Accounting (Module 7)
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Terms in this set (29)
The master budget usually
begins with the
a. production budget
b. operating budget
c. financial budget
d. sales budget
d. sales budget
Based on past experience, a
company developed the
following budget formula for
estimating its shipping
expenses. The company's
shipments average 12 lbs. per
shipment:
Shipment costs = P16,000 + ( P
0.50 x actual lbs. shipped)
The planned activity and actual
activity regarding orders and
shipments for the current
month are given in the
following scheduled:
Plan Actual
Sales orders 800 780
Shipments 800 820
Units shipped 8,000 9,000
Sales P120,000 P114,000
Total pound 9,600 12,300
Shipped
The actual shipping cost for the
month amounted to P21,000.
The appropriate monthly
flexible budget allowance for
shipping cost for the purpose
of performance evaluation
could be
A. P20,680
B. P20,920
C. P20,800
D. P22,150
B. P20,920
The production budget
d. sales budget
process usually begins with
a. Direct labor budget
b. Direct materials budget
c. manufacturing overhead
budget
d. sales budget
Which of these budgets is
a. production budget
usually prepared first?
a. production budget
b. materials purchases budget
c. cash disbursement budget
d. cash budget
All of the following are
considered operating budgets,
except
a. sales budget
b. materials budget
c. production budget
d. capital budget
d. capital budget
Hawaii Inc., has projected sales
c. P 264,000
to be 260,000 in June, 270,000
in July and 300,000 in august
.Hawaii collects 30% of a
month's sales in the month of
sale, 50% in the month
following the sale, and 20% in
the second month following
the sale. What is the accounts
receivable balance on august
31?
a. P 90,000
b. P 210,000
c. P 264,000
d. Some other number
Arizona Inc. has projected
sales: February, P10,000;
March, P9,000; April P8,000;
May, P10,000; and June, P
11,000. Arizona has 30% cash
sales and 70% sales on
account. Accounts are
collected 40% in the month
following the sale and 55%
collected the second month.
What would be the total cash
receipts in May?
a. P 3000
b. P 8150
c. P 8705
d. Some other number
c. P 8705
The Ohio company has the
following historical pattern on
its credit sales:
70% collected in the month of
sale
15% collected in the first month
after sale
10% collected in the second
month after sale
4% collected in the third month
after sale
1% uncollectible
The sales on open account
have been budgeted for the
last six months of 2013 are
shown below:
July P60,000
August 70,000
September 80,000
October 90,000
November 100,000
December 85,000
What would be the estimated
total cash collections during
the fourth calendar quarter
from sales made onopen
account during the fourth
calendar quarter?
a. P172,500
b. P230,000
c. P251,400
d. P265,400
b. P230,000
Alabama consortium is
constructing a corporate
planning model. Cash sales are
30% of the company's sales,
with the remainder subject to
the following collection
pattern:
One month after sale 60%
Two month after sale 30%
Three month after sale 8%
Uncollectible 2%
If is defined as total sales in
month 'n', which one of the
following expressions correctly
describes Alabama's collection
on account in any given
month?
a. 0.6 Sn-1 + 0.3 Sn-2 + 0.08 Sn3
b. 0.42 Sn+1 + 0.21 Sn+2 + 0.056
Sn+3
c. 0.42 Sn-1 + 0.21 Sn-2 + 0.056
Sn-3
d. 0.6 Sn-1 + 0.3 Sn-2 + 0.08 Sn3 - 0.02 S
c. 0.42 Sn-1 + 0.21 Sn-2 + 0.056 Sn-3
Nevada company
d. Some other number
manufactures a single product .
(4,350)
Nevada keeps inventory of raw
materials at 50% of the coming
month's budgeted production
needs . Each unit of product
requires three pounds of
materials. The production
budget is, in units:May ,1,000;
June 1,200 ; July ;1,300; August
,1,600.
