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Multiple Choice Quiz
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1
The budgeting process usually begins with the:
A)Production budget.
B)Sales budget.
C)Cash budget.
D)Cost of goods sold budget.
2
Bozich Company's projected sales budget, in units, for the next four months is as follows:

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Ending inventory for each month should be 30% of the next month's sales. How many units should the company produce in February?
A)69,500
B)75,000
C)67,000
D)72,500
3
Which of the following statements is correct?
A)In a production budget, beginning inventory plus ending inventory is equal to budgeted production plus budgeted sales.
B)The master budget does not include a cash budget.
C)Budgets are designed to organize or coordinate operating activities such as sales and production.
D)Budgeting is strictly for organizations that manufacture goods.
4
Involving employees at all levels is important for:
A)Participative budgeting.
B)Top-down budgeting.
C)Continuous budgeting.
D)Social budgeting.
5
Cisco Company has a policy of maintaining the ending finished goods inventory at the end of each quarter equal to 20% of the next quarter's budgeted sales. The sales budget for next year is as follows: Quarter 1= 12,000 units, Quarter 2 = 10,000 units, Quarter 3 = 15,000 units, and Quarter 4 = 16,000 units. Budgeted production for the second quarter would be:
A)9,600 units.
B)10,000 units.
C)11,000 units.
D)10,200 units.
6
The budgeted amount of raw materials to be purchased is determined by:
A)Adding the desired ending inventory of raw materials to the raw materials to be used in production and subtracting the beginning inventory of raw materials.
B)Adding the desired ending inventory of raw materials to the raw materials to be used in production.
C)Subtracting the beginning inventory of raw materials from the raw to be used in production.
D)Adding the beginning inventory of raw materials to the raw materials to be used in production and subtracting the desired ending inventory of raw materials.
7
Shown below is the sales forecast for four months of the Jasmine Company:

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Cash sales represent 20% of total sales and the remainder is on credit. Typically, 50% of credit sales are paid for in the month of the sale, 30% in the month following sale, and the remainder is paid two months after the month of the sale. For the month of August, what is the budgeted amount of cash to be collected?
A)$192,000
B)$246,000
C)$228,000
D)$189,600
8
Waldren Ltd. retails one model of an electric car. Forecasted sales for the quarter are: September 10,000 units, October 8,000 units, November 9,500 units, December 4,500 units. Waldren's policy is to have an ending inventory of 35% of the next month's sales needs. What are budgeted purchases in units for November?
A)7,225 units.
B)7,750 units.
C)9.625 units.
D)13,000 units.
9
A retailer has forecasted sales of $215,000 in April, $325,000 in May, $265,000 in June, and $440,000 in July. Customers purchase only on credit and sales are collected 55% in the month of sale, and the remainder in the following month. What is the budgeted Accounts Receivable balance on May 31?
A)$146,250
B)$119,250
C)$178,750
D)$118,250
10
Mason Leather Works has forecast purchases on account to be $480,000 in January, $450,000 in February, $370,000 in March, and $500,000 in April. Sixty percent of purchases are paid for in the month of purchase, the remainder is paid in the following month. What are budgeted cash payments for March?
A)$418,000
B)$300,000
C)$402,000
D)$448,000







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