1) Budgets provide financial objectives to achieve. If actual operations results do not meet the budgeted objectives, it may indicate inefficiency or ineffectiveness of the operations. Therefore, the managers should pay attention to the business activities which fail to meet the budgeted goals and be accountable for significant deviations.

Which of the following is best explained by the above statements?

Budgetary control

Zero-based budgeting

Capital budgeting

Operating budgets

2) Glacier Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Glacier anticipates the following sales volumes for the coming period:

Daytripper: 2,000 backpacks

Excursion: 1,200 backpacks

Desired ending inventory for Daytripper and Excursion are 30 and 50 units respectively. In the beginning of the budget year, Glacier expects to have 10 Daytripper and 15 Excursion backpacks. What would be the production budgets for Daytripper and Excursion?

Daytripper:2,010; Excursion: 1,185

Daytripper:2,030; Excursion: 1,250

Daytripper:2,210; Excursion: 885

Daytripper:2,020; Excursion: 1,235

3) Fezzari manufactures mountain bicycles. The company expects to produce 2,800 bikes in the next year. The budgeted direct labor hours are 3,800 hours. The budgeted total manufacturing overhead costs include $1.50 per direct labor hour for the perks for factory workers, $20 per bike produced for utilities, $12,000 for general liability insurance, $150,000 for equipment depreciation, $360,000 for the floor supervisor salaries, and $54,000 for the rent on the factory facilities.

What is the cash budget for the manufacturing overhead costs?

$576,000

$637,700

$487,700

$632,000

4)Which of the following operating performance measure represents the sales earned for every dollar in investment?

Residual income

Asset turnover

Return on investment

Profit margin

5)Which of the following is a capital expenditure?

Inspection costs to assure the quality of products.

Accelerated depreciation expenses on the office building.

None of the above

Purchase of inventory

Purchase of factory equipment.