Deck 9: The Use of Budgets in Planning and Decision Making

Question 1

Which of the following statements is true regarding budgeting?

A) It is primarily focused on past performance.
B) It is primarily a bookkeeping task.
C) It should be built from the ground up each year.
D) It involves input from a broad range of managers.

Answer 1

D

Question 2

Milton Inc. has prepared the following first quarter sales forecast: Each unit sells for $1.25.
The total budgeted sales for the first quarter is:

A) $587,500
B) $470,000
C) $196,875
D) $156,250

Answer 2

A

Question 3

Which of the following is not an advantage of the budgeting process?

A) It can help management identify potential bottlenecks.
B) It can help facilitate goal congruence throughout the organization.
C) It encourages management to focus on the past and not be distracted by current activities of the organization.
D) It encourages communication among various departments in the organization.

Answer 3

C

Question 4

The alignment of the personal goals of the managers of an organization with the goals of the organization is called:

A) a bottleneck.
B) benchmarks.
C) goal congruence.
D) static budgeting.

Question 5

Which type of activity includes ensuring that the objectives and goals developed by the organization are being attained?

A) Planning
B) Operating
C) Control
D) Bookkeeping

Question 6

In order to prepare a sales budget, a ____ is required.

A) production budget
B) sales forecast
C) static budget
D) flexible budget

Question 7

The comparison of actual outcomes with desired outcomes is an example of a(n):

A) planning activity.
B) control activity.
C) operating activity.
D) static activity.

Question 8

Which of the following statements is false regarding the process of preparing a sales forecast?

A) It usually starts with last year's level of sales.
B) General economic trends are often considered.
C) Since it involves estimates of future events, accuracy is of little importance.
D) The larger the size and complexity of an organization, the more complex their sales forecasting system will be.

Question 9

In 2012, Wingen Inc. sold 325,000 units at $8 each. Sales volume is expected to increase by 15 percent in 2013 while the price of each unit is expected to decrease by 15 percent. The expected sales revenue for 2013 is:

A) $ 373,750
B) $2,541,500
C) $1,878,500
D) $2,990,000

Question 10

Which of the following statements is falseregarding sales forecasting?

A) It may involve the use of elaborate planning models and regression analysis.
B) It may rely heavily on the intuition and opinions of managers.
C) Other budgets are rarely affected by errors in sales forecasts.
D) The usual starting point is last year's level of sales.

Question 11

Which of the following is not increased by the budgeting process?

A) Communication throughout the organization.
B) Identification of potential bottlenecks or constraints.
C) Goal congruence between the personal goals of managers and the goals of the organization.
D) Management's focus on past performance of the organization.

Question 12

Budgets are:

A) future oriented.
B) for managers only.
C) required by GAAP.
D) typically not used by small business.

Question 13

In the budgeting process, which budget is typically prepared first?

A) Cash budget
B) Summary budget
C) Sales budget
D) Production budget

Question 14

Which of the following statements regarding budgets is true?

A) They rarely use estimates.
B) They should not be used for performance evaluations.
C) They should focus on past performance.
D) They will likely require the input of more than one manager.

Question 15

The usual starting point when developing a sales forecast is:

A) the production budget.
B) the cash budget.
C) last year's level of sales.
D) competitor budget information.

Question 16

Which of the following is an advantage of the budgeting process?

A) It requires very little input from various departmental managers, leaving them more time to devote to day-to-day activities.
B) It can define specific goals and objectives that may be used in evaluating future job performance.
C) It forces management to focus on the past and not be distracted by the day-to-day operations of the business.
D) It requires no communication between various managers in the organization.

Question 17

A budget built from the ground up each year rather than by simply adding a percentage increase to last year's numbers is called:

A) a static budget.
B) a flexible budget.
C) a zero-based budget.
D) a master budget.

Question 18

Which of the following is not considered in the preparation of a sales budget or sales forecast?

A) General economic trends.
B) Anticipated marketing or advertising plans.
C) Issuance of the current year's financial statements.
D) Anticipated price changes in both purchasing costs and sales prices.

Question 19

Which of the following statements regarding budgeting is false?

A) The focus of budgeting is planning.
B) Many companies use enterprise resource planning (ERP) systems as a budgeting tool.
C) Budgeting is a bookkeeping task.
D) Budgeting helps managers determine the resources needed to meet their goals and objectives.

