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CHAPTER 21
BUDGETARY PLANNING
SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY
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True-False Statements
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Multiple Choice Questions
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114.
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143.
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C
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120.
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96.
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121.
5
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72.
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AN
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st147.
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sg148.
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99.
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st149.
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100.
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sg150.
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101.
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sg154.
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sg156.
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sg157.
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Brief Exercises
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sg This question also appears in the Study Guide.
st This question also appears in a self-test at the student companion website.
Test Bank for Accounting, Tools for Business Decision Making, Fifth Edition
FOR INSTRUCTOR USE ONLY
21 - 2
SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY
Exercises
169.
3
AP
175.
3
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181.
3,4
AP
187.
5
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5,6
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170.
3
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4
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Completion Statements
196.
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Matching
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Short-Answer Essay
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SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
Item
Type
Item
Type
Item
Type
Item
Type
Item
Type
Item
Type
Item
Type
Learning Objective 1
1.
TF
4.
TF
31.
TF
39.
MC
42.
MC
196.
C
209.
SA
2.
TF
5.
TF
37.
MC
40.
MC
147.
MC
197.
C
3.
TF
6.
TF
38.
MC
41.
MC
148.
MC
208.
Ma
Learning Objective 2
7.
TF
13.
TF
45.
MC
51.
MC
57.
MC
150.
MC
8.
TF
14.
TF
46.
MC
52.
MC
58.
MC
198.
C
9.
TF
15.
TF
47.
MC
53.
MC
59.
MC
199.
C
10.
TF
32.
TF
48.
MC
54.
MC
60.
MC
200.
C
11.
TF
43.
MC
49.
MC
55.
MC
61.
MC
201.
C
12.
TF
44.
MC
50.
MC
56.
MC
149.
MC
202.
C
Learning Objective 3
16.
TF
63.
MC
75.
MC
87.
MC
99.
MC
170.
Ex
203.
C
17.
TF
64.
MC
76.
MC
88.
MC
100.
MC
171.
Ex
204.
C
18.
TF
65.
MC
77.
MC
89.
MC
101.
MC
172.
Ex
205.
C
19.
TF
66.
MC
78.
MC
90.
MC
102.
MC
173.
Ex
210.
SA
20.
TF
67.
MC
79.
MC
91.
MC
103.
MC
174.
Ex
213.
SA
21.
TF
68.
MC
80.
MC
92.
MC
151.
MC
175.
Ex
214.
SA
22.
TF
69.
MC
81.
MC
93.
MC
152.
MC
176.
Ex
23.
TF
70.
MC
82.
MC
94.
MC
159.
BE
177.
Ex
24.
TF
71.
MC
83.
MC
95.
MC
160.
BE
178.
Ex
33.
TF
72.
MC
84.
MC
96.
MC
161.
BE
179.
Ex
34.
TF
73.
MC
85.
MC
97.
MC
162.
BE
180.
Ex
62.
MC
74.
MC
86.
MC
98.
MC
169.
Ex
181.
Ex
Budgetary Planning
FOR INSTRUCTOR USE ONLY
21 - 3
Learning Objective 4
25.
TF
108.
MC
153.
MC
182.
Ex
107.
MC
109.
MC
181.
Ex
183.
Ex
Learning Objective 5
26.
TF
113.
MC
121.
MC
129.
MC
154.
MC
168.
BE
189.
Ex
27.
TF
114.
MC
122.
MC
130.
MC
155.
MC
182.
Ex
190.
Ex
35.
TF
115.
MC
123.
MC
131.
MC
156.
MC
183.
Ex
191.
Ex
104.
MC
116.
MC
124.
MC
132.
MC
163.
BE
184.
Ex
192.
Ex
106.
MC
117.
MC
125.
MC
133.
MC
164.
BE
185.
Ex
193.
Ex
110.
MC
118.
MC
126.
MC
134.
MC
165.
BE
186.
Ex
206.
C
111.
MC
119.
MC
127.
MC
135.
MC
166.
BE
187.
Ex
112.
MC
120.
MC
128.
MC
136.
MC
167.
BE
188.
Ex
Learning Objective 6
28.
TF
36.
TF
139.
MC
142.
MC
145.
MC
158.
MC
195.
Ex
29.
TF
137.
MC
140.
MC
143.
MC
146.
MC
193.
Ex
207.
C
30.
TF
138.
MC
141.
MC
144.
MC
157.
MC
194.
Ex
Note: TF = True-False BE = Brief Exercise C = Completion
MC = Multiple Choice Ex = Exercise Ma = Matching
SA = Short-Answer Essay
CHAPTER LEARNING OBJECTIVES
1. Identify the benefits of budgeting. The primary advantages of budgeting are that it (a)
requires management to plan ahead, (b) provides definite objectives for evaluating
performance, (c) creates an early warning system for potential problems, (d) facilitates
coordination of activities, (e) results in greater management awareness, and (f) motivates
personnel to meet planned objectives.
