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| 1 | |
Gidget Farrelly, the Analysis and Control Manager for West Coast Surf Products, is undertaking the annual budgeting process and she has realised that she will need additional assistance to complete the annual budget. She has decided to engage an accounting student as a casual employee for six weeks to assist her with the budgetary process. In the interviews, she asked all the potential budget assistants the question ‘What does the annual budget consist of?’ to ascertain which applicants had some rudimentary knowledge of the budgeting process. Mark Grande, the successful applicant for the position, was the only applicant that answered the question correctly. What was his answer? |
| | A) | The annual budget consists of the sales budget and the operating budgets. |
| | B) | The annual budget consists of the operating budgets and the financial budgets. |
| | C) | The annual budget consists of the sales budget, the production budget and the operating budgets. |
| | D) | The annual budget consists of the sales budget, the operating budget and the cash budget. |
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| 2 | |
Corporate strategy involves: |
| | A) | making decisions about the types of businesses to operate in, which businesses to acquire and divest and how best to structure and finance the company |
| | B) | making decisions regarding the way a business competes within its chosen market |
| | C) | formulating a detailed plan summarising the financial consequences of an organisation’s operating activities for the next twelve months |
| | D) | formulating a detailed plan of the capital expenditure required to be spent in the next two years |
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| 3 | |
Gidget Farrelly, the Analysis and Control Manager for West Coast Surf Products, and her assistant, Mark Grande, are commencing the budgeting process. They should begin with: |
| | A) | the budgeted statement of cash flows |
| | B) | the budgeted statement of financial position |
| | C) | the production budget |
| | D) | the sales budget |
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| 4 | |
Gidget Farrelly, the Analysis and Control Manager for West Coast Surf Products, and her assistant, Mark Grande, are commencing the budgeting process—a process that West Coast Surf Products has not previously undertaken in a comprehensive manner. The Managing Director, Steve Beech, has asked Gidget to explain the reasons why a comprehensive budget is being undertaken, as it appears to be a costly process (Steve has just authorised the payment of Mark Grande’s wages). Gidget told Steve that the purposes of budgeting are: |
| | A) | planning, facilitating communication and coordination, and allocating resources |
| | B) | planning, allocating resources, evaluating performance and providing incentives |
| | C) | planning, facilitating communication and coordination, allocating resources, and controlling profit and operations |
| | D) | planning, facilitating communication and coordination, allocating resources, controlling profit and operations, and evaluating performance and providing incentives |
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| 5 | |
Jeff Dodge, the Sales Manager for the Western Region, is currently accountable for developing his own budget to estimate his region’s selling costs and sales revenues. The type of accounting that Jeff’s organisation has implemented is: |
| | A) | responsibility accounting |
| | B) | historical cost accounting |
| | C) | customer-based accounting |
| | D) | current cost accounting |
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| 6 | |
Jeff Dodge, the Sales Manager for the Western Region, is currently accountable for developing his own budget to estimate his region’s selling costs and sales revenues. He is responsible for continually updating the budget by adding the estimate of a new month and dropping off the month just completed. For example, Jeff has just received the actual results for June of the current year, so he has dropped off the budget for that month and added the budget forecast for June of next year. Jeff is undertaking: |
| | A) | zero base budgeting |
| | B) | rolling budgeting |
| | C) | financial budgeting |
| | D) | operating budgeting |
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| 7 | |
Budgeted production for a period is equal to: |
| | A) | beginning finished goods inventory + budgeted sales – required ending finished goods inventory |
| | B) | required ending finished goods inventory + budgeted sales – beginning finished goods inventory |
| | C) | required ending finished goods inventory + beginning balance finished goods inventory – budgeted sales |
| | D) | budgeted sales + purchases – beginning finished goods inventory |
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| 8 | |
Jeff Dodge, the Sales Manager for the Western Region, has been taken to task by the Sales Director for creating budgetary slack. What has Jeff Dodge done to be criticised in this way? |
| | A) | He has allowed his territory managers to have Monday and Wednesday afternoons off to play golf. |
| | B) | He has created excess capacity in the plant. |
| | C) | He has intentionally overestimated budgeted expenses and underestimated revenues. |
| | D) | He allowed his personal assistant and marketing analysts to watch international sporting events on television during normal working hours. |
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| 9 | |
Gidget Farrelly, the Analysis and Control Manager for West Coast Surf Products, and her assistant, Mark Grande, are commencing the budgeting process—a process that West Coast Surf Products has not previously undertaken in a comprehensive manner. Gidget is undertaking the task of writing a budget manual. It should include which of the following? |
| | A) | Identification of who is responsible for providing various types of information. |
| | B) | Communication of budget procedures. |
| | C) | Communication of budget deadlines. |
| | D) | All of the given answers. |
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| 10 | |
Managers may be more willing to accept a budget if it is: |
| | A) | a continuous process |
| | B) | imposed |
| | C) | very difficult to attain |
| | D) | developed through a participative process |
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