Question 20

____ activities involve developing objectives and goals for the organization as well as the actual preparation of the budget.

A) Operating
B) Control
C) Planning
D) Flexible

Question 21

Donnelly Manufacturing Donnelly Manufacturing sells cedar birdhouses. The company has prepared the following sales forecast for the third quarter of 2013:
Inventory at June 30, 2013 was budgeted at 1,500 units. Management would like the desired quantity of finished goods inventory at the end of each month to be equal to 15% of next month's budgeted unit sales. October's sales are projected to be 24,000 units.
Each completed unit of finished product requires 2.5 square feet of cedar at a cost of $3.5 per square foot.
Refer to the Donnelly Manufacturing information above. The total required production of birdhouses for the third quarter of 2013 is:

A) 39,900 units
B) 44,100 units
C) 45,600 units
D) 40,500 units

Question 22

Donnelly Manufacturing Donnelly Manufacturing sells cedar birdhouses. The company has prepared the following sales forecast for the third quarter of 2013:
Inventory at June 30, 2013 was budgeted at 1,500 units. Management would like the desired quantity of finished goods inventory at the end of each month to be equal to 15% of next month's budgeted unit sales. October's sales are projected to be 24,000 units.
Each completed unit of finished product requires 2.5 square feet of cedar at a cost of $3.5 per square foot.
Refer to the Donnelly Manufacturing information above. The company has determined that it needs 10 percent of next month's raw material needs on hand at the end of each month.
The cost of the direct material that should be purchased in August is:

A) $121,975
B) $ 34,850
C) $115,500
D) $ 46,200

Question 23

Porcelain Interiors sells a variety of porcelain products including porcelain sinks. On December 31, the company had 75 sinks in inventory. The company's policy is to maintain a sink inventory equal to 10% of next month's expected sales. The company expects the following sales activity for the first quarter of the year: What is the projected production for February?

A) 1,115 sinks
B) 1,015 sinks
C) 985 sinks
D) 1,215 sinks

Question 24

Last year, Garrison Manufacturing sold 250,000 units at $8 each. Both sales volume and sales price are expected to increase by 15 percent in the upcoming year. The expected sales revenue for the upcoming year is:

A) $2,645,000
B) $2,300,000
C) $2,000,000
D) $1,955,000

Question 25

Homestyle Interiors sells a variety of home furnishings including entertainment centers. On March 31, the company had 144 centers in inventory. The company's policy is to maintain a entertainment center inventory equal to 9% of next month's expected sales. The company expects the following sales activity for the second quarter of the year: What is the projected production for May?

A) 2,049 centers
B) 2,319 centers
C) 2,481 centers
D) 2,751 centers

Question 26

Which of the following budgets would probably not be prepared using information provided by the production budget?

A) Direct materials budget
B) Direct labor budget
C) Manufacturing overhead budget
D) Sales budget

Question 27

Ligon Enterprises has prepared a production budget for October. Management has determined that the total required production for October is 800,000 units when an ending inventory of 10,000 units is desired and the beginning inventory is 6,000 units. Based on the above information, what were October's budgeted sales?

A) 806,000 units
B) 796,000 units
C) 804,000 units
D) 794,000 units

Question 28

The budget that forecasts how many units a manufacturing company should produce in order to meet sales projections is called a:

A) Sales budget.
B) Materials budget
C) Production budget
D) Flexible budget

Question 29

Thurston Products Thurston Products sells a popular style of running shoe. The company has prepared the following sales forecast for the second quarter of 2012:
Ending inventory at March 31, 2012 was budgeted at 7,500 pairs. Management would like the desired quantity of finished goods inventory at the end of each month to be equal to 15 percent of next month's budgeted unit sales. July's sales are projected to be 135,000 pairs.
Each completed unit of finished product requires 2 pounds of rubber material at a cost of $1.75 per pound. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month.
Refer to the Thurston Products information above. The total required production of running shoes for the second quarter of 2012 is:

A) 315,000 pairs
B) 327,750 pairs
C) 302,250 pairs
D) 287,250 pairs

Question 30

Which of the following equations best depicts a basic production budget?

