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56) In a company that employs continuous budgeting on a quarterly basis and has an accounting period
that ends December 31 of each year, what period would the first revision and update to the January
through December 2017 budget cover?
A) December 2017-November 2018
B) February 2017-January 2018
C) March 2017-February 2018
D) April 2017-March 2018
E) January 2018-December 2018
57) The most useful budget figures are developed:
A) By the budget committee.
B) From the "bottom-up" following a participatory process.
C) By the CEO.
D) After the accounting period has begun.
E) From the "top-down".
58) The practice of preparing budgets for each of several future periods and revising those budgets as
each period is completed, adding a new budget each period so that the budgets always cover the
same number of future periods, is called:
A) Balanced budgeting.
B) Participatory budgeting.
C) Primary budgeting.
D) Capital budgeting.
E) Continuous budgeting.
59) The usual budget period for most companies is:
A) An annual period separated into quarterly and monthly budgets.
B) A monthly period separated into daily budgets.
C) A quarterly period separated into weekly budgets.
D) An annual period of 250 working days.
E) An annual period separated into weekly budgets.
60) Assuming a bottom-up process of budget development, which of the following should be initially
responsible for developing sales estimates?
A) The accounting department.
B) Top management.
C) The budget committee.
D) The marketing department.
E) The sales department.
61) The master budgeting process typically begins with the sales budget and ends with a cash budget
and:
A) Budgeted financial statements.
B) Rolling budget.
C) Forecast budget.
D) Capital expenditures budget.
E) Production budget.
62) Operating budgets include all the following budgets except the:
A) Cash budget.
B) Production budget.
C) General and administrative expense budget.
D) Sales budget.
E) Selling expense budget.
63) Operating budgets include all the following except the:
A) Budgeted balance sheet.
B) Sales budget.
C) General and administrative expense budget.
D) Selling expense budget.
E) Production budget.
64) The master budget of a merchandising company includes a:
A) Direct materials budget.
B) Purchases budget.
C) Production budget.
D) Factory overhead budget.
E) Direct labor budget.
65) The usual starting point for preparing a master budget is forecasting or estimating:
A) Expenditures.
B) Income.
C) Production.
D) Sales.
E) Cash payments.
66) The master budget process usually ends with:
A) The selling expense budget.
B) The production budget.
C) The budgeted balance sheet.
D) The overhead budget.
E) The sales budget.
67) Which of the following budgets is not an operating budget?
A) Sales budget.
B) Production budget.
C) Cash budget.
D) Selling expenses budget.
E) General and administrative expense budget.
68) A budget system based on expected activities and their levels that enables management to plan for
resources required to perform the activities is:
A) Cash budgeting.
B) Master budgeting.
C) Traditional budgeting.
D) Activity-based budgeting.
E) Management budgeting.
69) A plan that lists the types and amounts of operating expenses expected that are not included in the
selling expenses budget is a:
A) Sales budget.
B) Cash payments budget.
C) Selling expense budget.
D) General and administrative expense budget.
E) Overhead budget.
70) Cameroon Corp. manufactures and sells electric staplers for $16 each. If 10,000 units were sold in
December, and management forecasts 4% growth in sales each month, the dollar amount of electric
stapler sales budgeted for February should be:
A) $166,400 B) $173,056 C) $160,000 D) $187,177 E) $179,978
71) Cameroon Corp. manufactures and sells electric staplers for $16 each. If 10,000 units were sold in
December, and management forecasts 4% growth in sales each month, the number of electric
stapler sales budgeted for March should be:
A) 11,249 B) 10,400 C) 10,000 D) 10,816 E) 11,000
72) Cameroon Corp. manufactures and sells electric staplers for $16 each. If 10,000 units were sold in
December, and management forecasts 4% growth in sales each month, the number of electric
stapler sales budgeted for February should be:
A) 10,000 B) 10,816 C) 11,249 D) 11,000 E) 10,400
73) A July sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit. The
management forecasts 2% growth in sales each month. Total July sales are anticipated to be:
A) $60,000. B) $64,260. C) $61,250. D) $67,500. E) $63,000.
