Chapter 8 Wednesday Fall 2019 1. Consider the following statements: 1. Budgets are used to plan and control operations. II. A disadvantage of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack. a. Iis true; Il is true b. Iis true; Il is false c. lis false; Il is true d. I is false; Il is false 2. Consider the following statements: I. The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory. II. When preparing a direct materials budget, the units of raw materials needed to meet production should be added to the desired ending inventory and the beginning inventory for raw materials should be subtracted to determine the amount of raw materials to be purchased. a. I is true; Il is true b. Iis true; Il is false c. I is false; Il is true d. I is false; I is false 3. Which of the following budgets are prepared before the purchases budget? Cash budget Sales budget Yes Yes a. b. Yes No C. No Yes d. No No 4. When preparing a production budget, the required production equals: a. Budgeted Sales + Beginning Inventory + Desired Ending Inventory b. Budgeted Sales - Beginning Inventory + Desired Ending Inventory c. Budgeted Sales - Beginning Inventory - Desired Ending Inventory d. Budgeted Sales + Beginning Inventory - Desired Ending Inventory 5. Sixty percent of Parlee Corporation's sales are collected in the month of sale, 30% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data for the company: March April $500,000 $300,000 January February $700,000 Total sales $600,000 Total budgeted cash collections in April would be: c. $420,000 d. $460,000 e. None of the above. The answer is a. $360,000 b. $400,000