A) Required production = Projected sales - Desired ending inventory + Beginning inventory
B) Required production = Projected sales + Desired ending inventory - Beginning inventory
C) Required production = Projected sales - Desired ending inventory - Beginning inventory
D) Required production = Projected sales + Desired ending inventory + Beginning inventory

Question 31

Select Manufacturing sells a variety of office products including two-drawer file cabinets. On June 30, the company had 1,200 cabinets in inventory. The company's policy is to maintain a cabinet inventory equal to 20% of next month's sales. The company expects the following sales activity for the third quarter of the year: In addition, October's sales are projected to be 10,000 cabinets. What is the total required production for the third quarter?

A) 23,600 cabinets
B) 24,400 cabinets
C) 25,600 cabinets
D) 26,800 cabinets

Question 32

Jones Manufacturing Jones Manufacturing sells unique decorative water fountains. The company has prepared the following forecast for the first quarter of 2013:
Ending inventory at December 31, 2012 was budgeted at 300 units. Management would like the desired quantity of finished goods inventory at the end of each month to be equal to 15 percent of next month's budgeted unit sales. April's sales are projected to be 3,200 units.
Each completed unit of finished product requires 2.5 pounds of compounding material at a cost of $4.00 per pound. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month.
Refer to the Jones Manufacturing information above. The total required production of water fountains for the first quarter of 2013 is:

A) 8,800 units
B) 8,020 units
C) 8,620 units
D) 8,980 units

Question 33

Homestyle Interiors sells a variety of home furnishings including sleeper sofas. On March 31, the company had 225 sofas in inventory. The company's policy is to maintain a sleeper sofa inventory equal to 15% of next month's expected sales. The company expects the following sales activity for the second quarter of the year: What is the projected production for May?

A) 1,600 sofas
B) 1,105 sofas
C) 1,585 sofas
D) 1,615 sofas

Question 34

Newman Products is preparing their first quarter production budget. The desired ending inventory of finished goods for the month of January becomes:

A) the required production for the month of January.
B) the budgeted sales for the month of February.
C) the beginning inventory for the month of February.
D) the required production for the month of February.

Question 35

In 2012, Truman Products sold 900,000 units at $9 each. Sales volume is expected to increase by 10 percent in 2013 while the price of each unit is expected to decrease by 15 percent. The expected sales revenue for 2013 is:

A) $8,761,500
B) $1,336,500
C) $7,573,500
D) $6,885,000

Question 36

Brady Inc. produced and sold 200,000 units for $50 each last year. For the upcoming year, management believes that if they decrease the price of each unit by 5%, volume will increase 5%. What are Brady's expected sales revenues for the upcoming year?

A) $ 9,450,000
B) $10,000,000
C) $10,500,000
D) $ 9,975,000

Question 37

Keep-it-Cool Products Inc. manufactures a medium-sized drink cooler. On June 30, the company had 800 coolers in inventory. The company's policy is to maintain a cooler inventory equal to 5% of next month's expected sales. The company expects the following sales activity for the third quarter of the year: How many coolers should be produced in August?

A) 24,275 coolers
B) 25,725 coolers
C) 25,525 coolers
D) 23,225 coolers

Question 38

Enloe Manufacturing has prepared a production budget for June. Management has determined that the total required production for June is 680,000 units when an ending inventory of 50,000 units is desired and the beginning inventory is 30,000 units. Based on the above information, what were June's budgeted sales?

A) 660,000 units
B) 700,000 units
C) 760,000 units
D) 680,000 units

Question 39

Broughton Corp. has prepared a production budget for February. Management has determined that the total required production for February is 180,000 units when an ending inventory of 20,000 units is desired and the beginning inventory is 5,000 units. Based on the above information, what were February's budgeted sales?

A) 195,000 units
B) 180,000 units
C) 165,000 units
D) 185,000 units

Question 40

Tunstall Manufacturing sells medical supplies, including stethoscopes. On September 30, the company had 3,000 stethoscopes in inventory. The company's policy is to maintain an inventory equal to 15% of next month's sales. The company expects the following sales activity for the fourth quarter of the year: In addition, January sales for the following year are projected to be 30,000 stethoscopes. What is the total required production for the fourth quarter?