Determine the raw materials
purchases in July.
a. 1,450 pounds
b. 2,400 pounds
c. 3,900
d. Some other number
Philadelphia company has
budgeted sales of 24,000
finished units for the
forthcoming 6-month period. It
takes 4 lbs. of direct materials
to make one finished unit.
Given the following:
Finished units Direct Materials
(pounds)
Beginning inventory 14,000
44,000
Target ending inventory 12,000
48,000
How many pounds of direct
materials should be budgeted
for purchase during the 6month period?
a. 92,000
b. 88,000
c. 96,000
d. 100,000
a. 92,000
Georgia co, has projected
b. P45,750
sales to be P60, 000 in January
P 75,000 in February and
80,000 in March. Georgia
wants to have 25% of next
month 's sales needs on hand
at the end of a month.
If Georgia has an average
gross profit of 40% ,what are
the February purchases?
a. P30,500
b. P45,750
c. P46,250
d. P76,250
Michigan merchandising is
preparing its cash budget for
June 2013 and made the
following projections:
Sales P1,500,000
Gross profit rate 25%
Decrease in inventories
P70,000
Decrease in accounts payable
for inventories P 120,000
For June 2013, what were the
estimated cash disbursements
for inventories?
a. P935,000
b. P1,050,000
c. P1,055,000
d. P1,175,000
d. P1,175,000
Comparing actual results with a
d. flexible budget
budget based on achieved
(actual) volume is possible with
the use of a
a. Monthly budget
b. Master budget
c. rolling budget
d. flexible budget
Texas company has prepared
the following flexible budget
for production costs: costs=
340,000 + 9x where x is the
number of units produced.
Texas produced 20, 000 units
at a total cost of 490,000.
What is the variance of actual
costs from budgeted costs (i.e
, budget variance)?
a. 150,000 favorable
b. 30,000 favorable
c. 30,000 unfavorable
d. 90,000 unfavorable
b. 30,000 favorable
The use of standards in
a. flexible budget
budgeting process signifies
that an organization has most
likely implemented a
a. flexible budget
b. capital budget
c. zero- based budget
d. static budget
Budgeting is
a. the process of creating a formal plan and
translating goals into quantitative format.
a. the process of creating a
formal plan and translating
goals into quantitative format.
b. a technique for comparing
actual costs with standard
costs.
c. a technique for determining
the cost of manufactured
products.
d. a means of product costing
that emphasizes activities as
basic cost objects.
Which of the following
d. Budgets foster the planning of operations,
statements is correct?
provide a framework for performance e valuation,
and promote communication and coordination
a. Budgets ensure goal
among organization segments.
congruence between
superiors and subordinates.
b. Budgets define responsibility
centers and promote
communication and
coordination among
organization segments.
c. Budgets foster the planning
of operations and facilitate the
fixing of blame for missed
budget predictions.
d. Budgets foster the planning
of operations, provide a
framework for performance e
valuation, and promote
communication and
coordination among
organization segments.
Budgets are related to the
following management
function, except
a. planning
b. control
c. performance evaluation
d. None of the above
d. None of the above
It involves the forecasting of
b. Budgeting
realizable results over the
definite period or periods, the
planning and coordination of
the various operations and
functions of the business to
attain realizable results, and
control of variations from the
approved plan.
a. Cost control
b. Budgeting
c. Internal control
d. Vouching
Which of the following
d. Budget preparation is not the sole responsibility
statements regarding
of any one organizational segment and is prepared
budgeting is incorrect?
by combining the efforts of many individuals.
a. Planning and control are the
essential features of the
budgeting process.
b. Capital expenditures budget
shows the availability of idle
cash for investment.
c. Budgeting provides a
measuring device to which
subsequent performances are
compared and evaluated.
d. Budget preparation is not
the sole responsibility of any
one organizational segment
and is prepared by combining
the efforts of many individuals.
A company's product has an
expected 4-year life cycle
from research, development
and redesign through its
withdrawal from the market.
