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Exam 9: The Master Budget and Responsibility Accounting

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Question 61

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Tucker Company manufactures dog beds.The following selected data relates to Tucker Company's budgeted sales and inventory levels of the dog beds for the upcoming quarter: $\begin{array}{|l|r|}\hline \text { October expected unit sales } & 2,000 \\\hline \text { November expected unit sales } & 2,700 \\\hline \text { December expected unit sales } & 2,200 \\\hline \text { October desired ending unit finished goods inventory } & 850 \\\hline \text { November desired ending unit finished goods inventory } & 720 \\\hline \text { December desired ending unit finished goods inventory } & 520 \\\hline\end{array}$ How many dog beds should Tucker Company produce in November?

A) 2,570
B) 3,420
C) 4,270
D) 2,850

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

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Question 62

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Budgeting includes planning for ending inventory.

A) True
B) False

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Question 63

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Which of the following is NOT shown on the combined cash budget?

Rong Company expects cash sales for July of $15,000,and a 20% monthly increase during August and September.Credit sales of $6,000 in July should be followed by 10% decreases during August and September.What are budgeted cash sales and budgeted credit sales for September?

Which of the following statements about budgeting is NOT true?

Define operating budgets and financial budgets.List the specific budgets which are operating budgets.List the specific budgets which are financial budgets.

Good Doggie Treatz Company expects to sell 5,000 gourmet dog biscuits in January and 9,000 in February for $2 each.What will be the total sales revenue reflected in the sales budget for those months?

Lawrence Corporation desires a December 31 ending inventory of 900 units.Budgeted sales for December are 2,650 units.The November 30 inventory was 750 units.What are budgeted purchases in units?

The preparation of which of the following is the final step in the preparation of the financial budget?

A budget is a qualitative expression of a plan that helps managers coordinate and implement the plan.

Investigating significant variances from a budget to assign responsibility is an example of management by exception.

Managers may intentionally build slack into the budget:

The cash budget is prepared after the budgeted balance sheet is prepared.

A plan that shows the units to be sold and the projected selling price and is also the starting point in the budgeting process,is called the:

Peabody Enterprises prepared the following sales budget: $\begin{array} { | l | r | } \hline { \text { Month } } & \text { Budgeted Sales } \\\hline \text { March } & \$ 6,000 \\\hline \text { April } & \$ 13,000 \\\hline \text { May } & \$ 12,000 \\\hline \text { June } & \$ 14,000 \\\hline\end{array}$ The expected gross profit rate is 40% and the inventory at the end of February was $10,000.Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. - What is the desired beginning inventory on June 1?

Peabody Enterprises prepared the following sales budget: $\begin{array} { | l | r | } \hline \text { Month } & \text { Budgeted Sales } \\\hline \text { March } & \$ 6,000 \\\hline \text { April } & \$ 13,000 \\\hline \text { May } & \$ 12,000 \\\hline \text { June } & \$ 14,000 \\\hline\end{array}$ The expected gross profit rate is 40% and the inventory at the end of February was $10,000.Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. - What are the total purchases budgeted for May?

The master budget only includes the sales budget,the capital expenditures budget,and the financial budget.

Which of the following type(s) of companies use a "cost of goods sold,inventory,and purchases" budget?

The operating budgets project the collection and payment of cash,as well as forecast the company's budgeted balance sheet.

Service companies use a "cost of goods sold,inventory,and purchases" budget to calculate the amount of merchandise to purchase.