Question 1

Preparing the master budget begins by establishing _____.

Accepted Answer

The first step in preparing a master budget is to establish the expected sales for the budget period. This information is necessary to estimate the revenue for the period and to plan production, inventory, and labor accordingly. Once the expected sales are established, the budgeting process can continue with the preparation of the rest of the budget, including the income statement, cash budget, and balance sheet.

Question 2

Gore Company has budgeted sales of 7,000 units, target ending finished goods inventory of 1,000 units, and a beginning finished goods inventory of 300 units. _____ units should be produced.

Accepted Answer

To determine the number of units that should be produced, we need to calculate the total units needed, which is the sum of units required for sales and ending inventory minus beginning inventory. 
Total units needed = Budgeted sales + Target ending inventory - Beginning inventory 
Total units needed = 7,000 + 1,000 - 300 
Total units needed = 7,700 
Therefore, the answer is choice B, 7,700 units.

Question 3

_____ budget is a major part of the master budget that focuses on the income statement and its supporting schedules.

Accepted Answer

An operating budget focuses on the income statement and its supporting schedules, such as the sales budget, production budget, and selling and administrative expenses budget. A financial budget, on the other hand, focuses on the balance sheet and cash flow statement. A cash budget is a specific part of the operating budget that focuses on cash inflows and outflows. A capital budget is a separate budget that focuses on long-term investments in fixed assets.

Question 4

For next year, Dunphy Company has budgeted sales of 30,000 units, target ending finished goods inventory of 1,000 units, and a beginning finished goods inventory of 800 units.All other inventories are zero._____ units should be pro?duced.

Accepted Answer

To solve the problem, we need to use the following formula:

Units to be Produced = Units Needed for Sales + Target Ending Finished Goods Inventory - Beginning Finished Goods Inventory

Units Needed for Sales = 30,000
Target Ending Finished Goods Inventory = 1,000
Beginning Finished Goods Inventory = 800

By substituting these values into the formula, we get:

Units to be Produced = 30,000 + 1,000 - 800 = 30,200

Therefore, the correct answer is C) 30,200.

Question 5

What is the sequence of steps used in preparing the master budget?

Accepted Answer

The master budget is prepared by first preparing operating budgets such as sales, production, materials, labor, and overhead budgets. The output from these budgets is then used to prepare financial budgets such as cash, capital expenditure, and pro forma financial statements. Therefore, option A is correct. Options B, C, and D are incorrect as they suggest either financial budgets are prepared first or independent of operating budgets.

Question 6

Homer Company has a production schedule of 11,000 units and a budgeted sales volume of 10,000 units for the current year.In addition, 2,000 units are in beginning finished goods inventory._____ units are expected to be in ending finished goods inventory.

Accepted Answer

To find the number of units expected to be in the ending finished goods inventory, we need to use the following formula:

Ending Finished Goods Inventory = Beginning Finished Goods Inventory + Production - Sales

Plugging in the given values, we get:

Ending Finished Goods Inventory = 2,000 + 11,000 - 10,000
Ending Finished Goods Inventory = 3,000

Therefore, the expected number of units in ending finished goods inventory is 3,000, which corresponds to choice D.

Question 7

_____ expense is influenced by sales.

Accepted Answer

Commission is a variable expense that is directly influenced by sales. The more sales a company makes, the more commission it will have to pay out to its salespeople. Rent, insurance, and depreciation, on the other hand, are fixed expenses that are not affected by sales.

Question 8

Which of the following is not a major benefit of budgeting?

Accepted Answer

Budgeting requires managers to plan for the future, so they cannot simply react to current events. Operating day-to-day without a clear plan can lead to disorganized and inefficient use of resources.

Question 9

Unit sales of Product A are currently 10,000, while unit sales of Product B are double those of Product A.The com?pany's sales forecast will be _____, assuming sales of Product A increase by 10% and those of Product B increase by 4,000 units.

Accepted Answer

Product A's sales increase by 10% from 10,000 to 11,000 units. Product B's sales are initially 20,000 units (double of Product A's 10,000) and increase by 4,000 units to 24,000 units.

Question 10

The financial-budget process results in the _____.

Accepted Answer

The answer of The financial-budget process results in the _____.
...

Question 11

All of the following are operating budgets except the _____.

Accepted Answer

The cash budget is a financial budget that estimates the company's inflows and outflows of cash. The operating budgets, on the other hand, are concerned with the company's day-to-day operations and do not directly involve cash flow projections. The sales budget forecasts anticipated sales revenue, the operating expenses budget estimates the costs of running the business, and the budgeted income statement predicts the company's net income for a given period.

Question 12

All of the following are operating budgets except the _____.