2. State the essentials of effective budgeting. The essentials of effective budgeting are (a)
sound organizational structure, (b) research and analysis, and (c) acceptance by all levels of
management.
3. Identify the budgets that comprise the master budget. The master budget consists of the
following budgets: (a) sales, (b) production, (c) direct materials, (d) direct labor, (e) manu-
facturing overhead, (f) selling and administrative expense, (g) budgeted income statement, (h)
capital expenditure budget, (i) cash budget, and (j) budgeted balance sheet.
4. Describe the sources for preparing the budgeted income statement. The budgeted
income statement is prepared from (a) the sales budget, (b) the budgets for direct materials,
direct labor, and manufacturing overhead, and (c) the selling and administrative expense
budget.
5. Explain the principal sections of a cash budget. The cash budget has three sections
(receipts, disbursements, and financing) and the beginning and ending cash balances.
6. Indicate the applicability of budgeting in nonmanufacturing companies. Budgeting may
be used by merchandisers for development of a merchandise purchases budget. In service
companies budgeting is a critical factor in coordinating staff needs with anticipated services. In
not-for-profit organizations, the starting point in budgeting is usually expenditures, not receipts.
Test Bank for Accounting, Tools for Business Decision Making, Fifth Edition
21 - 4
TRUE-FALSE STATEMENTS
1. Budgets are statements of management's plans stated in financial terms.
2. A benefit of budgeting is that it provides definite objectives for evaluating performance.
3. A budget can be a means of communicating a company's objectives to external parties.
4. A budget can be used as a basis for evaluating performance.
5. A well-developed budget can operate and enforce itself.
6. The budget itself and the administration of the budget are the responsibility of the
accounting department.
7. Effective budgeting requires clearly defined lines of authority and responsibility.
8. The flow of input data for budgeting should be from the highest levels of responsibility to
the lowest.
9. Budgets can have a positive or negative effect on human behavior depending on the
manner in which the budget is developed and administered.
10. A budget can facilitate the coordination of activities among the segments of a large
company.
11. The longer the budget period, the more reliable the estimates of future outcomes.
12. The budget committee has the responsibility for coordinating the preparation of the
budget.
13. The budget is developed within the framework of a sales forecast.
Budgetary Planning
21 - 5
14. Budgeting and long-range planning are two terms that describe the same process.
15. Long-range plans are used more as a review of progress toward long-term goals rather
than an evaluation of specific results to be achieved.
16. The master budget reflects management's long-term plans encompassing five years or
more.
17. The master budget consists of operating and financial budgets.
18. Financial budgets must be completed before the operating budgets can be prepared.
19. The direct materials budget must be completed before the production budget because the
quantity of materials available for production must be known.
20. The number of direct labor hours needed for production is obtained from the production
budget.
21. A manufacturing overhead budget is not needed if the company develops a predeter-
mined overhead rate to apply overhead.
22. The manufacturing overhead budget generally has separate sections for variable, mixed,
and fixed costs.
23. A production budget should be prepared before the sales budget.
24. The direct materials budget contains both quantity and cost data.
25. The budgeted income statement indicates the expected profitability of operations for the
next year.
Test Bank for Accounting, Tools for Business Decision Making, Fifth Edition
21 - 6
26. If a monthly cash budget is prepared properly, there will never be a cash deficiency at the
end of any month.
27. The budgeted balance sheet is prepared entirely from the budgets for the current year.
28. The starting point when budgeting for a not-for-profit organization is generally to budget
expenditures first.
29. A merchandiser has a merchandise purchases budget rather than a production budget.
30. A critical factor in budgeting for a service firm is to determine the amount of products to
purchase.
31. The budget itself and the administration of the budget are entirely accounting
responsibilities.
32. Financial planning models and statistical and mathematical techniques may be used in
forecasting sales.
33. The direct materials budget is derived from the direct materials units required for
production plus desired ending direct materials units less beginning direct materials units.
34. The manufacturing overhead budget shows the expected manufacturing overhead costs.
35. In order to develop a budgeted balance sheet, the previous year's balance sheet is
needed.
36. In service enterprises, the critical factor in budgeting is coordinating materials and
equipment with anticipated services.
Budgetary Planning
21 - 7
Answers to True-False Statements
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
1.
T
7.
T
13.
T
19.
F
25.
T
31.
F
2.
T
8.
F
14.
F
20.
T
26.
F
32.
T
3.
F
9.
T
15.
T
21.
F
27.
F
33.
T
4.