74) A July sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit. The
management forecasts 2% growth in sales each month. Total August sales are anticipated to be:
A) $67,500. B) $64,260. C) $61,250. D) $60,000. E) $63,000.
32
July
August
September
5,000
5,700
5,560
July
August
September
5,000
5,700
5,560
75) Bengal Co. provides the following sales forecast for the next three months:
Sales units
The company wants to end each month with ending finished goods inventory equal to 25% of the
next month's sales. Finished goods inventory on June 30 is 1,250 units. The budgeted production
units for July are:
A) 6,425 units.
B) 6,250 units.
C) 5,175 units.
D) 3,750 units.
E) 2,500 units.
76) Bengal Co. provides the following sales forecast for the next three months:
Sales units
The company wants to end each month with ending finished goods inventory equal to 25% of the
next month's sales. Finished goods inventory on June 30 is 1,250 units. The budgeted production
units for August are:
A) 4,135 units.
B) 6,950 units.
33
January
February
March
3,000
4,200
5,000
C) 5,665 units.
D) 4,310 units.
E) 7,090 units.
77) Aloan Co. provides the following sales forecast for the next three months:
Sales units
The company wants to end each month with ending finished goods inventory equal to 10% of the
next month's sales. Finished goods inventory on December 31 is 300 units. The budgeted production
units for January are:
A) 3,120 units.
B) 2,880 units.
C) 3,720 units.
D) 3,420 units.
E) 3,000 units.
January
February
March
3,000
4,200
5,000
78) Aloan Co. provides the following sales forecast for the next three months:
Sales units
The company wants to end each month with ending finished goods inventory equal to 10% of the
next month's sales. Finished goods inventory on December 31 is 300 units. The budgeted production
units for February are:
A) 4,120 units.
B) 4,700 units.
C) 5,000 units.
D) 4,200 units.
E) 4,280 units.
79) A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to
be spent on purchasing additional plant assets is called a:
A) Production budget.
B) Cash budget.
C) Rolling budget.
D) Sales budget.
E) Capital expenditures budget.
80) Flack Corporation, a merchandiser, provides the following information for its December budgeting
process:
The November 30 inventory was 1,800 units.
Budgeted sales for December are 4,000 units.
Desired December 31 inventory is 2,840 units.
Budgeted purchases are:
A) 4,000 units.
B) 5,040 units.
C) 1,240 units.
D) 5,800 units.
E) 6,840 units.
81) A plan that reports the units or costs of merchandise to be purchased by a merchandising company
during the budget period is called a:
A) Sales budget.
B) Cash budget.
C) Capital expenditures budget.
D) Merchandise purchases budget.
E) Selling expenses budget.
82) A plan showing the planned sales units and the revenue to be derived from these sales, and is the
usual starting point in the budgeting process, is called the:
A) Business plan.
B) Sales budget.
C) Merchandise purchases budget.
D) Operating budget.
E) Income statement budget.
39
83) A plan that lists the types and amounts of selling expenses expected during the budget period is
called a(n):
A) General and administrative budget.
B) Purchases budget.
C) Selling expense budget.
D) Sales budget.
E) Capital expenditures budget.
84) Which of the following factors is least likely to be considered in preparing a sales budget?
A) Forecasted economic and market conditions.
B) Proposed selling expenses, such as advertising.
C) Prediction of unit sales.
D) Business capacity.
E) The capital expenditures budget.
85) A department store has budgeted sales of 12,000 men's suits in September. Management wants to
have 6,000 suits in inventory at the end of the month to prepare for the winter season. Beginning
inventory for September is expected to be 4,000 suits. What is the dollar amount of the purchase of
suits if each suit has a cost of $75.
A) $1,050,000.
B) $900,000.
C) $750,000.
D) $1,350,000.
E) $1,200,000.
