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Exam 23: Incremental Analysis

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Question 61

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Company A is a manufacturer and Company B is a merchandiser. What is the difference in the budgets the two entities will prepare?

A) Company A will prepare a production budget, and Company B will prepare a merchandise purchases budget.
B) Company A will prepare a sales forecast, and Company B will prepare a sales budget.
C) Company B will prepare a production budget, and Company A will prepare a merchandise purchases budget.
D) Both companies will prepare the same types of budgets.

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

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Question 62

Multiple Choice

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Which one of the following sections would not appear on a cash budget?

A) Cash receipts
B) Financing
C) Investing
D) Cash disbursements

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

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Question 63

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In many companies, responsibility for coordinating the preparation of the budget is assigned to

If budgets are to be effective, there must be

Budgets can have a positive or negative effect on human behavior depending on the manner in which the budget is developed and administered.

The primary benefits of budgeting include all of the following except it

The budget committee in a company is often headed by the

If a monthly cash budget is prepared properly, there will never be a cash deficiency at the end of any month.

Which one of the following items would never appear on a cash budget?

Budget development for the coming year usually starts

The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first.

Long-range planning usually encompasses a period of at least

Three major sections of a cash budget are (1) ___________________, (2) ____________________, and (3) ______________________.

Ivey, Inc. makes and sells buckets. Each bucket uses 3/4 pound of plastic. Budgeted production of buckets in units for the next three months is as follows: The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month's budgeted production needs. The cost of plastic is $2.12 per pound. Instructions Prepare a direct materials purchases budget for the month of May.

Morrison Company has the following budgeted sales: January $80,000, February $120,000, and March $100,000. 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:

Which is the last step in developing the master budget?

Cromwell Company 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: Expenses are paid in the month incurred. If the company has budgeted to sell 4,000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?

Lester Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.50 per pound and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Lester has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 pounds in ending inventory. What is the total amount to be budgeted for manufacturing overhead for the month?

The financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than

The following information is taken from the production budget for the first quarter: How many finished goods units should be produced during the quarter if the company desires 2,400 units available to start the next quarter?