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


A) Budgeted income statement
B) Direct material purchases budget
C) Ending inventory and cost of goods sold budget
D) All of these answer choices are components of the master budget.

E) A) and D)
F) A) and C)

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Pro-forma financial statements are prepared using the information developed in the budget process.These statements reflect the results of operations and the financial position of the organization as if all actions planned in the budget had occurred.Many of the master budget components provide direct input to the pro-forma financial statements. Required: For each of the following components of the financial statements,indicate which pro-forma financial statement will show the item Income Statement or Balance Sheet and the budget within the master budget where the the item originated.Number 1 provides an example. Pro-forma financial statements are prepared using the information developed in the budget process.These statements reflect the results of operations and the financial position of the organization as if all actions planned in the budget had occurred.Many of the master budget components provide direct input to the pro-forma financial statements. Required: For each of the following components of the financial statements,indicate which pro-forma financial statement will show the item Income Statement or Balance Sheet and the budget within the master budget where the the item originated.Number 1 provides an example.

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The standard price of a product is comprised of several components including cost and quantity. Required: List the six components and explain what each includes.

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Price standards are the expected cost of...

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What is budgetary slack and why is it an issue in budget preparation?

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Budgetary slack,or budgetary padding,is ...

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Which of the following is not a step in preparing the production budget?


A) Add beginning inventory units to required units to determine the budgeted production.
B) Enter budgeted sales units from the sales budget.
C) Calculate budgeted ending inventory units for the period.
D) All of these answer choices are steps in preparing the production budget.

E) None of the above
F) A) and D)

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Describe the components of the cash budget and discuss why the cash budget is important to managers.

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The cash budget has five major component...

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Simple Styles is a dress manufacturer.The company purchases fabric with a list price of $200 per bolt and pays shipping charges of $3 per bolt.Each bolt contains 100 yards of fabric.Simply Styles receives a volume discount of 15% per bolt.Each dress uses a standard quantity of 2 yards of fabric. Required: Calculate the standard cost of material for one dress.

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[$200 + $3 - $200 x .15] = $17...

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


A) Indirect cost budget
B) Direct material purchases budget
C) Ending inventory and cost of goods sold budget
D) All of these answer choices are components of the master budget.

E) A) and D)
F) A) and B)

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The most popular way to begin the budgeting process is the incremental approach.

A) True
B) False

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Custom Design manufactures t-shirts for new parents and grandparents by turning a client's newborn baby's picture into a design on the shirt.The following information has been provided by various

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Material Purchase price $400/1...

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Mounce,Inc.produces and sells free-standing quilt frames.In budgeting for production needs,the company requires that 10% of the next month's sales be on hand at the end of each month.Budgeted sales of quilt frames over the next four months are: Mounce,Inc.produces and sells free-standing quilt frames.In budgeting for production needs,the company requires that 10% of the next month's sales be on hand at the end of each month.Budgeted sales of quilt frames over the next four months are: Budgeted production for October would be A) 26,650. B) 34,400. C) 35,100. D) 37,600. Budgeted production for October would be


A) 26,650.
B) 34,400.
C) 35,100.
D) 37,600.

E) None of the above
F) B) and D)

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In the manufacturing of swim suits,in addition to the price of fabric,the standard materials price includes all of the following items except


A) cost of shipping.
B) cost of advertising.
C) volume discount.
D) All of these answer choices are included in the standard price.

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

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Which of the following is not a step in preparing the cost of goods sold budget?


A) Add the budgeted direct materials,budgeted direct labor,and budgeted manufacturing overhead used in production to the beginning work in process balance.
B) Subtract the budgeted ending work in process balance to determine the budgeted cost of goods manufactured.
C) Add the beginning finished goods balance.
D) All of these answer choices are steps in preparing the cost of goods sold budget.

E) B) and C)
F) None of the above

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Martin,Inc.is preparing a direct labor budget for the next quarter.Which of the following items will Martin not need to complete the budget?


A) Actual sales
B) Standard hourly labor rate
C) Standard direct labor hours per unit
D) Budgeted production

E) A) and C)
F) A) and B)

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The standard cost of direct material is the


A) standard price of direct material input x standard quantity of direct material inputs.
B) standard price of direct material input x actual quantity of direct material inputs.
C) actual price of direct material input x standard quantity of direct material inputs.
D) Actual price of direct material input x actual quantity of direct material inputs.

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

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A rolling budget always includes 12 months of data and as one month ends,it is removed from the budget and the entire budget rolls forward one month.

A) True
B) False

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An imposed budget


A) tends to elicit more commitment to the budget from employees since they have had some input into its creation.
B) begins at the lowest levels of management and filters up through the organization.
C) is the least efficient method of budget preparation.
D) involves the fewest number of people in the budgeting process.

E) A) and B)
F) None of the above

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The amounts to be included in the standard price of direct labor is generally provided by


A) each employee's supervisor.
B) the plant manager.
C) the payroll department.
D) the CFO.

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

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Undesirable behavior is especially common in a bottom-up budget environment because


A) managers may be required to explain unfavorable outcomes whether or not they are in control of the factors that caused the outcomes.
B) managers have the ability to include budgetary slack to increase his or her chances of beating the budget.
C) managers may be required to explain unfavorable outcomes whether or not they are in control of the factors that caused the outcomes and managers have the ability to include budgetary slack to increase their changes of beating the budget.
D) managers may not be required to explain unfavorable outcomes whether or not they are in control of the factors that caused the outcomes and managers may not have the ability to include budgetary slack to increase their chances of beating the budget.

E) B) and D)
F) None of the above

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In setting the direct labor quantity standard,allowances are made for


A) Rest time.
B) Defective units.
C) Both rest time and defective units.
D) Neither rest time nor defective

E) A) and B)
F) C) and D)

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