A) 72,500 stethoscopes
B) 69,500 stethoscopes
C) 75,500 stethoscopes
D) 68,000 stethoscopes

Question 41

Cash outflows for interest on line of credit will be shown:

A) on the cash receipts budget.
B) in the investing activity section of the cash summary budget.
C) on the summary cash budget.
D) on the selling and administrative expense budget

Question 42

Taylor Inc. sells and installs residential water heaters. Its customers pay for their water heaters over four months by paying in equal, monthly installments. The sales price of an installed water heater is $600. Taylor sold and installed the following number of water heaters in the first six months of 2013: Cash receipts for June are expected to be:

A) $ 74,850
B) $118,050
C) $ 47,850
D) $191,400

Question 43

Woodsman Inc. produces a variety of wood finishing products including gallons of varnish that it manufactures and packages under its own name. The company has computed the required production of gallons of varnish it will need for the first three months of 2013 as follows: Each gallon of varnish requires 10 ounces of a special chemical. This chemical costs $.25 per ounce. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month.
The cost of the direct material that should be purchased in February is:

A) $920,000
B) $950,000
C) $880,000
D) $850,000

Question 44

Carson Products Inc. manufactures LEDs (light emitting diodes) for use in vehicles. On September 30, the company had 5,000 LED units in inventory. The company's policy is to maintain a LED ending inventory equal to 25% of next month's expected sales. In addition, each LED manufactured requires 2 minutes of assembly and inspecting time at a cost of $.30 per minute. The company expects the following sales activity for the fourth quarter of the year:
What is the projected direct labor cost for November?

A) $72,000
B) $63,000
C) $60,000
D) $57,000

Question 45

Cash received by borrowing from line of credit will be shown:

A) on the summary cash budget.
B) in the investing activity section of the cash summary budget.
C) on the cash disbursements budget.
D) on the operating activity section of the cash summary budget.

Question 46

The "Beginning cash balance" would most likely appear on which type of budget?

A) Cash receipts budget
B) Summary cash budget
C) Sales budget
D) Cash disbursements budget

Question 47

Ingalls Mercantile Inc. sells bolts of fabric to retailers for $80 per bolt. The company's accountant has prepared the following sales forecast (in bolts) for the first quarter of 2013: Historically, the cash collection of sales has been as follows: 60 percent in the month of sale, 30 percent in the month following sale, and 9 percent in the second month following sale.
Cash receipts for March are expected to be:

A) $ 61,920
B) $182,160
C) $ 33,600
D) $ 57,840

Question 48

Cicero Manufacturing Inc. sells gloves at local ski resorts during the winter months. Each pair of gloves sells for $15. The following sales forecast (in units) has been prepared for October 2012 through March 2013: Historically, the cash collection of sales has been as follows: 60 percent in the month of sale, 35 percent in the month following sale, and 4 percent in the second month following sale. The remaining 1 percent is uncollectible.
Cash receipts for January are expected to be:

A) $13,170
B) $51,975
C) $10,800
D) $16,530

Question 49

Cash outflows for overhead expenditures is shown on:

A) the materials purchases budget.
B) the investing activity section of the cash summary budget.
C) the cash disbursements budget.
D) the cash receipts budget.

Question 50

Blooming Products Inc. sells flower bulbs to local nurseries. Each bag of bulbs sells for $2. The company's accountant has prepared the following sales forecast (in bags) for the fourth quarter of 2013: Historically, the cash collection of sales has been as follows: 50 percent in the month of sale, 40 percent in the month following sale, and 10 percent in the second month following sale.
Cash receipts for December are expected to be:

A) $13,800
B) $ 8,000
C) $16,200
D) $ 8,100

Question 51

Sellars Inc. manufactures widgets. On June 30, the company had 2,000 widgets in inventory. The company's policy is to maintain a widget ending inventory equal to 10% of next month's sales. In addition, each widget manufactured requires 6 minutes of assembly and inspecting time at a cost of $.25 per minute. The company expects the following sales activity for the third quarter of the year:
What is the projected direct labor cost for August?

A) $55,800
B) $57,000
C) $61,500
D) $58,200

Question 52

Grisham Products Inc. manufactures engines for small scooters. On September 30, the company had 1,050 engines in inventory. The company's policy is to maintain an ending inventory equal to 15% of next month's sales. Each engine manufactured requires 20 minutes of assembly and inspecting time at a cost of $1.50 per minute. Grisham applies overhead to engines at a rate of $2.50 per direct labor minute. The company expects the following sales activity for the fourth quarter of the year:
What is the projected applied manufacturing overhead cost for November?