T
10.
T
16.
F
22.
F
28.
T
34.
T
5.
F
11.
F
17.
T
23.
F
29.
T
35.
T
6.
F
12.
T
18.
F
24.
T
30.
F
36.
F
MULTIPLE CHOICE QUESTIONS
37. Why are budgets useful in the planning process?
a. They provide management with information about the company's past performance.
b. They help communicate goals and provide a basis for evaluation.
c. They guarantee the company will be profitable if it meets its objectives.
d. They enable the budget committee to earn their paycheck.
38. A budget
a. is a substitute for management.
b. is an aid to management.
c. can operate or enforce itself.
d. is the responsibility of the accounting department.
39. Accounting generally has the responsibility for
a. setting company goals.
b. expressing the budget in financial terms.
c. enforcing the budget.
d. administration of the budget.
40. Which one of the following is not a benefit of budgeting?
a. It facilitates the coordination of activities.
b. It provides definite objectives for evaluating performance.
c. It provides assurance that the company will achieve its objectives.
d. It requires all levels of management to plan ahead on a recurring basis.
41. Budgeting is usually most closely associated with which management function?
a. Planning
b. Directing
c. Motivating
d. Controlling
Test Bank for Accounting, Tools for Business Decision Making, Fifth Edition
21 - 8
42. Which of the following items does not follow from the adoption of a budget?
a. Promote efficiency
b. Deterrent to waste
c. Basis for performance evaluation
d. Guarantee of accomplishing the profit objective
43. Which is true of budgets?
a. They are voted on and approved by stockholders.
b. They are used in the planning, but not in the control, process.
c. There is a standard form and structure for budgets.
d. They are used in performance evaluation.
44. A common starting point in the budgeting process is
a. expected future net income.
b. past performance.
c. to motivate the sales force.
d. a clean slate, with no expectations.
45. If budgets are to be effective, all of the following must be present except
a. acceptance at all levels of management.
b. research and analysis in setting realistic goals.
c. stockholders' approval of the budget.
d. sound organizational structure.
46. If budgets are to be effective, there must be
a. a history of successful operations.
b. independent verification of budget goals.
c. an organizational structure with clearly defined lines of authority and responsibility.
d. excess plant capacity.
47. It is important that budgets be accepted by
a. division managers.
b. department heads.
c. supervisors.
d. All of these.
Budgetary Planning
21 - 9
48. Which of the following statements about budget acceptance in an organization is true?
a. The most widely accepted budget by the organization is the one prepared by top
management.
b. The most widely accepted budget by the organization is the one prepared by the
department heads.
c. Budgets are hardly ever accepted by anyone except top management.
d. Budgets have a greater chance of acceptance if all levels of management have
provided input into the budgeting process.
49. Top management notices a variation from budget and an investigation of the difference
reveals that the department manager could not be expected to have controlled the
variation. Which of the following statements is applicable?
a. Department managers should be held accountable for all variances from budgets for
their departments.
b. Department managers should only be held accountable for controllable variances for
their departments.
c. Department managers should be credited for favorable variances even if they are
beyond their control.
d. Department managers' performances should not be evaluated based on actual results
to budgeted results.
50. An unrealistic budget is more likely to result when it
a. has been developed in a top down fashion.
b. has been developed in a bottom up fashion.
c. has been developed by all levels of management.
d. is developed with performance appraisal usages in mind.
51. A budget is most likely to be effective if
a. it is used to assess blame when things do not occur according to plans.
b. it is not used to evaluate a manager's performance.
c. employees and managers at the lower levels do not get involved in the budgeting
process.
d. it has top management support.
52. In many companies, responsibility for coordinating the preparation of the budget is
assigned to
a. the company's independent certified public accountants.
b. the company's internal auditors.
c. the company's board of directors.
d. a budget committee.
Test Bank for Accounting, Tools for Business Decision Making, Fifth Edition
21 - 10
53. A budget period should be
a. monthly.
b. for a year or more.
c. long-term.
d. long enough to provide an obtainable goal under normal business conditions.
54. If a company has adopted continuous budgeting, the budget will show plans for
a. every day.
b. a full year ahead.
c. the current year and the next year.
d. at least five years.
55. The most common budget period is
a. one month.
b. three months.
c. six months.
d. one year.
56. Budget development for the coming year usually starts
a. a year in advance.
b. the first month of the year to be budgeted.
c. several months before the end of the current year.
d. the last month of the previous year.
57. The budget committee would not normally include the
a. research director.
b. treasurer.
c. sales manager.
d. external auditor.
58. The budget committee in a company is often headed by the
a. president.
b. controller.
c. treasurer.
d. budget director.
