1.A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet. The balance of Accounts Receivable can be obtained from the ________.

a)schedule of inventory, purchases, and cost of goods sold budget

b)cash receipts from customers

c)capital expenditures budget

d)elling and administrative expenses budget

2.Sensitivity analysis is a what-if technique.

True or False

• 3.MFLSalesexpectstosell400unitsofProductAand360unitsofProductBeachdayatanaveragepriceof$20forProductAand$26forProductB.TheexpectedcostforProductAis36%ofitssellingpriceandtheexpectedcostforProductBis59%ofitssellingprice.MFLSaleshasnobeginninginventory,butitwantstohaveasix-daysupplyofendinginventoryforeachproduct.Computethebudgetedcostofgoodssoldforthenext(seven-day)week.(Roundtheanswertothenearestdollar.)

a)$56,627

b)$50,414

c)$104,160

d)$58,817

4.June sales were $22,000, while projected sales for July and August were $45,000 and $63,000, respectively. Sales are 60% cash and 40% credit. All credit sales are collected in the month following the sale. Calculate expected collections for July.

a)$31,200

b)$35,800

c)$8,800

d) $27,000

4.he direct materials budget is prepared using information from the ________ budget.

a)cash

b)master

c)capital expenditure

d)production

5.The last step in the preparation of the master budget is the budgeted balance sheet.

True or False

6.The starting point in developing the master budget is the preparation of the ________.

a)cash budget

b)production budget

c)sales budget

d)budgeted income statement

7.Which of the following is an example of the planning function of the budgeting process?

a)A budget demands integrated input from different business units and functions.

b)Employees are motivated to achieve the goals set by the budget.

c)Budget figures are used to evaluate the performance of mnagers.

d)The budget outlines a specific course of action for the coming period.

• 8.While calculating the budgeted cash payments for selling and administrative expenses, noncash expenses like depreciation are also considered.

True or False

9.The budgeting process ________.

a)usually begins about one month before the beginning of the budget period to allow for more current information to be considered

b)does not need input from all levels because it is the role of management to control costs and meet revenue goals

c)requires significant coordination among the company's various business segments

d)s standard among all types of companies

10.For a merchandising company, the budgeted total sales equals the expected number of units sold multiplied by the budgeted selling price per unit.

True or False

• 11.Magnolia,Inc.hasbudgetedsalesforthefirstquarterofthenextyeartobe40,000units.Theinventoryonhandatthebeginningofquarteris10,000units.Thedesiredendinginventoryis4,000units.Calculatethebudgetedproductionforthefirstquarter.

a)4,000 units

b)34,000 units

c)30,000 units

d)44,000 units

12.Manhattan Enterprises manufactures cookware sets and sells the sets to department stores. Manhattan expects to sell 2,100 cookware sets for $260 each in April and 3,900 cookware sets for $275 each in May. Sales are 10% cash and 90% on account. Compute the total budgeted sales for May.

a)$1,072,500

b)$546,000

c)$107,250

d)$965,250

13.Regarding the sales budget, which of the following statements is incorrect?

a)The forecast of sales revenue is the cornerstone of the master budget.

b)The level of sales affects expenses and almost all other elements of the master budget.

c)The budgeted sales are carried from the sales budget to the balance sheet.

d)Budgeted total sales for each product equal the sales price multiplied by the expected number of units sold.

• 14.Which of the following is an example of the benchmarking function of the budgeting process?

a)A budget demands integrated input from different business units and functions.

b)Budgeting requires close cooperation between accountants and operational personnel.

c)Budget figures are used to evaluate the performance of managers.

d)The budget outlines a specific course of action for the coming period.