ditional e other Exercise 2 Multiple Choice: Concepts (LISO) Name Section: Score: Instruction: Encircle the letter that corresponds to your answer. Financial Planning and Budgeting Sales forecast . Which of the following is the starting point in preparing a comprehensive budget? b. Budgeted balance sheet C. Budgeted income statement d. Production budget Which of the following is true about a budget? 159 2. a. It can focus as a substitute for management. b. It is a written statement of managements' plans for a specified future time period. c. It is required for all business operations. . It is used only by manufacturing companies. Which budget provides the information needed to prepare the direct labor budget? a . Income budget . Production budget c. Materials budget d. Sales budget 4. Which of the following is an operating budget? a . Cash budget b. Sales budget c. Budgeted balance sheet d. Capital expenditure budget 5. Which question/s is/are can be asked when constructing a direct materials budget? I. How many units of direct materials should be purchased? II. How much is the cost of direct materials to be purchased? a. I only b. II only c. Both I and II d. Neither I nor II 6. What is the starting point in preparing a master budget? a. Production budget b. Sales budget c. Production budget d. Purchases budget7. Why is the sales budget the single most important source in preparing budgets? a. All the other budgets depend on it. b. It enables the company to determine the unit cost of products. It is the best determination of the profitability of a company. . It is the only budget that requires estimates. ANAGEMENT | Part I 8. Which of the following is calculated on a direct labor budget? . Number of employees needed b. Cost per finished goods unit for labor . Cost per employee for each unit produced FINANCIAL d. Total required direct labor hours 9. Which of the following is used by a merchandiser? 160 a . Production budgets b. Manufacturing budgets c. Material purchases budgets d. Merchandise purchases budget 10. Which of the following is the correct formula for determining budgeted merchandise purchases? a. Budgeted sales + desired ending inventory - beginning inventory b. Budgeted production - sales + beginning inventory - desired ending inventory c. Budgeted sales - cost of goods sold + desired ending inventory - beginning inventory d. Budgeted sales - cost of goods sold + beginning inventory - desired ending inventory 11. Which of the following is needed to prepare a production budget? a. Budgeted unit sales - b. Budgeted raw materials to be purchased c. Beginning work in process units d. Estimated cost of goods sold 12. Where do most companies start in the budgeting process? a. They estimate expected profits. b. They look at past performance. c. They look at competitors' plans. d. None of the above