Accepted Answer

Operating budgets deal with the day-to-day expenses and revenues of a business, such as purchases and cost of goods sold. A capital budget, on the other hand, deals with long-term investments in assets like property, equipment, and infrastructure, and is not considered an operating budget.

Question 13

All of the following are financial budgets except the _____.

Accepted Answer

The answer of All of the following are financial budgets...

Question 14

All of the following are financial budgets except the _____.

Accepted Answer

Budgeted income statement is not a financial budget. It is a financial statement that shows the expected revenues and expenses of a company over a period of time.

Question 15

The operating-budget process results in the _____.

Accepted Answer

The operating-budget process results in the budgeted statement of income, which outlines the expected revenues, expenses, and net income for a specific period of time. The other options (budgeted balance sheet, budgeted cash balance, and sales budget) may be components of the budgeting process, but they are not the final result of that process.

Question 16

Busted Company expects to produce 19,000 units.Beginning finished goods inventory is 2,000 units and expected sales are 18,000 units.Expected ending finished goods inventory is _____.

Accepted Answer

To find the expected ending finished goods inventory, we need to use the following formula:

Expected ending finished goods inventory = Beginning finished goods inventory + Production - Sales

We are given that the company expects to produce 19,000 units and has a beginning finished goods inventory of 2,000 units. We are also given that expected sales are 18,000 units.

Plugging these values into the formula, we get:

Expected ending finished goods inventory = 2,000 + 19,000 - 18,000 
Expected ending finished goods inventory = 3,000

Therefore, the best choice is (D) 3,000.

Question 17

Super Hotels operates a 100-room property in a location popular for "spring breakers".Occupancy rates average 95% in March and 80% in April.The average room rental is $150 per night.Expected sales for March are _____.

Accepted Answer

The answer of Super Hotels operates a 100-room property in...

Question 18

Haggle Corporation, a wholesaler, has a sales budget for next month of $400,000.Cost of units sold is expected to be 35% of sales.All units are paid for in the month following purchase.The beginning inventory of units is $10,000, and an ending amount of $12,000 is desired.Beginning accounts payable is $76,000. The cost of units sold for next month is expected to be _____.

Accepted Answer

The cost of units sold is expected to be 35% of sales, so for sales of $400,000, the cost of units sold would be $400,000 * 35% = $140,000.

Question 19

_____ is generally prepared as the first step in preparing the operating budgets.

Accepted Answer

A sales budget is generally prepared as the first step in preparing the operating budgets because it provides information on the expected sales revenue for the period, which is necessary for determining other budgets such as production, inventory, and operating expenses.

Question 20

Hot Hotels operates a 100-room property in a location popular for "spring breakers".Occupancy rates average 97% in March and 90% in April.The average room rental is $150 per night.Expected sales for April are _____.

Accepted Answer

Expected sales for April = (Number of rooms * Occupancy rate * Average room rental * Number of days in April)= (100 * 90% * $150 * 30)= $405,000

Quiz 7: Introduction to Budgets and Preparing the Master Budget

Preparing the master budget begins by establishing _____.

Gore Company has budgeted sales of 7,000 units, target ending finished goods inventory of 1,000 units, and a beginning finished goods inventory of 300 units. _____ units should be produced.

_____ budget is a major part of the master budget that focuses on the income statement and its supporting schedules.

For next year, Dunphy Company has budgeted sales of 30,000 units, target ending finished goods inventory of 1,000 units, and a beginning finished goods inventory of 800 units.All other inventories are zero._____ units should be pro?duced.

What is the sequence of steps used in preparing the master budget?

Homer Company has a production schedule of 11,000 units and a budgeted sales volume of 10,000 units for the current year.In addition, 2,000 units are in beginning finished goods inventory._____ units are expected to be in ending finished goods inventory.

_____ expense is influenced by sales.

Which of the following is not a major benefit of budgeting?

Unit sales of Product A are currently 10,000, while unit sales of Product B are double those of Product A.The com?pany's sales forecast will be _____, assuming sales of Product A increase by 10% and those of Product B increase by 4,000 units.

The financial-budget process results in the _____.

All of the following are operating budgets except the _____.

All of the following are operating budgets except the _____.

All of the following are financial budgets except the _____.

All of the following are financial budgets except the _____.

The operating-budget process results in the _____.

Busted Company expects to produce 19,000 units.Beginning finished goods inventory is 2,000 units and expected sales are 18,000 units.Expected ending finished goods inventory is _____.

Super Hotels operates a 100-room property in a location popular for "spring breakers".Occupancy rates average 95% in March and 80% in April.The average room rental is $150 per night.Expected sales for March are _____.

_____ is generally prepared as the first step in preparing the operating budgets.

Hot Hotels operates a 100-room property in a location popular for "spring breakers".Occupancy rates average 97% in March and 90% in April.The average room rental is $150 per night.Expected sales for April are _____.