81. If the
required direct materials purchases are 24,000 pounds, the direct materials
required for production is three times the direct materials purchases, and the
beginning direct materials are three and a half times the direct materials
purchases, what are the desired ending direct materials in pounds?
a. 60,000
b. 12,000
c. 36,000
d. 24,000

82. Dart, Inc. makes
and sells umbrellas. The company is in the process of preparing its Selling and
Administrative Expense Budget for the last half of the year. The following
budget data are available:
Variable
Cost Per Unit Sold Monthly Fixed
Cost
Sales commissions $0.60 $ 6,000
Shipping 1.20
Advertising 0.30
Executive salaries 40,000
Depreciation on office equipment 8,000
Other 0.35 28,000
Expenses are paid in the month incurred. If the company has budgeted
to sell 8,000 umbrellas in October, how much is the total budgeted variable
selling and administrative expenses for October?
a. $16,800
b. $18,400
c. $101,600
d. $19,600

83. Which of the following expenses would not appear on a selling and
administrative expense budget?
a. Sales commissions
b. Depreciation
c. Property taxes
d. Indirect labor

84. Which of the following
would not appear as a fixed expense
on a selling and administrative expense budget?
a. Freight-out
b. Office salaries
c. Property taxes
d. Depreciation

85. A master budget consists of
a. an interrelated long-term plan and operating
budgets.
b. financial budgets and a long-term plan.
c. interrelated financial budgets and operating
budgets.
d. all the accounting journals and ledgers used
by a company.

86. The starting point in preparing a master
budget is the preparation of the
a. production budget.
b. sales budget.
c. purchasing budget.
d. personnel budget.

87. Which one of the following is not needed in preparing a production
budget?
a. Budgeted unit sales
b. Budgeted raw materials
c. Beginning finished goods units
d. Ending finished goods units

88. A company budgeted unit sales of 204,000
units for January, 2013 and 240,000 units for February 2013. The company has a
policy of having an inventory of units on hand at the end of each month equal
to 30% of next month’s budgeted unit sales. If there were 61,200 units of
inventory on hand on December 31, 2012, how many units should be produced in
January, 2013 in order for the company to meet its goals?
a. 214,800 units
b. 204,000 units
c. 193,200 units
d. 276,000 units

89. At January 1, 2013, Deer
Corp. has beginning inventory of 2,000 surfboards. Deer estimates it will sell 10,000
units during the first quarter of 2013 with a 12% increase in sales each
quarter. Deer’s policy is to maintain an ending inventory equal to 25% of the
next quarter’s sales. Each surfboard costs $100 and is sold for $150. How much
is budgeted sales revenue for the third quarter of 2013?
a. $450,000
b. $1,950,000
c. $1,881,600
d. $12,544

90. Doe
Manufacturing plans to sell 6,000 purple lawn chairs during May, 5,700 in June,
and 6,000 during July. The company keeps 15% of the next month’s sales as
ending inventory. How many units should Doe produce during June?
a. 5,745
b. 6,600
c. 5,655
d. Not
enough information to determine.

91. Strand
Company is planning to sell 400 buckets and produce 380 buckets during March.
Each bucket requires 500 grams of plastic and one-half hour of direct labor.
Plastic costs $10 per 500 grams and employees of the company are paid $15.00
per hour. Manufacturing overhead is applied at a rate of 110% of direct labor
costs. Strand has 300 kilos of plastic in beginning inventory and wants to have
200 kilos in ending inventory. How much is the total amount of budgeted direct
labor for March?
a. $3,000
b. $6,000
c. $2,850
d. $5,7000

92. Teller
Co. is planning to sell 900 boxes of ceramic tile, with production estimated at
870 boxes during May. Each box of tile requires 44 pounds of clay mix and a
quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of
the company are paid $12.00 per hour. Manufacturing overhead is applied at a
rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in
beginning inventory and wants to have 4,500 pounds in ending inventory.

What is the total amount to be budgeted
for manufacturing overhead for the month?
a. $2,871
b. $2,970
c. $11,484
d. $11,880

93. Teller
Co. is planning to sell 900 boxes of ceramic tile, with production estimated at
870 boxes during May. Each box of tile requires 44 pounds of clay mix and a
quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of
the company are paid $12.00 per hour. Manufacturing overhead is applied at a
rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in
beginning inventory and wants to have 4,500 pounds in ending inventory.

What is the total amount to be budgeted
for direct labor for the month?
a. $2,610
b. $10,440
c. $2,700
d. $41,760

94. Teller
Co. is planning to sell 900 boxes of ceramic tile, with production estimated at
870 boxes during May. Each box of tile requires 44 pounds of clay mix and a
quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of
the company are paid $12.00 per hour. Manufacturing overhead is applied at a
rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in
beginning inventory and wants to have 4,500 pounds in ending inventory.