A) $408,125
B) $843,625
C) $631,375
D) $737,500

Question 53

In a summary cash budget, the total cash available is calculated by:

A) adding the cash receipts and deducting the cash disbursements from the beginning cash balance.
B) adding the cash receipts to the beginning cash balance.
C) adding the cash receipts and borrowings to the beginning cash balance.
D) adding the cash balance before borrowing to interest on line of credit.

Question 54

Boylan Inc. has projected the following sales information for the first quarter of 2013: Credit sales are collected over a two-month period, with 55 percent collected in the month of sale and 45 percent collected in the month following sale.
Total cash collections for March are:

A) $55,900
B) $93,650
C) $70,250
D) $95,900

Question 55

Which of the following statements regarding cash flows is true?

A) Many managers consider cash flow budgets to be the least important of all the budgets.
B) As long as accounting revenues exceed accounting expenses, cash flow budgets do not have to be prepared.
C) It is possible for cash receipts to exceed revenues earned in a given month.
D) As long as a manager is confident that there will eventually be a cash receipt from a customer, the timing of the cash receipt is not important.

Question 56

Crafty Cathy Products Inc. manufactures a product sold in most craft stores which requires non-soluble glue as one of the key ingredients. The company has already estimated that it needs to produce the following number of units of product for the second quarter of 2013: Each unit requires .5 ounces of glue at a cost of $.30 an ounce. The company has determined that it needs 15 percent of next month's raw material needs on hand at the end of each month.
The cost of the glue that should be purchased in May is:

A) $13,365
B) $13,500
C) $15,390
D) $13,635

Question 57

Carteret Inc. Carteret Inc. manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced:
Each unit requires 30 feet of cotton rope cord which costs $.50 per foot. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month.
In addition, each hammock requires 45 minutes of direct labor for assembly and inspection at a cost of $.25 per minute. The company currently applies manufacturing overhead to production at the rate of $8 per direct labor hour.
Refer to the Carteret Inc. information above. The cost of the rope cord that should be purchased in May is:

A) $195,000
B) $150,000
C) $165,000
D) $135,000

Question 58

Robusto Coffee Traders Inc. sells prepackaged coffees to a variety of businesses throughout the East Coast. Robusto purchases the coffee in bulk from a wholesale distributor and packages the coffee themselves to sell to customers. The company expects to sell 120,000 and 135,000 one-pound packages of coffee during 2012 and 2013, respectively. The company had 6,000 one-pound packages on hand at the beginning of 2012, and the company has a policy of maintaining an ending inventory equal to 5 percent of the packages needed for next year's expected sales. How many packages of coffee should the company plan to purchase in 2012?

A) 126,750
B) 120,750
C) 119,250
D) 255,000

Question 59

Browning Inc. has projected the following sales information for the fourth quarter of 2013: Credit sales are collected over a two-month period, with 60 percent collected in the month of sale and 40 percent collected in the month following sale.
Total cash collections for December are:

A) $86,000
B) $54,000
C) $83,600
D) $68,000

Question 60

Carteret Inc. Carteret Inc. manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced:
Each unit requires 30 feet of cotton rope cord which costs $.50 per foot. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month.
In addition, each hammock requires 45 minutes of direct labor for assembly and inspection at a cost of $.25 per minute. The company currently applies manufacturing overhead to production at the rate of $8 per direct labor hour.
Refer to the Carteret Inc. information above. The total cost of direct labor and manufacturing overhead for the month of May is:

A) $192,500
B) $ 82,500
C) $172,500
D) $168,750

Question 61

For a manufacturing company, which of the following budgets does not have to be prepared before a budgeted income statement is prepared?

A) Budgeted cost of goods manufactured
B) Budgeted cost of goods sold
C) Budgeted balance sheet
D) Sales budget

Question 62

Which type(s) of activities are static budgets less useful for?

A) Operating activities
B) Control activities
C) Planning activities
D) Both control and planning activities

Question 63

A budget that budgets costs for the actual number of units produced is called a:

A) master budget.
B) summary cash budget.
C) static budget.
D) flexible budget.

Question 64

Which of the following budgets is often more of a focus for a service company than a manufacturing company?

A) Manufacturing overhead budget
B) Direct materials budget
C) Labor budget
D) Cash receipts budget

Question 65

Which of the following budgets would be prepared by manufacturing companies but not merchandising companies?