59. Long-range planning
a. generally presents more detailed information than an annual budget.
b. generally encompasses a longer period of time than an annual budget.
c. is usually more accurate than an annual budget.
d. is prepared on a quarterly basis if the budget is prepared on a quarterly basis.
Budgetary Planning
21 - 11
60. Long-range planning usually encompasses a period of at least
a. six months.
b. 1 year.
c. 5 years.
d. 10 years.
61. Which of the following is not a proper match-up?
a. Long range planning → Strategies
b. Budgeting → Short-term goals
c. Long-range planning → 5 years
d. Budgeting → Long-term goals
62. Which is the last step in developing the master budget?
a. Preparing the budgeted balance sheet
b. Preparing the cost of goods manufactured budget
c. Preparing the budgeted income statement
d. Preparing the cash budget
63. If there were 60,000 pounds of raw materials on hand on January 1, 120,000 pounds are
desired for inventory at January 31, and 410,000 pounds are required for January
production, how many pounds of raw materials should be purchased in January?
a. 350,000 pounds
b. 530,000 pounds
c. 290,000 pounds
d. 470,000 pounds
64. The total direct labor hours required in preparing a direct labor budget are calculated
using the
a. sales forecast.
b. production budget.
c. direct materials budget.
d. sales budget.
65. The direct materials and direct labor budgets provide information for preparing the
a. sales budget.
b. production budget.
c. manufacturing overhead budget.
d. cash budget.
Test Bank for Accounting, Tools for Business Decision Making, Fifth Edition
21 - 12
66. A sales forecast
a. shows a forecast for the firm only.
b. shows a forecast for the industry only.
c. shows forecasts for the industry and for the firm.
d. plays a minor role in the development of the master budget.
67. Which of the following is not an operating budget?
a. Direct labor budget
b. Sales budget
c. Production budget
d. Cash budget
68. Which of the following is not a financial budget?
a. Capital expenditure budget
b. Cash budget
c. Manufacturing overhead budget
d. Budgeted balance sheet
69. Which of the following is done to improve the reliability of the sales forecast?
a. Employ financial planning models
b. Lengthen the planning horizon to more than a year
c. Rely solely on outside consultants
d. Use the sales forecasts from the previous year
70. The financial budgets include the
a. cash budget and the selling and administrative expense budget.
b. cash budget and the budgeted balance sheet.
c. budgeted balance sheet and the budgeted income statement.
d. cash budget and the production budget.
71. The culmination of preparing operating budgets is the
a. budgeted balance sheet.
b. production budget.
c. cash budget.
d. budgeted income statement.
Budgetary Planning
21 - 13
72. The following information is taken from the production budget for the first quarter:
Beginning inventory in units 1,200
Sales budgeted for the quarter 426,000
Capacity in units of production facility 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. 428,000
b. 424,000
c. 474,000
d. 429,200
73. An overly optimistic sales budget may result in
a. increases in selling prices late in the year.
b. insufficient inventories.
c. increased sales during the year.
d. excessive inventories.
74. In a production budget, total required production units are the budgeted sales units plus
a. beginning finished goods units.
b. desired ending finished goods units.
c. desired ending finished goods units plus beginning finished goods units.
d. desired ending finished goods units minus beginning finished goods units.
75. The direct materials budget details
1. the quantity of direct materials to be purchased.
2. the cost of direct materials to be purchased.
a. 1
b. 2
c. both 1 and 2
d. neither 1 nor 2
76. The production budget shows expected unit sales of 32,000. Beginning finished goods
units are 3,600. Required production units are 33,600. What are the desired ending
finished goods units?
a. 2,000
b. 3,600
c. 6,400
d. 5,200
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77. The production budget shows expected unit sales are 100,000. The required production
units are 104,000. What are the beginning and desired ending finished goods units,
respectively?
Beginning Units Ending Units
a. 10,000 6,000
b. 6,000 10,000
c. 4,000 10,000
d. 10,000 4,000
78. The production budget shows that expected unit sales are 48,000. The total required units
are 54,000. What are the required production units?
a. 6,000
b. 9,000
c. 12,000
d. Cannot be determined from the data provided.
79. The direct materials budget shows:
Units to be produced 3,000
Total pounds needed for production 9,000
Total materials required 9,900
What are the direct materials per unit?
a. .33 pounds
b. 3.0 pounds
c. 3.3 pounds
d. Cannot be determined from the data provided.
80. The direct materials budget shows:
Desired ending direct materials 48,000 pounds
Total materials required 69,000 pounds
Direct materials purchases 63,200 pounds
The total direct materials needed for production is
a. 21,000 pounds.
b. 5,800 pounds.
c. 15,200 pounds.
d. 132,200 pounds.
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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
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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
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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. $5,700
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
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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
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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
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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.
