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Chapter 9 Quiz 3
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1
Direct material purchases equal:
A)direct materials used in production plus direct materials required for production
B)direct materials used in production plus target ending raw materials inventory plus beginning raw materials inventory
C)beginning raw materials inventory plus direct materials required for production
D)direct materials used in production plus target ending raw materials inventory
2
A disadvantage of participative budgeting is:
A)that it is expensive and time-consuming
B)the accuracy of the budget estimates may be enhanced because operational management has better operational knowledge than high-level executives
C)that it leads to higher motivation and better morale
D)that the budget is more realistic
3
Preston Company has a policy of maintaining an inventory of finished goods equal to 20% of next month’s budgeted sales. If Preston Company plans to produce 8000 units in June and sell 7800 units in June, the budgeted sales for July are:
A)1560
B)8800
C)7800
D)8000
4
The budgeted provision for doubtful debts is reported in the:
A)cash budget
B)sales budget
C)budgeted balance sheet
D)budgeted income statement
5
For the month of August, Kew Ltd predicts total cash collections of $1 000 000. For August, Kew estimates that its beginning cash balance will be $50 000 and that it will borrow cash amounting to $70 000. If Kew estimates that the ending balance will be $40 000 for August, the amount of August cash disbursements is:
A)$1 010 000
B)$1 030 000
C)$1 080 000
D)$1 000 000
6
Based on the production budget, a manufacturer develops budgets for:
A)sales
B)selling and administrative expenses
C)direct materials, direct labour and manufacturing overhead
D)transportation costs
7
Employee empowerment refers to:
A)a hierarchical organisational structure
B)giving employees at the operational level greater levels of responsibility
C)the function organisational structure
D)employees working in teams
8
Budget acceptance is likely when:
A)targets are developed with the participation of employees
B)targets are considered achievable
C)there is frequent feedback on performance
D)all of the given answers are present
9
Goal congruence occurs when:
A)the organisation’s goals coincide with an individual’s goals
B)targets are developed with the participation of employees
C)targets are considered achievable
D)there is frequent feedback on performance
10
Line item budgeting:
A)requires managers to meet the financial and non-financial objectives that are set for each program
B)requires managers to justify the allocation of all resources, not just increases over the prior period’s budgeted amounts
C)is similar to program budgeting
D)is a form of budgeting where resources are allocated to line items such as salaries, office supplies or telephone expenses





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