Budgeted costs are
Upstream costs (R&D, Design)
P 2,000,000
Manufacturing costs 3,000,000
Downstream costs ( marketing,
distribution,
customer service) 1,200,000
After-purchase costs 1,000,000
The company plans to produce
2000,000 units and price the
product at 125% of the wholelife unit cost. Thus, the
budgeted unit selling price is
A. P15 C. P36
B. P31 D. P45
D. P45
Southful, Inc. desires to reduce
its inventory of a particular raw
material by 40%. The inventory
at the beginning of the budget
period is 240,000 units, and the
company plans to manufacture
168,000 units of output. Each of
these units requires 2.5 units
raw materials. How much of
the raw materials should be
purchased during the budget
period?
A. 316,000 units
B. 276,000 units
C. 324,000 units
D. 139,000 units
C. 324,000 units
Southwing Company is
preparing a flexible budget for
2010 and the following
maximum capacity estimates
for department M are available:
At maximum capacity
Direct labor bonus 60,000
Variable factory overhead
P150,000
Fixed factory overhead
P240,000
Assume the Southwing's
normal capacity is 80% of
maximum capacity, what would
be the total factory overhead
rate, based on direct labor
hours, in flexible budget at
normal capacity?
A. P6.00 C. P7.00
B. P6.50 D. P8.13
P7.50
Premised on past experience
Jason Corp. adopted the
following budget formula for
estimating shipping expenses.
The company's shipments
averaged 12 kilos per shipping
(shipping cost = P8000 + P0.25
x standard kilograms shipped).
Pertinent data for the current
month are given below.
Planned Actual
Sales order 800 780
Shipments 800 820
Units shipped 8,000 9,000
Sales 240,000 288,000
Total prends shipped P9600
12,300
The actual shipping costs for
the month *amounted* to
P10,500. The appropriate
monthly flexible budget
allowance for shipping costs
for purposes of performance
evaluation would be
A. P10,250 C. P10,340
B. P11,075 D. P10,460
D. P10,460
Spaghetti Corporation
prepared the following sales
budget
Month Cash sales Credit sales
February P80,000 P340,000
March 100,000 400,000
April 90,000 370,000
May 120,000 460 000
June 110,000 380,000
Collections are 40% in the
month of , 45% in the month
following thr sale, and 10% tow
months following the sale. The
remaining 5% is a expected to
be uncollectible. The
company's budgeted
collections from April to June
amounts to
A. P1,090,250
B. P1,325,500
C. P1,468,500
D. P1,397,500
C. P1,468,500
The following purchases
budget was prepared by
Masagana Corporation:
Month Budgeted Purchases
January P460,000
February 380,000
March 400,000
April 440,000
May 420,000
Purchases are paid for in the
following manner:
10% in the month of purchase
50% in the month after
purchase
40% two months after purchase
Total disbursement for the
period March to May amount
to:
A. P1,285,000
B. P1,325,000
C. P1,285,000
D. P1,232,000
D. P1,232,000
Melsie Company has budgeted
its activity for October 2010
based on the following
information:
Sales are budgeted at
P300,000. All sales are credigt
sales and a provision for
doubtful accounts is made
monthly at the rate of 3% of
sales.
Merchandise inventory was
P70,000 at September 30,2008
and an increase of P10,000 is
planned for the month.
All merchandise is marked up
to sell at invoice cost plus
50%>
Estimated cash disbursement
for selling and administrative
expenses for the month are
P40,000.
Depreciation for the month is
projected at P5,000.
Melsie is projecting operating
income for October 2010 in the
amount of:
A. P80,000
B. P56,000
C. P55,000
D. P46,000
D. P46,000
Dianne has the following cost
components for 100 units of
product for 2010:
Raw Materials P 200,000
Direct Labor 100,000
Manufacturing overhead
200,000
Selling/Administrative expense
150,000
All cost are variable for
P100,000 of manufacturing
overhead and P100,000 of
selling and administrative
expenses. The total costs to
produce and sell 110,000 units
during 2010 are:
A. P650,000
B. P715,000
C. P695,000
D. P540,000
C. P695,000