41. Alana Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2. Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months.
How many units of A2 are expected in the raw material inventory at the end of the second month?
a. 30 units
b. 35 units
c. 40 units
d. 45 units
30 + 5 + 5 = 40 units
42. Which of the following statement is correct regarding a continuous budget?
a. A continuous budget is a monthly budget
b. None of these
c. As a month/period expires in the budget, an additional month/period in the future is added so the company always has a 12-month budget on hand
d. The budget is prepared for a one-year period that corresponds to the company's fiscal year
43. The body that has the responsibility to review the budget, provide policy guidelines and budgetary goals, resolve differences that may arise as the budget is prepared, approve the final budget, and monitor the actual performance of the organization as the year unfolds is called the:
a. budget director
b. budget committee
c. president
d. controller
44. Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed:
Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders
Maintenance: $20,000
Machining: 73,000
Inspection: 73,000
Setups: 18,000
Purchasing: 82,000
What is the budget variance for inspection in an activity-based performance report?
a. $2,000 F
b. none of these
c. $3,000 F
d. $1,000 F
Actual: $73,000
Budget $70,000+ (10 x $500): 75,000
Variance: $ 2,000 F
45. A budget is a financial plan for the future used for planning, controlling, and decision making.
a. True
b. False
46. Natasha Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000.
For Natasha Company, the ending accounts payable should be
a. $91,000
b. $39,000
c. $89,000
d. $61,000
($150,000 x 0.40) + $6,000-$5,000 = $61,000
47. When the reaction to a budget is negative, resulting in managerial behavior that is negative for the organization, the resulting behavior is known as
a. sociopathic behavior
b. psychopathic behavior
c. congruent behavior
d. dysfunctional behavior
48. Molina Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000 units; June, 28,000 units. Sales totaled 16,000 units in March. The March finished goods inventory was 4,000 units. End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales.
The planned production for Ben Company for April is
a. 20,800 units
b. 24,800 units
c. 21,200 units
d. 19,200 units
20,000+ (0.20 x 24,000) - 4,000 = 20,800 units
49. When managers intentionally underestimate or overestimate revenues and costs it is called budgetary...slack..
50. Thirty percent of Sharp Company's sales are for cash and 70% are on account Sixty percent of the account sales are collected in the month of sale, 25% in the month following sale, and 129% in the second month following sale. The remainder is uncollectible. The following are budgeted sales data for the company.
Total cash receipts in April are expected to be:
a. $35,200
b. $24,640
c. $33,640
d. $31,560
How many units of A2 are expected in the raw material inventory at the end of the second month?
a. 30 units
b. 35 units
c. 40 units
d. 45 units
30 + 5 + 5 = 40 units
42. Which of the following statement is correct regarding a continuous budget?
a. A continuous budget is a monthly budget
b. None of these
c. As a month/period expires in the budget, an additional month/period in the future is added so the company always has a 12-month budget on hand
d. The budget is prepared for a one-year period that corresponds to the company's fiscal year
43. The body that has the responsibility to review the budget, provide policy guidelines and budgetary goals, resolve differences that may arise as the budget is prepared, approve the final budget, and monitor the actual performance of the organization as the year unfolds is called the:
a. budget director
b. budget committee
c. president
d. controller
44. Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed:
| Activity | Cost Formula |
| Maintenance | $11,000+ $2 per machine hour |
| Machining | $55,000 +$3 per machine hour |
| Inspection | $70,000+ $500 per batch |
| Setups | $2,000 per batch |
| Purchasing | $80,000+ $150 per purchase order |
Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders
Maintenance: $20,000
Machining: 73,000
Inspection: 73,000
Setups: 18,000
Purchasing: 82,000
What is the budget variance for inspection in an activity-based performance report?
a. $2,000 F
b. none of these
c. $3,000 F
d. $1,000 F
Actual: $73,000
Budget $70,000+ (10 x $500): 75,000
Variance: $ 2,000 F
45. A budget is a financial plan for the future used for planning, controlling, and decision making.
a. True
b. False
46. Natasha Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000.
For Natasha Company, the ending accounts payable should be
a. $91,000
b. $39,000
c. $89,000
d. $61,000
($150,000 x 0.40) + $6,000-$5,000 = $61,000
47. When the reaction to a budget is negative, resulting in managerial behavior that is negative for the organization, the resulting behavior is known as
a. sociopathic behavior
b. psychopathic behavior
c. congruent behavior
d. dysfunctional behavior
48. Molina Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000 units; June, 28,000 units. Sales totaled 16,000 units in March. The March finished goods inventory was 4,000 units. End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales.
The planned production for Ben Company for April is
a. 20,800 units
b. 24,800 units
c. 21,200 units
d. 19,200 units
20,000+ (0.20 x 24,000) - 4,000 = 20,800 units
49. When managers intentionally underestimate or overestimate revenues and costs it is called budgetary...slack..
50. Thirty percent of Sharp Company's sales are for cash and 70% are on account Sixty percent of the account sales are collected in the month of sale, 25% in the month following sale, and 129% in the second month following sale. The remainder is uncollectible. The following are budgeted sales data for the company.
| January | February | March | April | |
| Total sales | $50,000 | $60,000 | $40,000 | $30,000 |
Total cash receipts in April are expected to be:
a. $35,200
b. $24,640
c. $33,640
d. $31,560