A) Sales budget
B) Cash receipts budget
C) Production budget
D) Selling and administrative expenses budget

Question 66

Holmes Manufacturing Inc. had the following purchases budgeted for the last six months of 2013: Holmes pays one-half of a month's purchases in the month of purchase and the remainder in the following month. What are expected total cash disbursements for the last quarter of 2013?

A) $112,500
B) $225,000
C) $182,500
D) $208,500

Question 67

Which of the following statements is false regarding a company's budgeted financial statements?

A) They are used for internal planning purposes.
B) They are often called pro forma financial statements.
C) Lending institutions should not use them as a basis for granting a loan.
D) An error in the preparation of one budget often affects one or more other budgets.

Question 68

Which of the following would not appear on a budgeted income statement?

A) Net income
B) Depreciation expense
C) Cost of goods sold
D) Cash received from bank loan.

Question 69

Vela Enterprises Inc. would like to prepare a summary cash budget for March. The following information is available: What is the cash balance at the end of March expected to be?

A) $ 8,500
B) $ (3,500)
C) $ 3,500
D) $26,500

Question 70

Upton Products Inc. would like to prepare a summary cash budget for the first quarter of 2013. The following information regarding operating activities from the cash receipts and cash disbursements budgets are available: The following information is also available:
What is the cash balance at the end of March expected to be?

A) $(1,000)
B) $ 0
C) $ 1,000
D) $ 2,000

Question 71

Which of the following budgets would be prepared by both manufacturing companies and merchandising companies?

A) Production budgets
B) Direct material purchases budget
C) Sales budget
D) Manufacturing overhead budget

Question 72

In September of 2013, Mitford Products Inc. began doing business as a corporation. The company plans to start making its first purchases in October of 2013. They have the following purchases budgeted for the last quarter of 2013: Mitford has worked out agreements with its various suppliers to pay for one-third of a month's purchases each month, beginning in the month of purchase, until the purchases are paid in full. No purchases were made prior to October.
What are expected total cash disbursements for the last quarter of 2013?

A) $1,490,000
B) $ 723,333
C) $1,006,667
D) $1,446,667

Question 73

Griswald Inc. would like to prepare a summary cash budget for the first quarter of 2013. The following information from the cash receipts and cash disbursements budgets are available: The company has a beginning cash balance on January 1, 2013 of $5,000. No other receipts and disbursements in the first quarter are expected. What is the cash balance at the end of March expected to be?

A) $14,000
B) $19,000
C) $ 9,000
D) $34,000

Question 74

Diamonde Products Inc. would like to prepare a summary cash budget for the second quarter of 2013. The following information regarding operating activities from the cash receipts and cash disbursements budgets are available: The following information is also available:
What is the cash balance at the end of June expected to be?

A) $1,000
B) $7,000
C) $9,000
D) $5,000

Question 75

Merrell Enterprises had the following purchases budgeted for the last six months of 2013: Merrell pays one-half of a month's purchases in the month of purchase and the remainder in the following month. What are expected total cash disbursements for the last quarter of 2013?

A) $210,000
B) $255,000
C) $130,000
D) $260,000

Question 76

In December of 2012, Jones Inc. was formed as a corporation. The company plans to start its operations in early January of 2013. They have the following purchases budgeted for the first quarter of 2013: Jones has worked out agreements with its various suppliers to pay for one-fourth of a month's purchases each month, beginning in the month of purchase, until the purchases are paid in full. No purchases were made prior to January.
What are expected total cash disbursements for the first quarter of 2013?

A) $425,000
B) $625,000
C) $775,000
D) $350,000

Question 77

Becham Inc. had the following purchases budgeted for the last quarter of 2013: Becham pays one-half of a month's purchases in the month of purchase and the remainder in the following month. What are expected cash disbursements for the month of December?

A) $124,500
B) $ 84,000
C) $ 87,000
D) $ 42,000

Question 78

A budget that is established at the beginning of the period and not adjusted for different levels of actual sales activity is called a:

A) nonfinancial budget.
B) flexible budget.
C) static budget.
D) zero-based budget.

Question 79

Avery Inc. would like to prepare a summary cash budget for June. The following information is available: What is the cash balance at the end of June expected to be?

A) $15,000
B) $12,000
C) $26,000
D) $29,000

Question 80

Which type(s) of activities are flexible budgets most useful for?

A) Operating activities
B) Control activities
C) Planning activities
D) Both control and planning activities