Texas A&M International University

ACC 2302

Quiz 5

Chapter 21 Budgeting

1)A formal written statement of management's plans for the future, expressed in financial terms, is a

1. 1. gross profit report
   2. responsibility report
   3. budget
   4. performance report
2. The budget process involves doing all of the following except
   1. establishing specific goals
   2. executing plans to achieve the goals
   3. periodically comparing actual results with the goals
   4. dismissing all managers who fail to achieve operational goals specified in the budget
3. The budgetary unit of an organization which is led by a manager who has both the authority over and responsibility for the unit's performance is known as a
   1. control center
   2. budgetary area
   3. responsibility center
   4. managerial department
4. When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing
   1. budgetary slack
   2. padding
   3. goal conflict
   4. cushions
5. Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem?
   1. setting goals among managers that conflict with one another
   2. setting goals too tightly making it difficult to meet performance expectation
   3. allowing employees the opportunity to be a part of the budget process
   4. allowing goals to be so low that employees develop a “spend it or lose it” attitude
6. Which of the following budgets allow for adjustments in activity levels?
   1. static budget
   2. continuous budget
   3. zero-based budget
   4. flexible budget
7. A variant of fiscal-year budgeting whereby a twelve-month projection into the future is maintained at all times is termed
   1. flexible budgeting
   2. continuous budgeting
   3. zero-based budgeting
   4. master budgeting
8. Jase Manufacturing Co.'s static budget for 10,000 units of production includes $40,000 for direct labor and $4,000 for variable electric power. Total fixed costs are $24,000. At 12,000 units of production, a flexible budget would show
   1. variable costs of $52,800 and $29,000 of fixed costs
   2. variable costs of $44,000 and $24,000 of fixed costs

8. 3. variable costs of $52,800 and $24,000 of fixed costs
   4. variable and fixed costs totaling $68,000
9. Miller and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of

$24,000. A flexible budget for 12,000 units of production would show

9. 1. the same cost structure in total
   2. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $28,800
   3. total variable costs of $148,000
   4. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000
10. If budgeted beginning inventory is $8,000, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted production should be

a.    $1,400

b.   $9,600

c.     $11,660

d.   $11,550

11. At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct materials of $165,000, and fixed factory overhead of $15,000 for 9,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?

a.    $416,000

b.   $370,556

c.     $368,889

d.   $335,000

12. The production budgets are used to prepare which of the following budgets?
    1. operating expenses
    2. direct materials purchases, direct labor cost, and factory overhead cost
    3. sales in dollars
    4. sales in units
13. The first budget customarily prepared as part of an entity's master budget is the
    1. production budget
    2. cash budget
    3. sales budget
    4. direct materials purchases
14. Motorcycle Manufacturers, Inc. projected sales of 78,000 machines for the year. The estimated January 1 inventory is 6,500 units, and the desired December 31 inventory is 6,000 units. What is the budgeted production (in units) for the year?

a.    78,500

b.   70,000

c.     77,500

d.   70,500

15. The operating budgets of a company includes the
    1. cash budget
    2. capital expenditures budget
    3. financing budget
    4. production budget
16. Which of the following budgets is not directly associated with the production budget?
    1. direct materials purchases budget
    2. sales budget
    3. capital expenditures budget