What is the total amount to be budgeted
in pounds for direct materials to be purchased for the month?
a. 38,280
b. 37,680
c. 38,880
d. 40,200

95. Lorie
Nursery plans to sell 320 potted plants during April and 240 units in May. Lorie
Nursery keeps 15% of the next month’s sales as ending inventory. How many units
should Lorie Nursery produce during April?
a. 308
b. 332
c. 320
d. 356

96. Comma Co. makes and sells widgets. The
company is in the process of preparing its selling and administrative expense
budget for the month. The following budget data are available:
Item Variable
Cost Per Unit Sold Monthly
Fixed Cost
Sales commissions $1 $10,000
Shipping $3
Advertising $4
Executive salaries $120,000
Depreciation on
office equipment $4,000
Other $2 $6,000
Expenses are paid in the month
incurred. If the company has budgeted to sell 80,000 widgets in October, how
much is the total budgeted selling and administrative expenses for October?
a. $940,000
b. $140,000
c. $930,000
d. $800,000

97. Comma Manufacturing budgets on an annual basis for its fiscal
year. The following beginning and ending inventory levels are planned for the
fiscal year of July 1, 2012 to June 30, 2013:
June 30, 2013 June
30, 2012
Raw Materials 3,000 kilos 2,000
kilos
Three kilos of raw materials are needed
to produce each unit of finished product. If Comma Manufacturing plans to
produce 560,000 units during the 2012-2013 fiscal year, how many kilos of
materials will the company need to purchase for its production during the year?
a. 1,681,000
b. 1,686,000
c. 1,680,000
d. 1,678,000

98. The following
information is taken from the production budget for the first quarter:
Beginning inventory in units 1,200
Sales budgeted for the quarter 456,000
Production capacity in units 472,000
How many finished goods units should be produced during the quarter
if the company desires 3,200 units available to start the next quarter?
a. 458,000
b. 454,000
c. 474,000
d. 459,200

99. Off-Line Co. has 9,000 units in beginning
finished goods. The sales budget shows expected sales to be 36,000 units. If
the production budget shows that 42,000 units are required for production, what
was the desired ending finished goods?
a. 3,000.
b. 9,000.
c. 15,000.
d. 27,000.

100. Lion Industries required production for
June is 132,000 units. To make one unit of finished product, three pounds of
direct material Z are required. Actual beginning and desired ending inventories
of direct material Z are 300,000 and 330,000 pounds, respectively. How many
pounds of direct material Z must be purchased?
a. 378,000.
b. 396,000.
c. 408,000.
d. 426,000.

101. Haft
Construction Company determines that 54,000 pounds of direct materials are
needed for production in July. There are 3,200 pounds of direct materials on
hand at July 1 and the desired ending inventory is 2,800 pounds. If the cost
per unit of direct materials is $3, what is the budgeted total cost of direct
materials purchases?
a. 158,400.
b. 160,800.
c. 163,200.
d. 165,600.

102. Pell
Manufacturing is preparing its direct labor budget for May. Projections for the
month are that 33,400 units are to be produced and that direct labor time is
three hours per unit. If the labor cost per hour is $12, what is the total
budgeted direct labor cost for May?
a. 1,159,200.
b. 1,180,800.
c. 1,202,400.
d. 1,296,000.

103. Dolce Co. estimates its sales at 180,000
units in the first quarter and that sales will increase by 18,000 units each
quarter over the year. They have, and desire, a 25% ending inventory of
finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of
the credit customers pay within the quarter. The remainder is received in the
quarter following sale.

Production in units for the third
quarter should be budgeted at
a. 220,500.
b. 207,000.
c. 274,500.
d. 216,000.

104. Dolce
Co. estimates its sales at 180,000 units in the first quarter and that sales
will increase by 18,000 units each quarter over the year. They have, and
desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40%
of the sales are for cash. 70% of the credit customers pay within the quarter.
The remainder is received in the quarter following sale.

Cash collections for the third quarter
are budgeted at
a. $3,051,000.
b. $4,428,000.
c. $5,319,000.
d. $6,156,000.

105. Bear,
Inc. estimates its sales at 200,000 units in the first quarter and that sales
will increase by 20,000 units each quarter over the year. They have, and
desire, a 25% ending inventory of finished goods. Each unit sells for $35. 40%
of the sales are for cash. 70% of the credit customers pay within the quarter.
The remainder is received in the quarter following sale.

