1. A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both dollars and units of products manufactured. True/False 2. In the selling and administrative budget, the non-cash charges (such as depreciation) are added to the total budgeted selling and administrative expenses to determine the expected cash disbursements for selling and administrative expenses. True/False 3. Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared? A. Sales budget, cash budget, direct materials budget, direct labor budget B. Production budget, sales budget, direct materials budget, direct labor budget C. Sales budget, cash budget, production budget, direct materials budget D. Selling and administrative expense budget, cash budget, budgeted income statement, budgeted balance sheet 4. Berol Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month's estimated sales. There are 150,000 finished units in inventory on June 30 . Berol Company's production requirement in units of finished product for the three-month period ending September 30 is: A.712,025unitsB.630,500units C. 664,000 units D. 665,720 units 5. Wohner Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During August, the company budgeted for 5,000 units, but its actual level of activity was 5,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: 5-1. The net operating income in the planning budget for August would be closest to: A. $19,836 B. $19,446 C. $26,700 D. $27,620 51. The net operating income in the planning budget for August would be closest to: A. $19,836 B. $19,446 C.$26,700D.$27,620 5-2. The net operating income in the flexible budget for August would be closest to: A. $26,700 B. $19,446 C. $27,620 D. $19,836 53. The activity variance for net operating income in August would be closest to: A. $7060F B. $7,060U C. $920F D. $920U 6. The revenue and spending variances are the differences between the static planning budget and the actual results for the period. True/False 7. A revenue variance is favorable if the revenue in the static planning budget exceeds the revenue in the flexible budget. True/False 8. The purpose of a flexible budget is to: A. remove items from performance reports that are not controllable by managers. B. permit managers to reduce the number of unfavorable variances that are reported. C. update the static planning budget to reflect the actual level of activity of the period. D. reduce the amount of conflict between departments when the master budget is prepared
