending inventory in units and deducting the beginning
    inventory in units from this total.
    B.
    adding budgeted sales in units to the beginning inventory in units and deducting the desired ending
    inventory in units from this total.
    C. adding budgeted sales in units to the desired ending inventory in units.
    D. deducting the beginning inventory in units from budgeted sales in units.
  9. The budgeted amount of raw materials to be purchased is determined by:
    A.
    adding the desired ending inventory of raw materials to the raw materials needed to meet the
    production schedule.
    B.
    subtracting the beginning inventory of raw materials from the raw materials needed to meet the
    production schedule.
    C
    .
    adding the desired ending inventory of raw materials to the raw materials needed to meet the production
    schedule and subtracting the beginning inventory of raw materials.
    D.
    adding the beginning inventory of raw materials to the raw materials needed to meet the production
    schedule and subtracting the desired ending inventory of raw materials.
  10. Which of the following is not correct regarding the manufacturing overhead budget?
    A.
    Total budgeted cash disbursements for manufacturing overhead is equal to the total of budgeted
    variable and fixed manufacturing overhead.
    B. Manufacturing overhead costs should be broken down by cost behavior.
    C
    .
    The manufacturing overhead budget should provide a schedule of all costs of production other than
    direct materials and direct labor.
    D.
    A schedule showing budgeted cash disbursements for manufacturing overhead should be prepared for
    use in developing the cash budget.

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  1. Which of the following represents the normal sequence in which the indicated budgets are prepared?
    A. Direct Materials, Cash, Sales
    B. Production, Cash, Income Statement
    C. Sales, Balance Sheet, Direct Labor
    D. Production, Manufacturing Overhead, Sales

B. Production, Cash, Income Statement

  1. Which of the following is not a benefit of budgeting?
    A. It reduces the need for tracking actual cost activity.
    B. It sets benchmarks for evaluation performance.
    C. It uncovers potential bottlenecks.
    D. It formalizes a manager's planning efforts.

A. It reduces the need for tracking actual cost activity.

  1. Self-imposed budgets typically are:
    A.
    not subject to review by higher levels of management since to do so would contradict the participative
    aspect of the budgeting processing.
    B.
    not subject to review by higher levels of management except in specific cases where the input of higher
    management is required.
    C.
    subject to review by higher levels of management in order to prevent the budgets from becoming too
    loose.
    D. not critical to the success of a budgeting program.

C. Subject to review by higher levels of management in order to prevent the budgets from becoming too
loose.

  1. Which of the following represents the correct order in which the indicated budget documents for a
    manufacturing company would be prepared?
    A. Sales budget, cash budget, direct materials budget, direct labor budget
    B. Production budget, sales budget, direct materials budget, direct labor budget
    C. Sales budget, cash budget, production budget, direct materials budget
    D.
    Selling and administrative expense budget, cash budget, budgeted income statement, budgeted balance
    sheet

D. Selling and administrative expense budget, cash budget, budgeted income statement, budgeted balance
sheet

  1. National Telephone company has been forced by competition to put much more emphasis on planning
    and controlling its costs. Accordingly, the company's controller has suggested initiating a formal
    budgeting process. Which of the following steps will NOT help the company gain maximum acceptance
    by employees of the proposed budgeting system?
    A. Implementing the change quickly.
    B.
    Including in departmental responsibility reports only those items that are under the department
    manager's control.
    C. Demonstrating top management support for the budgeting program.
    D.
    Ensuring that favorable deviations of actual results from the budget, as well as unfavorable deviations,
    are discussed with the responsible managers.

A. Implementing the change quickly.

  1. A continuous (or perpetual) budget:
    A. is prepared for a range of activity so that the budget can be adjusted for changes in activity.
    B. is a plan that is updated monthly or quarterly, dropping one period and adding another.
    C. is a strategic plan that does not change.
    D. is used in companies that experience no change in sales.

B. is a plan that is updated monthly or quarterly, dropping one period and adding another.

  1. Which of the following statements is not correct?
    A. The sales budget is the starting point in preparing the master budget.
    B. The sales budget is constructed by multiplying the expected sales in units by the sales price.
    C.
    The sales budget generally is accompanied by a computation of expected cash receipts for the
    forthcoming budget period.
    D.
    The cash budget must be prepared prior to the sales budget because managers want to know the
    expected cash collections on sales made to customers in prior periods before projecting sales for the
    current period.

D. The cash budget must be prepared prior to the sales budget because managers want to know the
expected cash collections on sales made to customers in prior periods before projecting sales for the
current period.

  1. Budgeted production needs are determined by:
    A.
    adding budgeted sales in units to the desired ending inventory in units and deducting the beginning
    inventory in units from this total.
    B.
    adding budgeted sales in units to the beginning inventory in units and deducting the desired ending
    inventory in units from this total.
    C. adding budgeted sales in units to the desired ending inventory in units.
    D. deducting the beginning inventory in units from budgeted sales in units.

A. Adding budgeted sales in units to the desired ending inventory in units and deducting the beginning
inventory in units from this total

  1. The budgeted amount of raw materials to be purchased is determined by:
    A.
    adding the desired ending inventory of raw materials to the raw materials needed to meet the
    production schedule.
    B.
    subtracting the beginning inventory of raw materials from the raw materials needed to meet the
    production schedule.
    C
    .
    adding the desired ending inventory of raw materials to the raw materials needed to meet the production
    schedule and subtracting the beginning inventory of raw materials.
    D.
    adding the beginning inventory of raw materials to the raw materials needed to meet the production
    schedule and subtracting the desired ending inventory of raw materials.

C. Adding the desired ending inventory of raw materials to the raw materials needed to meet the production
schedule and subtracting the beginning inventory of raw materials.

  1. Which of the following is not correct regarding the manufacturing overhead budget?
    A.
    Total budgeted cash disbursements for manufacturing overhead is equal to the total of budgeted
    variable and fixed manufacturing overhead.
    B. Manufacturing overhead costs should be broken down by cost behavior.
    C
    .
    The manufacturing overhead budget should provide a schedule of all costs of production other than
    direct materials and direct labor.
    D.
    A schedule showing budgeted cash disbursements for manufacturing overhead should be prepared for
    use in developing the cash budget.

A. Total budgeted cash disbursements for manufacturing overhead is equal to the total of budgeted
variable and fixed manufacturing overhead

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