True / False Questions: 1. The flow of input data for budgeting should be from the highest levels of responsibility to the lowest True False 2. The master budget reflects management's long-term plans encompassing five years or more True False 3. The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first True False The manufacturing overhead budget generally has separate sections for variable, mixed, and fixed costs True False 5. The budgeted income statement indicates the expected profitability of operations for the next year True False Multiple Choice Questions 6. Which of the following items does not follow from the adoption of a budget? a. Promote efficiency b. Deterrent to waste C. Basis for performance evaluation d. Guarantee of accomplishing the profit objective 7. A budget period should be a monthly. b. for a year or more. C. long-term. d. long enough to provide an obtainable goal under normal business conditions. 8. Which of the following is not an operating budget? a. Direct labor budget b. Sales budget c. Production budget d. Cash budget 9. The following information is taken from the production budget for the first quarter: Beginning inventory in units 1,200 Sales budgeted for the quarter 426,000 Capacity in units of production facility 472,000 How many finished goods units should be produced during the quarter if the company desires 3,200 units available to start the next quarter? a. 420.000 b. 424.000 c. 474,000 d. 429,200 10. The direct materials budget shows: Desired ending direct materials Total materials required Direct materials purchases 48,000 pounds 69,000 pounds 63,200 pounds The total direct materials needed for production is a. 21,000 pounds. b. 5,800 pounds. c. 15,200 pounds. d. 132,200 pounds. 11. Comma Co. makes and sells widgets. The company is in the process of preparing its selling and administrative expense budget for the month. The following budget data are available: Variable Cost Per Unit Sold Item Sales commissions Monthly Fixed Cost $10,000 Shipping Advertising Executive salaries $120,000 Depreciation on office equipment $4,000 Other $6,000 Expenses are paid in the month incurred. If the company has budgeted to sell 80,000 widgets in October, how much is the total budgeted selling and administrative expenses for October? a. $940,000 b. $140,000 c. $930,000 d. $800,000 12. Pell Manufacturing is preparing its direct labor budget for May. Projections for the month are that 33,400 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $12, what is the total budgeted direct labor cost for May? a. 1,159,200. b. 1.180,800. c. 1,202,400. d. 1,296,000. 13. The single most important output in preparing financial budgets is the a. sales forecast b. determination of the unit cost of the product. c. cash budget. d. budgeted income statement. 14. The following information was taken from Southgate Industry's cash budget for the month of July Beginning cash balance $480,000 Cash receipts 304,000 Cash disbursements 544,000 If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company would have to borrow is a. $160,000. b. $80,000. c. $240,000 d. $96.000. 15. Orange Co. is a manufacturer and Pineapple Company is a merchandiser. What is the difference in the budgets the two entities will prepare? a. Orange Co. will prepare a production budget, and Pineapple Company will prepare a merchandise purchases budget. b. Orange Co. will prepare a sales forecast, and Pineapple Company will prepare a sales budget c. Pineapple Company will prepare a production budget, and Orange Co. will prepare a merchandise purchases budget. d. Both companies will prepare the same types of budgets