1. A written budget can effectively communicate management's specific action plans to all employees.

T or F

2. Continuous budgeting is the practice of revising budgets as time passes.

T or F

3. Budget evaluations offer opportunities to explain differences between actual and budgeted amounts.

T or F

4. If a merchandisers budgeted beginning inventory is $8,300, budgeted ending inventory is $9,400, and cost of goods sold is expected to be $10,260, then budgeted purchases should be $11,360.

T or F

5. Budgets that are revised by adding a new quarterly budget to replace the quarter that just elapsed are called:

A. Production budgets.

B. Sales budgets.

C. Cash budgets.

D. Rolling budgets.

E. Capital expenditures budgets.

6. Giannis Company sells a single product for $100 per unit. Budgeted sales units for January are 2,400 units. Total budgeted sales is:

a. $220,000.

b. $230,000.

c. $240,000.

d. $250,000.

e. $260,000.

7. Garcia Company budgets the following sales in units for the coming two months.

	June	July
Budgeted sales units	360	400

If each months ending inventory of finished units should be 60% of the next months sales, Garcia Companys desired ending inventory in units for June is:

a. 216 units.

b. 240 units.

c. 456 units.

d. 144 units.

e. 160 units.

8. Bengal Company provides the following unit sales forecast for the next three months

	July	August	September
Sales units	5,000	5,700	5,560

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. 6,950 units.

b. 4,310 units.

c. 7,090 units.

d. 5,665 units.

e. 4,135 units.

9. A budget that reports expected cash receipts and cash payments related to the sale and purchase of plant assets is called a:

a. Cash budget.

b. Capital expenditures budget.

c. Rolling budget.

d. Sales budget.

e. Production budget.

10. A department store has budgeted sales of 12,100 men's coats in September. Management wants to have 6,100 coats in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4,100 coats. What is the dollar amount of the coat purchases if each coat has a cost of $76?

a. $767,600.

b. $919,600.

c. $1,231,200.

d. $1,071,600.

e. $1,383,200.

11. A quantity of inventory that helps protect against lost sales caused by unfulfilled demands from customers or delays in shipments from suppliers is called:

a. Just-in-time inventory.

b. Budgeted stock.

c. Continuous inventory.

d. Capital stock.

e. Safety stock.

12. Schrank Company is trying to decide how many units of merchandise to order each month. Company policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. How many units must be purchased in September?

a. 14,000.

b. 20,000.

c. 22,000.

d. 24,000.

e. 28,000.

13. A managerial accounting report that presents budgeted amounts for assets, liabilities, and equity as of the end of the budget period is called a(n):

a. Rolling balance sheet.

b. Continuous balance sheet.

c. Budgeted balance sheet.

d. Cash balance sheet.

e. Operating balance sheet.

14. In preparing a budgeted balance sheet, the dollar amount of Accounts Receivable can be derived from:

a. The purchases budget and schedule of cash payments.

b. The sales budget and the schedule of cash receipts.

c. The capital expenditures budget and purchases budget.

d. The budgeted income statement and budgeted balance sheet.

e. The selling expenses budget and the schedule of cash receipts.

15. Gardner Company expects sales for October of $256,000. Experience suggests that 40% of sales are for cash and 60% are on credit. The company collects 50% of its credit sales in the month of sale and 50% in the month following sale. Budgeted Accounts Receivable on September 30 is $71,000. What is the amount of Accounts Receivable on the October 31 budgeted balance sheet?

a. $102,400.

b. $128,000.

c. $71,000.

d. $76,800.

e. $153,600.

16. Which of the following should not be considered when determining the production budget for an accounting period.

a. Budgeted ending inventory.

b. Budgeted beginning inventory.

c. Budgeted sales.

d. Budgeted overhead.

e. Safety stock.

17. Glaston Company manufactures a single product using a JIT inventory system. The production budget indicates that the number of units expected to be produced are 183,000 in October, 191,500 in November, and 188,000 in December. Glaston assigns variable overhead at a rate of $0.70 per unit of production. Fixed overhead equals $140,000 per month. Compute the budgeted total factory overhead for October.

a. $323,000.

b. $140,000.

c. $128,100.

d. $274,050.

e. $268,100.

18. Webster Corporation's budgeted sales for February are $329,000. Webster pays sales representatives a commission of 7% of sales dollars. The company pays a sales manager a monthly salary of $4,800 and expects advertising expense of $2,400 per month. Compute the total budgeted selling expenses for February.

a. $30,230.

b. $23,030.

c. $7,200.

d. $27,830.

e. $25,430

19.Flagstaff Company has budgeted production units of 8,400 for July and 8,600 for August. The direct materials requirement per unit is 3 ounces (oz.). The company requires to have safety stock of direct materials on hand at the end of each month to complete 30% of the units of budgeted production in the following month. There was 7,560 ounces of direct material in inventory at the start of July. The total ounces of direct materials to be purchased in July is

a. 25,200 oz.

b. 25,800 oz.

c. 32,940 oz.

d. 25,380 oz.

e. 25,020 oz.

20. Grason Corporation is preparing a budgeted balance sheet for current year. The retained earnings balance at December 31 of the previous year was $533,500. The current year budgeted income statement shows expected net income of $112,000. The company expects to declare dividends during the current year amounting to $40,000. The expected balance on December 31 of the current year in retained earnings on the budgeted balance sheet is:

a. $533,500.

b. $605,500.

c. $645,500.

d. $493,500.

e. $685,500.