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Exam 8: Budgetary Planning

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Question 61

Multiple Choice

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A top-down approach to budgeting is one that is:

A) participative.
B) motivational.
C) imposed.
D) tight.

E) All of the above
F) A) and C)

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Question 62

True/False

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The budget translates a company's objectives into financial terms.

A) True
B) False

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Question 63

Multiple Choice

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Which of the following terms is generally not used to describe the forward-oriented nature of the budgeting process?

An advantage of budgeting is that it provides a benchmark for evaluating performance.

Parker Corp. ,which operates on a calendar year,expects to sell 4,000 units in October,and expects sales to increase 20% each month thereafter.Sales price is expected to stay constant at $8 per unit.What are budgeted revenues for the fourth quarter?

Which of the following is not a component of the cash budget?

Budgeted production is calculated by:

Jeremy Inc.produces leather handbags.The production budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Each handbag requires 0.5 square meters of leather.Jeremy Inc.'s leather inventory policy is 30% of next month's production needs.If the leather policy is met,what will the July 1 inventory be?

Which of the following sequences is correct?

Gertrude Products expects the following sales of its single product: Gertrude desires an ending finished goods inventory to be equal to 10% of the next month's sales needs.July 1 inventory is projected to be 800 units.Each unit requires 5 pounds of Chemical A and 14 pounds of Chemical B.July 1 materials inventory includes 8,600 pounds of Chemical A and 76,000 pounds of Chemical B.Gertrude desires to maintain a Chemical A inventory equal to 20% of next month's production needs and a Chemical B inventory equal to 100% of next month's production needs. a.Prepare a production budget for Gertrude for as many months as is possible. b.Prepare a direct materials purchases budget for both Chemical A and Chemical B for the months of July through September.

Sugar Co.has forecast sales for the next four months as follows: July 4,000 units,August 6,000 units,September 7,500 units,and October 8,000 units.Sugar's policy is to have an ending inventory of 40% of the next month's sales needs on hand.July 1 inventory is projected to be 1,500 units.Manufacturing overhead is budgeted to be $17,000 plus $5 per unit produced. a.Prepare a production budget for Sugar for as many months as is possible. b.Prepare a manufacturing overhead budget for the three months July - September.Be sure to include a total for the quarter as well.

Crest Products expects the following sales of its single product: Crest desires an ending finished goods inventory to be equal to 30% of the next month's sales needs.August 1 inventory is projected to be 7,800 units.Each finished unit requires 2 units of component X and 11 units of component Z.August 1 materials inventory includes 5,000 units of component X and 184,000 units of component Z.Crest desires to maintain a component X inventory equal to 10% of next month's production needs and a component Z inventory equal to 70% of next month's production needs. a.Prepare a production budget for Crest for as many months as is possible. b.Prepare a direct materials purchases budget for both Component X and Component Z for the months of August through October.

________ are the specific goals that managers want to achieve over a 5- to 10-year horizon.

The direct labor budget is based on budgeted sales levels.

Which of the following budgets do not provide information needed for the budgeted balance sheet?

Jaybird Inc.produces leather handbags.The sales budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Jaybird Inc.'s ending finished goods inventory policy is 10% of the following month's sales.Each handbag requires 1.3 hours of unskilled labor (paid $8 per hour) and 2.2 hours of skilled labor (paid $15 per hour) .What will be the total labor cost for the month of August?

Control is a forward-looking process while planning is a backward-looking one.

Jackson Inc.produces leather handbags.The production budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Each handbag requires 0.5 square meters of leather.Jackson Inc.'s leather inventory policy is 30% of next month's production needs.On July 1 leather inventory was expected to be 1,000 square meters.What will leather purchases be in July?

A ________ is the vision of what management wants the organization to achieve over the long term.

Which of the following budgets would not exist for a merchandising firm?