Production in units for the third
quarter should be budgeted at
a. 245,000.
b. 230,000.
c. 305,000.
d. 240,000.

106. Bear,
Inc. estimates its sales at 200,000 units in the first quarter and that sales
will increase by 20,000 units each quarter over the year. They have, and
desire, a 25% ending inventory of finished goods. Each unit sells for $35. 40%
of the sales are for cash. 70% of the credit customers pay within the quarter.
The remainder is received in the quarter following sale.

Cash collections for the third quarter
are budgeted at
a. $4,746,000.
b. $6,888,000.
c. $8,274,000.
d. $9,576,000.

107. A
company determined that the budgeted cost of producing a product is $30 per
unit. On June 1, there were 80,000 units on hand, the sales department budgeted
sales of 300,000 units in June, and the company desires to have 120,000 units
on hand on June 30. The budgeted cost of goods manufactured for June would be
a. $7,800,000.
b. $11,400,000.
c. $9,000,000.
d. $10,200,000.

108. Of the following items, which one is not
obtained from an individual operating budget?
a. Selling and administrative expenses
b. Accounts receivable
c. Cost of goods sold
d. Sales

109. Which of the following statements about a
budgeted income statement is not
true?
a. The budgeted income statement is prepared
after the financial budgets are prepared.
b. The budgeted income statement is prepared on
the accrual basis of accounting.
c. The budgeted income statement can be prepared
in a multiple-step format.
d. The budgeted income statement is prepared
using the individual operating budgets.

110. A company has budgeted
direct materials purchases of $300,000 in July and $480,000 in August. Past
experience indicates that the company pays for 70% of its purchases in the
month of purchase and the remaining 30% in the next month. During August, the
following items were budgeted:
Wages Expense $150,000
Purchase of office equipment 72,000
Selling and Administrative Expenses 48,000
Depreciation Expense 36,000
The
budgeted cash disbursements for August are
a. $648,000.
b. $426,000.
c. $696,000.
d. $732,000.

111. Astor Manufacturing has the following
budgeted sales: January $120,000, February $180,000, and March $150,000. 40% of
the sales are for cash and 60% are on credit. For the credit sales, 50% are
collected in the month of sale, and 50% the next month. The total expected cash
receipts during March are:
a. $168,000.
b. $159,000.
c. $157,500.
d. $150,000.

112. Garnett Co. expects
to purchase $180,000 of materials in July and $210,000 of materials in August.
Three-fourths of all purchases are paid for in the month of purchase, and the
other one-fourth are paid for in the month following the month of purchase.
How much will August’s cash disbursements for materials purchases be?
a. $135,000
b. $157,500
c. $202,500
d. $210,000

113. The single most important output in
preparing financial budgets is the
a. sales forecast.
b. determination of the unit cost of the
product.
c. cash budget.
d. budgeted income statement.

114. Which of the following does not
appear as a separate section on the cash budget?
a. Cash receipts
b. Cash disbursements
c. Capital expenditures
d. Financing

115. The financing section of a cash budget is
needed if there is a cash deficiency or if the ending cash balance is less than
a. the prior years.
b. management’s minimum required balance.
c. the amount needed to avoid a service charge
at the bank.
d. the industry average.

116. Beginning cash balance plus total receipts
a. equals ending cash balance.
b. must equal total disbursements.
c. equals total available cash.
d. is the excess of available cash over
disbursements.

117. The projection of financial position at the
end of the budget period is found on the
a. budgeted income statement.
b. cash budget.
c. budgeted balance sheet.
d. sales budget.

118. What is the proper preparation sequencing
of the following budgets?
1. Budgeted Balance Sheet
2. Sales Budget
3. Selling and Administrative Budget
4. Budgeted Income Statement
a. 1, 2, 3, 4
b. 2, 3, 1, 4
c. 2, 3, 4, 1
d. 2, 4, 1, 3

119. Kam Department Store reported the following information for 2013:
October November December
Budgeted
sales $1,240,000 $1,160,000 $1,440,000
·
All sales are on credit.
·
Customer amounts on account are
collected 50% in the month of saleand 50% in the following month.
How much cash will Kam receive in November?
a. $580,000
b. $1,300,000
c. $1,200,000
d. $1,160,000

120. The following information was taken from Southgate
Industry’s cash budget for the month of July:
Beginning cash balance $480,000
Cash receipts 304,000
Cash disbursements 544,000
If
the company has a policy of maintaining a minimum end of the month cash balance
of $400,000, the amount the company would have to borrow is
a. $160,000.
b. $80,000.
c. $240,000.
d. $96,000.

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